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Tuesday, April 14, 2009

Organization, part #2: Are you the bottleneck?

The more decisions that must go through the entrepreneur, the more of a bottleneck he becomes.

Example: Despite working harder than ever, the two partners at FreightX, a regional shipping firm, could not figure out how to break into eight figure revenue. The needle simply refused to budge. A quick look at FreightX’s organizational structure revealed the problem instantly. Even with 70 employees working on 8-10 separated projects, every single "scoping" decision ran through the two founders. Because each new project took the founders at least two weeks to scope, prospective clients frequently defected before FreightX even laid eyes on their Requests for Proposals. Although the founders had more experience at scoping than anyone else in the firm, they failed to recognize that their firm was losing 100% of the deals that they never got to.


Best Practice: Just because you are capable of wearing many hats, doesn’t mean you should. While self-sufficiency is critical to getting started, entrepreneurs incapable of delegating tasks inevitably become bottlenecks in their firms’ growth. Routing every decision through one person can be the cause of habitual delays. Although founders are understandably hesitant to delegate tasks knowing that they could do a better job themselves, they must learn that perfect is the enemy of good (and growing). Decisions and the information necessary to make them should be pushed down the ranks whenever possible so that the entrepreneur can pursue even more valuable activities.


Performance Management Self-Assessment:
How many of your employees’ tasks depend on your approval?
What is your average time to respond to emails?
How many direct reports do you have?
What would happen if you fired yourself?
What critical tasks can only you perform?
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