March 22, 2023

You’re the Boss Blog: Are You Involved in Every Decision at Your Company?

Creating Value

Are you getting the most out of your business?

Does every problem still come across your desk? Are you spending too much time in the weeds and not enough thinking about the big picture? Are you feeling burned out? For many business owners I know, the answers to these questions are a resounding “yes.”

One of the best ways I know to create value in a business is for the owner to become operationally irrelevant. That doesn’t mean leaving the business. It means changing your relationship to your business. Instead of being involved in every decision, you build a team and find a way to trust your senior employees to take care of their individual areas of responsibility.

I use the term passive owner to describe owners who have removed themselves from the day-to-day operation. Instead of solving problems all day, they have moved on to working on strategic issues. You know a business has a passive owner when it can run for weeks and or even months without the direct intervention of the owner, because there are managers in the company who are competent and have been given the authority and responsibility to keep things running smoothly. Here’s a fun way to think about it: Several years ago, Norm Brodsky wrote a column for Inc. magazine in which he argued that the more vacation time he took, the more he increased the value of his company.

Passive ownership is hard to achieve. At first, we don’t believe it’s possible. If we get to the point where do believe it’s possible, we often have to change not only our behavior but the culture of the company. Worse, we’re busy — so busy in fact, that we often don’t have time to stop and take a look around. We’re forced to deal with emergency after emergency after emergency. Before we know it, another day has passed and we’re still in the same place.

To take the first step toward passive ownership, we have to be able to get past living as if everything is a crisis. When we’re constantly in crisis mode, everything is late and we’re always under tremendous pressure. At least, that’s how it was for me. I thought I had to be involved in every decision. I lived as if everything was an emergency. I drove my staff crazy and, frankly, my company wasn’t a very satisfying place to be — neither for my employees nor for me.

In the early ’80s I ran across a book by Stephen Covey called “Seven Habits of Highly Effective People.” The book talks about four stages that people occupy. They are:

  1. Urgent and important (where I was living).
  2. Important, but not urgent (where I needed to be).
  3. Not important, but urgent (I delegated, but not effectively. The project seemed to always land back on my desk).
  4. Not important and not urgent (where I hid behind useless activities and was completely unproductive).

I realized that I would have to move out of stages 1 and 3 and spend more time in stage 2 if I were ever going to be successful. It wasn’t easy, but I found one thing that I thought was a crisis and successfully delegated it to someone else. Then, I did it again. Over the course of a couple of years, I managed to get some time to work on important but not urgent activities. And that’s when life started to change.

Passive ownership requires the owner to build a team of effective managers, to have a reporting system that shares critical company information and to have systems in place that let front-line employees know what to do and how to act. This might sound easy, but it often takes several years of taking small steps before you even get close passive ownership.

For my company, the result was that we went from providing inconsistent service to being tactically excellent. We developed systems, and we stopped acting as if everything was a crisis. We had systems in place to keep crises from happening in the first place but could plan for things that were likely to go wrong.

Building trust between my managers and me was a real challenge. My issue was that I had a very difficult time understanding what was happening when one of my managers made a mistake. At some level, I didn’t fully understand that it wasn’t on purpose. This is where I ran into W. Edwards Deming and his books on quality management. One of his rules was that you don’t blame the person — you blame the system. This was a really difficult rule for me to embrace. But as we put more and better systems in place, the mistakes got smaller and more manageable. This took time and the willingness to change.

There’s a reason a lot of owners have a habit of micromanaging. In the early years, if I hadn’t been obsessive about being involved in every aspect of the business, the business might well have failed. It was only as the business became more successful that I had the option of learning to back off. But I know I waited longer than I should have.

Take a moment and ask yourself whether you are constantly feeling the pressure. If you answered yes to the questions at the beginning of this post, you might want to think about ways to make at least some of these issues go away.

Josh Patrick is a founder and Principal at Stage 2 Planning Partners where he works with private business owners on wealth management issues.

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