Reach for the stars

Effective leadership is by far the most important determinant in the successful growth of a company, according to Will and John McKee, authors of STAR: Leadership behaviours for stellar SME growth, a newly-published book which aims to demystify leadership behaviours for Irish SMEs. This may seem fairly self-evident, but the beauty of the book is that this statement is backed by engaging anecdotes and behaviours from real-life companies and their leaders, including familiar faces like Norman Kilroy of Grafton Group and our own Sean Quinn.

Long-time entrepreneur, director, chairman and coach Will McKee explained his motivation for writing such a book when we spoke. "The fundamental reason was that I was aware of the need for business leadership in the Irish economy generally, something that has been borne out by Enterprise Ireland and by Invest Northern Ireland, who have both put leadership at the top of their agenda in terms of improving the economic performance of businesses in Ireland. Leadership is obviously a very current topic." Above all, he says, there was a glaring gap in the existing management literature out there.

“I'm very familiar with the business literature that is available and I believe the majority has been written in the context of the Motorolas, Microsofts or Dells. If you read any of these books you'll find that most of the stories or examples that are used are of relatively large businesses. Some 99pc of incorporated entities in Ireland are SMEs, so my question was: what relevance has all this stuff to them? What would Bill Gates or Steve Ballmer do? What relevance has that got to a guy who's running a relatively small business in Ireland?"

STAR illustrates just this difference in the introduction, comparing a day in the life of Mike, a busy, time- and cash-strapped SME owner, with that of Sean, the CEO of a subsidiary of a large corporation, the latter being well-supported by an entourage of professionals. It points to the irony that Mike is the very person who, along with his team, could benefit from top training and reading. "The biggest problem in bringing help to Mike is that, due to his relatively chaotic work patterns, he has very little time available to dedicate to his own improvement or that of his team."

It's a sentiment with which many leaders of fast-growing SMEs will immediately identify, but the McKees claim that it's a problem that can be greatly eased if you want to make it happen: “The answer, we have observed in many companies, lies first in training and empowering your team, to the point where the individuals are capable of taking greater responsibility, thus releasing more of your time," they say. "Then you must discipline yourself to use that additional freedom in self-development, rather than filling the vacuum with more activity."

Pitfalls for SME leaders

As 'microbusinesses' develop into SMEs, they bring with them very positive attributes such as flexibility and speed, but, say the McKees, they can also carry more negative attributes like a lack of discipline in reporting and organisational operating weaknesses. The earlier clarity of structure and clear goals can be established the better. The authors warn against the tendency for SMEs to operate without a functioning board of directors, to which the STAR leader reports, and the tendency towards ill-judged decisions on shareholding in the early days when the shares are worth little or nothing. "As an SME leader with STAR leadership potential, you should never bring investors onto the share register just to raise money; they must have a long-term contribution to make to your ambitious, growing company."

Not that the McKees warn young companies to steer away from angel investors or venture capital. The experienced ones will bring not alone money from growth, but also "contacts, expertise, experience, discipline and commitment to your aggressive stellar growth plan".

Robust corporate structures are key, according to STAR, and all companies should have its board of directors and regular board meetings. "The importance of the role of the board of directors cannot be overstated. The board and its chairman must perform well for the SME to prosper."

Clear enterprise goals are also vital for stellar growth. "The CEO, through confident inspirational leadership, must turn aspiration into clear, measurable goals, obtain commitment by the top team and communicate the challenging agenda throughout the firm." The authors are quick to differentiate between operational goals - also important - and the higher, aspir-ational 'rich' goals required for stellar growth.

No failure, no prosperity

The authors are also quick to point to the obstacles to growth, which all SME leaders must be aware of and prepared for. While competitive pressures, external factors, internal problems and sheer mental stress make the list, they say that arguably the most difficult barriers on the journey to stellar growth are "bad luck, fear of failure and loneliness". They argue that failure must occur, so the key is for leaders not to fear it. "Failure is the catalytic spark at the heart of all wealth creation. It is the essential link in the entrepreneurial causal chain.

“If there is no failure, there is no risk; if there is no risk, there is no entrepreneurship; if there is no entrepreneurship, there is no added value; if there is no added value, there is no wealth creation; if there is no wealth creation, there is no business; if there is no business, there is no prosperity - for anyone."

Challenges of growth

In their pursuit of a best-practice leadership model, the McKees also looked at the fact that an individual entrepreneur can take things a long way - but only to a point. A salutary lesson that will ring true for most entrepreneurs is the fact that the excitement of starting a new business can inspire super-human performance and superior differentiating customer service to early customers. "But it is difficult, if not impossible, for an individual to sustain such a level of attention over time, as the company expands."

Those of us who have not yet come up against this challenge may well have been at the receiving end of this phenomenon. "Early excitement and initial customer-
centric focus can lose their force in a rapid growth situation, if there is an inability to change the total organisation in line with the demands of its expansion."
We have all read the many books on delegation in the context of growth, but the McKees refreshingly recognise that this is not always a simple process.

Unfortunately, the precious magic [of the entrepreneurial leader] is often lost in the delegation. The well-intentioned efforts of her informal emergent team and the input of her own strengths, whether visionary, team-building, selling, managing or innovating, can be significantly diluted in terms of their effect." In STAR, the authors have sought to create a leadership model that will 'bottle' and apply that magic successfully.

We cannot hope to touch on the sheer detail of the McKees' STAR leadership model here, but suffice to say anyone who has experienced, or is experiencing, the
inherent loneliness of leading a fast-growing SME will find much in this book to engage and inspire and, indeed, to help them feel a lot less alone.

'STAR: Leadership behaviours for stellar SME growth' is available in bookstores and at www.oaktreepress.com, ISBN 978-1904887232

This article first appeared in Owner Manager magazine.