Top 50: Counting cash or commitment?

Managing a small business is a balancing act, with available funds and the ability to attract decent personnel at opposite ends of the seesaw. So who can people turn to for advice? Rupert Merson reveals how KITE lets chief executives share their experiences

"THE ORGANISATIONAL weaknesses that entrepreneurs confront every day would cause the managers of a mature company to panic," wrote Amar Bhide in Harvard Business Review in 1996. It follows therefore that the leaders of entrepreneurial businesses must be cut from a special cloth, or the problems faced by such leaders must be the subject of a specialised body of wisdom, or possibly both.

Unfortunately, neither is true. Not much worth reading about managing the growing or entrepreneurial business has been written down, and the leaders of such businesses are made of flesh and blood, like the rest of us.

Little has been done to address what it is about entrepreneurial and growing businesses that is so difficult to deal with and so different from the challenges faced by management in big business. In part this is because those involved in marshalling expertise about business and in selling advice to businesses have historically been more interested in the needs of big business. In part, in the UK at least, it is also because business has preferred to muddle through regardless, trusting only to native wit, a good sense of humour, hard work and good luck.

The organisational problems of entrepreneurial businesses are thus thrust back onto the shoulders of the individuals who lead them. Even more so than for bigger businesses the old adage is true - that people, particularly those who take the big decisions, are a business's most important asset.

Only in his cubicle in a big business could Dilbert famously observe that money was actually every business's most important asset, with people appearing eighth, after carbon paper. In actual fact, such research that does exist confirms the counter-intuitive fact that money is not the asset that the leaders of growing businesses need to worry most about, nor an inability to access more of it the prime barrier to growth. The main reason a growing business stops growing, or an entrepreneurial business stops evolving, is the lack of management and leadership resource available to the business when it matters. Give an entrepreneur a decent, experienced, skilled team and he or she will find the funds every time. Getting the team and keeping it up to scratch is the difficult bit, though.

Part of the problem is change - a growing business just doesn't lie still enough to be pinned down. Growing businesses, since time immemorial, have had to grapple with continuous change or die and have been sceptical about premature discoveries of the ultimate management solution. They have seen the many offerings from business schools as out-of-date even before leaving the planning board and have lost heart when the interventions of advisers and consultants have arrived in the hands of fresh-faced graduates earning almost as much as they do with an hourly rate to match.

But such impatience with business solutions in the abstract does not mean the problems can be left to solve themselves. Indeed, growing businesses change so quickly that problems quickly compound each other, and the solution to the problem of one stage of business development can turn into a problem in its own right in the next stage of development. And if the leaders of growing businesses cannot turn to a body of expertise or wisdom, and are reluctant to turn business consultants, to whom can they turn? Where can they look for experience and counsel? How can a leader of a growing business plug the skills and experience gaps that appear in even the most capable of teams?

The answer is horribly simple: business leaders can ask each other. Being a business leader can be famously lonely, but the collective experience of a group of leaders can prove enormously helpful to solving the specific problems of each. One leader's insoluble sleep-destroyer has inevitably been solved already by someone else. All you had to do was have the means to ask. And in so doing, ironically, business leaders can discover what students in any good university discover pretty quickly - that you learn more from each other than any appointed expert or teacher.

KITE is an organisation that enables those responsible for growing businesses to meet and share experiences. Members of KITE, all of whom are chief executives or equivalent, once safely through a rigorous selection process, join a small group of other chief executives from a broad range of businesses from a diverse selection of industries and business histories.

Each group is led by a "moderator", an independently selected business man or woman specially trained to facilitate the group. They meet monthly and each group plans its own agenda. Each meeting will often feature a star turn from an invited guest expert, but the bulk of each meeting is devoted to the group discussing, analysing and solving the problems brought by each chief executive to the meeting. Each group member takes it in turn to host a meeting at his business premises, thus affording a further insight into the problems faced by other business leaders and the solutions. And, most critical of all, group discussions are kept strictly confidential to the group, thus encouraging the freest sharing of concerns and problems, and enabling the best chance of discovering ideas and solutions.

Speaking about the value of the service, KITE member Derek Ralston of Mountain View, a European brand agency, said, "The pace of change is enormous. Take e-commerce, for example: some companies are way ahead of others. Look at the number of distribution channels available - which channel is most appropriate? Take marketing, personnel, HR issues and so on. The great benefit of KITE for me is the opportunity to look outside the business and learn from people in completely different sectors who have completely different skills and experiences instead of using my own industry sector as a benchmark which so many companies tend to do."

KITE's approach is simple. But it works principally because it provides solutions to problems from the most credible of all sources - those who have been there already, know what works and have battled through. Such a mechanism requires participants to invest time and effort and honesty in making it work for all, but time and effort invested is paid back in the speedy identification of workable solutions to real problems.

Rupert Merson is a partner at BDO Stoy Hayward, specialising in helping clients maximise the performance of senior management and staff.