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Sunday, December 12, 2010

Leaders and Shopkeepers

In the business world the individuals who start companies can be labeled as one of the following two types - Leaders and Shopkeepers.

Leaders are guided by a long-term and overarching vision. The product or service they conceive is a path towards entrepreneurial success in terms of fame and money. They are focused on the long-term and view the balance sheet and profit and loss statements over a wider time horizon. Real businesses do no start making money immediately as they first attempt to create a tempting revenue model based on a product or service idea which carries certain newness in it.

Leaders invest in their people. They would generally hire with a long-term and don't do seasonal hire and fire. Everyone hired by them is a part of the strategic vision till the organization gains traction and reaches the critical mass.

On the other hand, Shopkeepers are just the opposites of Leaders. The organizations they start are means for them to earn cash from an emerging trend in the business. They watch the profit and loss on a daily basis. They engage in seasonal hire and fire but never fire the coterie and the trusted lieutenants. Such organizations are run like an old boys club with the well-knit family assuming complete control. Professional practices find it difficult to gain a foothold in such organizations.

The moot point is - does this make a difference? Yes, it emphatically does. For organizations which are managed by "Leaders", likelihood of growth and success is much higher and it is generally much faster. For organizations which are run (not really managed) by "Shopkeepers" growth and scaling up always remains a distant dream. And in situations of economic turmoil the "Shopkeepers" will tend to be like mad men trying to desperately row their boat in troubled waters and getting exhausted, without ever realizing like "Leaders" will, that at times no action is the best action.

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