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Challenges of Organisational Maturity in Entreprenuerial Organisations

In today’s post we look at the challenges faced by entreprenurial organisations as they mature and become bureacratic.

As the banking organizations grew larger, their nature and methods of operation changed. More formalized structures, processes, information systems and controls became necessary, thus producing several layers of management. This bureaucratic structure distanced the entrepreneurs from the customer while creating a layer of middle managers who have been billed as “enemies of innovation”. The organisations became bureaucracies, which hindered innovation. As Nigel Chanakira of Kingdom observed, “As the bank grew it lost its agility and got buried in a bureaucracy.”

The challenge for entrepreneurs is discovering how to instil and extend the recognition and capture of innovation throughout the organization while maintaining customer orientation. Franky Kufa at Kingdom created time to visit with large customers in their offices offering advice and counsel without directly soliciting their business. He contends that this process has been possible because he has let go of managerial work and focuses on the strategic issues. On one such visit to Bulawayo he noticed how the client was losing value and advised him on how to make more
money. When this was followed up, the client’s performance greatly improved. Benefit accrued to Kingdom as the client’s banking with Kingdom increased while at the same time the client’s board members requested Kingdom to create more financial structures for them.

Chris Goromonzi and the team at Trust reduced the distance between the entrepreneurial founders and the client by making sure that on most financial structures at least an executive director would be actively involved and visit the clients. The clients appreciated that they were not relegated to junior bankers. These strategies kept the entrepreneurial bankers close to the action while they mentored the younger bankers. It created an opportunity for customer loyalty as well.

Evidently, as the organisation grows, an entrepreneur has to actively and intentionally seek to preserve and maintain entrepreneurship and innovation, for without constant attention the forces of bureaucracy would stamp it out. It has been noted that with the growth of the industry a significant number of banking services became generic as banks copied each other rather than producing innovative services and products.

Entrepreneurial growth is usually good and desirable as larger companies have more resources, greater credibility, and a deeper and more varied human resource skill set from which to draw. However it is easier to be nimble and change with new knowledge and innovations when you are small. Finally only the constant attention of entrepreneurial leadership can provide the force necessary to keep the company entrepreneurial and opportunity seeking.

Another critical role of entrepreneurial leaders at this stage is to a) provide the vision, b) participate in its dissemination, c) share in its interpretation and d) support and coach during its execution.


Extract from Entreprenurship On Trial 2011 Rapha Trust