Musings And Dialogue On Entrepreneurs And Decision Making (Part 5)

The following backdrop and questions apply to this part of the series of musings and open discussion on entrepreneurs and decision-making (See Part 1, Part 2, Part 3, Part 4. Note that there will likely be a total of six parts for this series with a recap summary of feedback at the end):

One difference between time and money is that money can be stored (inventoried) for future use, but time cannot – it’s use it or lose it. This allows money to be fungible; you can move it around as you need it. For large companies, time can become fungible by hiring or firing workers; entrepreneurs don’t usually have this luxury. How does the inability to store time affect entrepreneurs, especially in comparison to larger companies? What does this imply for time management?

Here are my off-the-cuff thoughts on these exploratory research questions. For permanent changes in capacity (e.g., related to building new capabilities or downsizing), my experience is that hiring and firing of workers is a more painful process in a large company. This has to due with all of the process, legal, HR, budget, management alignment, etc. that cuts across many groups. The larger company, however, has more resources and a greater margin for error. Larger companies may also benefit from having some supply-side agreements in place to readily outsource to consultants or contractors, although the complexity of these contracts sometimes makes it more difficult to source specific, single resources. The upshot, off-the-cuff, is I would hypothesize that larger companies would be somewhat slower in terms of making changes to capacity, that changes can be more efficient in batches, and that margin for error might be a bit larger (on average).

Entrepreneurial firms may be more cash constrained and have less margin for error. That said, they may be quicker in terms of hiring and firing if only because there may be fewer formal processes. What may be working against entrepreneurial firms are that since resources are constrained, they may not always use HR support (e.g., recruiters) in terms of sourcing candidates. To compensate for this fact, I have often found in entrepreneurial situations that one may rely on informal networks more for the hiring process. This may provide an improved screening process for entrepreneurs. The informal networking may also have auxiliary benefits for the entrepreneur (beyond the hiring process itself, such as getting sales leads or industry info) so entrepreneurs may be able to get multiple benefits more easily through the hiring process. All-in-all from a capacity model perspective, my experience is that large capacity changes are harder in entrepreneurial firms, and margins for error are smaller. Yet changes can be quicker, more customized, and dovetail with other efforts.

What are your thoughts and experiences?

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