close to the heart: coaching entrepreneurs in closely held ... to the heart: coaching entrepreneurs...

Close to the Heart:Coaching Entrepreneurs in Closely Held

Enterprises

William Bergquist, Ph.D. and Susan Boland, M.A.

This article first appeared in the International Journal of Coaching in Organizations, 2005, 3(2), 4-16. It can only be reprinted and distributed with prior written permission from Professional Coaching

Publications, Inc. (PCPI). Email John Lazar at [email protected] for such permission.

ISSN 1553-3735

2005

© Copyright 2005 PCPI. All rights reserved worldwide.

Journal information:

www.ijco.info

Purchases:www.pcpionline.com

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Close to the Heart:Coaching Entrepreneurs in Closely Held Enterprises

William Bergquist, Ph.D. and Susan Boland, M.A.

Based on their own work with entrepreneurs, particularly in closely held enterprises, Bergquist and Boland have come to an

important conclusion: organizational coaches can play an important role in assisting entrepreneurs to meet a set of distinctive

challenges associated with leadership in closely held enterprises. In this article, Bergquist and Boland identify some of these

challenges and suggest how an organizational coach might help an entrepreneur more effectively meet these challenges.

They examine, in particular, the unique challenges that an organizational coach faces when working with entrepreneurs who

are leading closely held enterprises.

Entrepreneurship is needed in the postmodern realityof 21st Century life. The “enterprise zone,” which got somuch press (at least in the United States) during the1990s, must be defined in a new way, engaging anentrepreneurial spirit to courageously and effectivelyaddress the postmodern challenges of complexity,unpredictability and turbulence.

Organizational coaches can play an important role inmeeting the distinctive challenges associated withentrepreneurial leadership in closely held enterprises.What are these challenges and how might anorganizational coach help an entrepreneur meet thesechallenges? Furthermore, what are the uniquechallenges that the organizational coach faces whenworking with entrepreneurs in closely held enterprises?

The Closely Held EnterpriseBefore identifying and describing these challenges, wemust indicate what a “closely held enterprise” is—given that this is not yet a commonly used term. Wepropose that there are four types of organizations thatfit in this category:

Type One/The Family-Owned Business: single personownership, immediate family ownership, extendedfamily ownership, corporate stock held exclusivelyby family members (for example, a large family-owned insurance company, a major automobile

dealership, a high-status restaurant chain).

Type Two/Small Businesses: revenues of less than $5million per year (for example, a small independentgrocery store, a family-owned auto repair shop, aspecialty food mail-order business).

Type Three/Professional Practices: independent firmsthat are owned and operated by professionals whousually are licensed to provide highly specializedand technical services (for example, dentistry,veterinary medicine, accounting, architecture,clinical psychology, organizational consulting, andcoaching).

Type Four/Focused and Independent NonprofitOrganizations: often small, usually governed by asmall, carefully chosen group of like-minded people(often founders). Created for a specific purpose.Providing needed services in a selective niche (forexample, shelter for homeless families or batteredwomen, environmental action group to save aspecific species, high status public policy thinktank).

There are many ways in which these four organization-al types differ from one another; furthermore, these fourtypes are usually treated as separate and distinct

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Coaching In Closely Held Enterprises (2005/Issue Two)

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entities. We propose, however, that these four typesshare many characteristics and that they often face manyof the same challenges.

The Challenges of EnterpriseWhat is it that these four types of closely held enterprisehold in common and what are the challenges faced byentrepreneurs who lead these enterprises? We haveidentified seven fundamental issues that are embeddedin and shared by most closely held enterprises. Each ofthese seven issues, in turn, poses one or more challengesfor the entrepreneur who leads the enterprise andsuggests one or more opportunities for effectiveexecutive coaching.

1. Diffuse Roles/Responsibilities/BoundariesThe traditional boundaries to be found in the carefullyconstructed bureaucracies of corporations,governmental agencies and other large organizationsare often absent in closely held enterprises. Nepotismoften reigns (especially in family-run businesses), withfamily members working for other family members.Furthermore, there is often an esprit in the closely heldenterprise that leads every employee to lend a hand inwhatever way will help the organization. As one of themembers of a closely held enterprise whom we coachedrecently noted: “Everyone does a little of everything . . .and we can never seem to get totally away from ourwork.”

Using more technical language, the closely heldenterprise is one in which there typically is a high levelof integration, but a low level of differentiation amongfunctions. Classical organizational theory suggests thatan organization initially begins (like any system) withlow levels of differentiation among functions. There isnot much division of labor. Everyone does everythingwhen an organization is young. However, as mostorganizations grow larger or older there is increasingdifferentiation. Each person does a specific job and thereis ever-increasing differentiation of roles, language, andeven organizational culture. We often describe this todayas the tendency for organizations to create “silos”.

While the creation of silos is an effective and expectedresponse to the growth of any organization, silos can

create their own unique challenges if coordination andcollaboration between these silos begins to suffer. Thisis where integration enters the picture. As anorganization becomes increasingly differentiated, itmust create an increasingly large and powerful set ofintegrating functions. These functions includemanagement, intra-organizational communicationchannels (for example, telephone, email and intranetsystems), and a unifying vision, mission or set of values.

It is important to note that many closely held enterprisesdo not follow this traditional and often normative modelof organizational effectiveness. These enterprises oftendo not differentiate. Everyone continues to lend a handin all aspects of the enterprise, even as this enterprisegrows larger and older. As a result, there is less needfor formal integration among differentiated functionsin these unique organizations. The informal andpowerful integrative forces that existed when theenterprise was begun remain in force throughout thelife of the organization. As we shall note later, this isboth an asset and a liability for the enterprise and forthe entrepreneurs who lead this enterprise.

What is the entrepreneurial challenge when rolesremain diffuse? Typically, we find that the lack ofboundaries and differentiation can lead to burnout. Inclosely held enterprises, burnout results not from a lackof recognition for the work one does nor from a moregeneral psychological alienation from the organizationwhere one is employed. (These sources of burnout aremore common in corporate life or in government.)Burnout in closely held enterprises is more likely tocome from working too many hours, assuming too manyresponsibilities and finding no time away from the job—even when at home with “the family.”

The key factor is pacing. An entrepreneur can’t doeverything, be everywhere, or achieve every goal at onetime. While the solution to the problem of burnout seemsobvious—quit working so hard—it is remarkable howoften in coaching sessions, it all comes down to thisone basic issue: “How do I, as an entrepreneur, servingin a leadership role in a closely held enterprise, findtime for my family, for my personal restoration and formoments of reflection on the enterprise that I

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International Journal of Coaching in Organizations

am leading?”

2. Tacit (Informal and Obvious) IntentionsA second major theme is voiced by many entrepreneursin closely held enterprises: the intentions of theenterprise (Mission, Vision, Values, Purpose) are veryimportant—but are not often discussed or evenarticulated. Why is this the case and what are theimplications?

First, there is often very little conversation aboutintentions, because (as we mentioned above) there islittle time to discuss these matters, given the timepressure felt by everyone working in the enterprise.They are all working on behalf of the mission of theenterprise, even if they are not sure what this missionis!

Second, in many closely held enterprises, the intentionsare obvious—everyone is working on behalf of theseintentions every moment of every working day. Mostpeople working in a dentist office know what they arethere for: dental health (and the reduction of anxietyassociated with the patient’s coming to “see thedentist”). The intentions are similarly obvious to thestaff of a law office, employees in a family-run grocerystore, crew members on a fishing boat, or volunteers ata woman’s shelter. As one of our coaching clientsrecently commented: “If you want to know what ourbusiness is, just look around you . . . Why do you evenask?”

There is a third reason for the intentions of a closelyheld enterprise being important, but rarely discussed.This third reason is inherent in the name: the power inthe organization is held closely by a small number ofpeople. There is not much room for other people toinfluence the intentions of the enterprise, so why evenbother talking about these intentions? “Everyonearound here knows who’s in charge and who calls thetune—so why even talk about what we value or wherewe are going in the future.”

What are the implications of a lack of explicitly statedintentions in closely held enterprises? First, there tendsto be high levels of commitment in the organization—

that’s why there is not much need for explicit intentionsor for formal mechanisms of integration. Everyonepitches in and provides direct, tangible service to theorganization; therefore, there is not much need forconversation about the intentions or for carefulmonitoring of the alignment of an employee’s work withthe formal mission, vision, values or purposes of theorganization.

On the other hand, there are low levels of clarityregarding the achievement of specific goals andobjectives, and little clarity regarding how one’s ownpersonal performance is measured with reference to aspecific set of goals or objectives. (We shall discuss thismore fully later.) Everyone is a bit on edge, waiting foran informed (but often biased) assessment by theentrepreneurial leaders regarding how “well” theenterprise is “performing.” One of the men we coachowns a small business that processes coffee beans fordistribution to high-end coffee shops. Every morning,when he walks into his office he can smell the beansbeing processed and immediately knows if the coffee is“good” or “bad.” He knows intuitively—but can youimagine how his employees feel while waiting for hisdaily assessment?

The entrepreneurial challenge associated with thisissue of inexplicit intentions is a bit complex and evencontradictory—a dilemma.1 On the one hand, it seemsobvious that the entrepreneur should be more explicitabout the intentions of the enterprise that she leads.She needs to articulate the mission, vision, values andpurposes in a way that employees (and otherstakeholders) can understand and in a way that enablesother people, independently, to assess achievement ofspecific goals and objectives.

On the other hand, it is critical that the entrepreneurdoes not become too attached to an explicit set ofintentions. Haile Sellassie, the legendary king ofEthiopia (kingdoms are closely held enterprises!) onceindicated in a moment of remarkable candor that henever wanted anything he said to be written down, forhe might change his mind! Like Sellassie, theentrepreneur has to remain “fleet of foot” and expedient.She must always be thinking out of the box (“thinking


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the unthinkable”) and open to new opportunities thatmay stretch the mission or vision of the enterprise(while remaining true to its fundamental values). Oneof us lives in a fishing village in New England. Themen and women who go out to sea will readily shiftfocus (and tackle) if they find that their primarycommodity isn’t there to be harvested. This is a delicatebalancing act—between clarity and flexibility. Thecoach can provide important assistance in helping theentrepreneur find this balance in their closely heldenterprise.

One of the more successful examples of what’s possiblewhen there is flexibility around the intentions of abusiness took place in the early years following WW2.A Canadian start-up that manufactured airplane partslost their biggest client when the Avro Arrow projectwas abandoned by the Canadian government. Finally,after much soul-searching, the founder approached hisemployees and explained the situation: they’d lost theirmajor client and he could no longer afford to pay them.He would have to close the business.

Many of these employees were British aeronauticalengineers who had immigrated to Canada with theirfamilies specifically for this project. They had no jobs togo back to in Britain and no money to pay their wayhome in any case. For them, there was no turning back!

Together they did an “audit” of their combined skillsand researched growing market opportunities.Television, they decided, was going to be the next “bigthing” and while none of these engineers knew muchabout television, they did know about radar from theirwartime aeronautical experience. There was much incommon between radar technology and the emergingtelevision technology. They would figure out the rest.They convinced the entrepreneur to “hang in.”

To cut costs, employees and their families moved intogether, sharing the costs of apartments and child care,and wives who had never before worked in an officecontributed by typing, accounting and filing or by gettingjobs of their own. Within a decade the company thathad been set up to build aircraft became a world leaderin the area of television switching equipment!

3. Informal Performance Criteria and ReviewThe first two issues facing the entrepreneur – diffuseroles and informal intentions - inevitably culminate ina third issue. In many closely held enterprises, thereare high levels of informal control but low levels offormal evaluation and review. People working in theclosely held enterprise don’t know how theirperformance is being evaluated. Their “boss” is likelyto tell them: “I can’t tell you exactly when we are doingit right, but I know when we’re doing the right thing.”Our coffee bean entrepreneur comes to mind.

This lack of clarity regarding performance can lead toburnout on the part of those who work with theentrepreneur. We see this in the frequent turnover ofstaff in many human service agencies and in manyprofessional practices. There will be a few “old-timers”who have been there many years, know the “ropes”and know that their job is secure (even if they are notvery productive) and, most importantly, can “read” themoods, nonverbal evaluations and brief, crypticcomments of their boss regarding “how things aregoing.”

Newer employees will burn out because they try hardand believe ardently in the entrepreneur or in thebroader enterprise. They identify a mission, vision andpurpose for the enterprise, but typically see this mission,vision or purpose embodied in the entrepreneur ratherthan in any formal statement of mission, vision. Theyalso see the values of the enterprise embodied in theentrepreneur. The problem is that they don’t know howto translate this into their own decisions and actions.They can’t really be “just like the boss,” given that theydon’t own or tightly control the enterprise. Plus, theyare meant to be working on behalf of the entrepreneur,to complement rather than replicate her performance.So what is the employee to do and how is he to receivefeedback regarding how he is doing?

The entrepreneurial challenge, in this case, is ratherstraightforward (though not easily achieved by manyentrepreneurs). The entrepreneur must identifyappropriate goals and objectives for her employees and,most importantly, identify appropriate levels ofaccountability. This is where flexibility and expedience

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comes to the end of the line—the specific performanceof employees in the enterprise. Every employee shouldbe given clear guidelines regarding what is expected ofthem in the organization and how specifically they areto be evaluated and for what they are to be rewarded(with regard to continuing employment, compensationand potential career advancement). Organizationalcoaches can be of valuable assistance in helpingentrepreneurs establish and communicate theseguidelines.

The editor of a high-end fashion magazine had adifficulty retaining employees; they left within a shorttime either to head for greener pastures or due toburnout, leaving our client perpetually understaffedand stressed. But understaffed or not, Mary and herever-changing team of writers, photographers, stylistsand editors drove themselves to produce an entirelynew product every month. What’s more, the magazinehad to accurately predict and portray the future trendsin the international fashion world, while trying toremain true to its own vision. Asked about her longterm vision for the magazine, Mary shook her head,“We’re always aiming at a moving target.”

On a short term, day-to-day basis, Mary found it verydifficult to articulate her vision to herself, let alone toher staff and equally difficult to articulate to them whatthey were doing right and what they were doing thatwas not working. Mary would frequently insist thatwork that had been done – photo shoots and articles –be redone, but she was unable (or too rushed) tocommunicate what good work would look like before itwas begun. Understandably, the staff felt that they, too,were aiming at a “moving target.”

Through coaching, Mary began to see that, at the heartof the “moving target”, there was, in fact, a very stable,consistent vision: her own sense of style. The staff feltthat they were successful to the extent that they wereable to reflect her style, “to get inside Mary’s head”, “tobecome Mary’s clone”, indicating that they, too,understood that there was a consistent vision.Unfortunately, they were resistant to that vision: forpeople who had chosen a career in fashion, theperceived requirement that they abandon their own

personal sense of style and replace it with someoneelse’s was anathema.

The entrepreneurial challenge was threefold: toarticulate a shared vision for the magazine, to clarifyperformance expectations for the staff, and to find away whereby the staff could feel creative within theparameters of the vision. One of the most effectiveinterventions was instituting “casual Friday.” Wherepreviously everyone had dressed for work as “Mary’sclones” in very sophisticated, conservative professionalattire, “casual Fridays” quickly evolved into a day whenstaff “played dress-up.” The outfits were amazing – apunk-rocker, a harlequin, a Hilary Clinton, a biker-chick, a schoolgirl.

The results of “casual Friday” were unexpectedly rich:everyone started having more fun and feeling lessstressed, and they began to develop a shared insidervocabulary, a lighthearted shorthand, which enabledthe team to clearly articulate a wealth of style/taste ideas– sometimes in a single word or a single image. Usingthis shared vocabulary, the team began to articulate ashared image of the magazine that they envisioned. Astheir confidence grew, the staff became increasinglycapable of assessing, independent of input from Mary,whether or not any particular idea would pass musterwith Mary.

It was a delightful surprise to discover that meetingMary’s criteria for success could become more like acreative process of “playing dress-up” rather than atug of war between Mary’s taste and that of a staffmember. One didn’t need to be a punk rocker in order tohave fun dressing like one…. and one didn’t need to bea “Mary clone” in order to have fun designing amagazine for “her” style!

4. Intensive (Face-To-Face) CommunicationThe fourth issue for coaching concerns the “feeling” ofthe organization—the culture of the enterprise.Typically, a closely held enterprise is one in which thereis frequent, direct communication among those whowork in this enterprise. The entrepreneur typically doesnot sit in an office at some distant location. She is rightthere with the employees. Furthermore, with the low


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levels of differentiation and lack of explicit intentions,people in the organization must constantly talk withone another to make sure that everyone is “on the samepage.” One of our coaching clients recently stated itthis way: “We are always bumping into each other . . .so we don’t really need to worry much about keepinginformed about what each of us is doing.”

The story, however, doesn’t end here. While there arehigh levels of interaction, there are often low levels ofconsistency or predictability with regard to the patternsof this interaction in closely held enterprises. There aremany rules and regulations that tend to dictate howemployees relate to one another in corporate life, largeorganizations and other bureaucratized institutions.Formal reporting relationships are respected and end-runs are discouraged. This is often not the case in closelyheld enterprises. Employees typically do not hesitate togo directly to the “boss” with a complaint or request,often bypassing the person to whom they formallyreport.

Members of a closely held enterprise are also inclinedto form informal teams to get a job done, these teamsbeing constituted for a specific purpose with informalleadership roles shifting depending on the nature ofthe task. Everyone pitches in to set up tables for anupcoming meeting and one of the employees with thebiggest muscles or clearest sense of seatingarrangements “takes charge.” Five minutes latersomeone else is in charge. She will handle thedecorations on the tables or will ensure that each tablehas water, pens, paper, etc. All of this occurs with verylittle negotiation or posturing.

In this instance, the entrepreneurial challenge is one offinding coherence and continuity in the midst of theinformality and flexibility—reminding one of thechallenge that is associated with our second issue (tacitintentions). In a closely held enterprise, one findscoherence and continuity, not in the rules andregulations of the organization, but instead in thedistinctive stories that each member of the enterprisecan tell regarding the organization and her role in theorganization. As coaches in closely held enterprises weare constantly in the business of eliciting and listening

to stories—this is what holds the enterprise togetherand provides members of the enterprise with guidanceregarding how to work with one another.

A story about the way in which one human serviceagency with which we work handled the loss of halfthe staff with flu last February suggests somethingabout the often-unacknowledged strengths of staffmembers who fill in for those who are absent. This storyalso reveals something about the contingency plans thatare already informally in place for the next time manymembers of the staff must be absent. Story telling is muchmore valuable in closely held enterprises than areattempts to artificially impose rules and regulations.Some sociologists identify this approach as thediscovery of “natural helping networks.” Thesenetworks often operate very effectively in closely heldenterprises, and must be honored and supported, ratherthan being bypassed by some external version of howan “effective organization should run.”

The Director of Nursing in a privately owned aidshospice has discovered the power of storytelling intraining new nursing staff: “Our hospital has a prettyunique culture and I was at a loss as to how tocommunicate what that culture is all about and what’srequired of staff as a result of our culture – until Irecognized the value of storytelling.” Now, new nursesjoin longtime employees for lunch hour “storytime.”One of the stories that staff members like to tell is abouta patient who, nearing death, had only one request:that she could die in her caregiver’s arms. In the finaldays of her life, staff took turns lying with her in herbed, holding her in their arms. Day in, day out, she wasnever alone. When the time came, the woman died inthe arms of dedicated caregivers, just the way shewished. You can imagine the impact of that story onnew nursing staff!

5. Powerful Role of LeaderAt the heart of the matter in closely held enterprises isthe central, integrative force in this organization—namely, the entrepreneurial leader or cluster of leaders.Typically, the closely-held enterprise is highlydependent on this leader or cluster of leaders: “I don’tknow what we’d do if she wasn’t here.” “He is the ‘life

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blood’ of this organization.”

Usually, there are high levels of loyalty to the leader orcluster of leaders. Furthermore, there typically are lowlevels of independence from the leader on the part ofthose who are working in the enterprise. This can be afurther source of burnout on the part of both the leaderand follower. The leader is ambivalent about thedependency of her staff. “I wish they would make uptheir own minds sometimes, rather than always comingto me for my advice.” Yet, this entrepreneur never quitelets her staff off of a very short leash and can be verycritical if a mistaken action is taken without consultingher. There is often a demoralizing “I-told-you-so”response from the entrepreneur.

We can get even more detailed in our analysis ofleadership in the closely held enterprise. There areessentially three kinds of entrepreneurial leaders: thewise leader, the brave leader and the visionary leader.Usually one of these leadership styles prevails in anyone enterprise.

The Wise LeaderThe wise entrepreneur is the one who knows everythingabout the business, having been in this business “sincetime immemorial.” This leader fosters dependency,because no one else is quite as knowledgeable orexperienced. There are two parts to the entrepreneurialchallenge for this type of leader: first, to learn to listen tothe input from others, and second, to consciously shareher knowledge and experience with others. This oftenmeans an intentional mentorship program.

In the short term, the entrepreneurial challenge oftenfocuses on fostering listening skills in the wise leaderand decision-making skills and independent thinkingin the executive team that reports to the wise leader. Wehave seen more than one situation where importantinformation did not make it to the top. Was the wiseleader not listening? Were employees complacent –thinking that the wise leader was all-knowing? Or wereemployees uncertain as to the value of the informationthey possessed? Over the long run, this entrepreneurialchallenge often centers on succession planning. Howdo we transfer leadership to a new generation of

knowledgeable and experienced leaders?

The Brave LeaderThe second type of entrepreneurial leadership- the braveleader- requires a powerful (but not overpowering)enemy: a competing business, a societal crisis (poverty,violence, injustice) or a client population that has notyet begun to value the services or product of thisenterprise. The brave leader remains vigilant in fightingthe foe, in never giving up, in putting in additional hoursto gain a greater market share, in seeking to conquerpoverty in a specific neighborhood, or in mounting asuccessful marketing campaign.

The entrepreneurial challenge for the brave leadercenters on the nature and continuing existence of the“enemy.” If there is no longer a viable external enemy,then attention and conflict-laden energy tends to turninternal, and hostile camps are established inside theenterprise. Some members of the organization line upwith one camp and others with a second (or even athird) camp. Leaders who rely on this organizationaldynamic must find a new external enemy if the old oneis defeated, or must redefine the external enemy if thisenemy ceases to be a viable source of passion and loyaltyin the enterprise; otherwise, they are likely to witnessconflict within their enterprise.

A woman we know dedicated many years to foundinga home for unwed mothers who wanted to return toschool. More or less single-handedly, she raised funds,bought a building, developed and ran a program thatsaw many young women complete university degrees,find jobs and escape a multigenerational cycle ofpoverty. In gratitude to the woman who had acted likea mother to them, one of these young women launchedan alumni association and mounted a successfulfundraising campaign to help support the home.

Finally, the organization was no longer struggling forits very existence. This should have been good news,but that’s when the trouble began. Conflict arosebetween alumni, staff and students, and everyoneseemed to blame the founder. This conflict waseventually resolved in what might have seemed acounter-intuitive decision to extend the services and


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build a second home. With two homes now sharinglimited resources, money was once again tight, and bothhomes were struggling for their survival, but with thestruggle refocused on an external challenge, the internalconflict virtually evaporated.

The Visionary LeaderThe third type of leader focuses on the vision of theenterprise. She is faced with a challenge that is similarto that of the brave leader. The visionary leader mustensure that there is always a viable vision—and thatthe vision of her enterprise is never fully realized. Theremust always be something out there in front, somethingto be attained—the impossible dream.

The entrepreneurial challenge is, therefore, to alwayslook into the future and constantly update and engagethe enterprise’s vision. While the mission, values andsocial purposes of the enterprise may remain relativelystable over many years, the vision must constantlyevolve and change if the visionary leader is to retaininfluence in the enterprise.

There is a second part of the entrepreneurial challengefor the visionary leader. This person is often inclined topoint to a vision “out there” when the enterprise mustlook “in here” at its current issues and struggles in orderto stay alive for the longer-term and larger vision of theentrepreneurial leader. It is too easy to escape intodreams when the current reality seems like a nightmare.As a coach of visionary entrepreneurial leaders, we areoften in the business of supporting them and (ifnecessary) encouraging them, in their redirection ofattention from the future to the present.

We know a coach who works with real estate developers- powerful visionaries whose greatest strength is theirability to imagine fabulous skyscrapers where there isnothing but a hole in the ground. The coach has foundthat while these developers can be very effective atcommunicating their vision to investors and to staff,they will commonly have great difficulty narrowing thatvision to the here and now, and can be quite dismissiveregarding what they consider to be the mundanebusiness of “how to.” Rather than fighting an uphillbattle of getting the visionary to focus on today’s to-do

list, this coach has been very successful in helping hervisionary clients to recognize and acknowledge thevalue of a second-in-command whose job is to graspthe vision, break it down into a series of tasks and tomanage the day-to-day concerns of the enterprise.

6. Inadequate CapitalizationEntrepreneurs who hold their enterprise close to theirheart may sacrifice something very large in exchangefor this control. In many cases, they sacrifice the capacityto raise outside funds. They may seek out venture capital(VCs), if they are a for-profit organization, but often arenot very attractive to the VCs because they are so tightlycontrolled and dependent on the ongoing inspirationand leadership of one or two people. (Venture capitaliststypically want to be able to exert their own influence,which means the entrepreneur has to give up partialownership of that which is close to her heart.) If theclosely held enterprise is nonprofit, then typically thisenterprise limits the scope of its fund-raising efforts inits focus on a specific niche (for example, shelter forbattered women).

More importantly, there is a powerful psychologicalforce in operation. For a variety of reasons, mostentrepreneurs feel like they are living on the edge offinancial insolvency. Just as doting parents are oftenirrationally concerned about the safety of their children(John Irving captured this fear beautifully in The WorldAccording to Garp—the fear of the “under-toad”), theentrepreneur is constantly in angst regarding thewelfare of her cherished enterprise. There is neverenough financial security. There is always the searchfor another dollar or a new funding source: “We neverseem to have quite enough money . . . or maybe we justkeep raising the bar in terms of our financialexpectations. . . . how much is enough money? . . . onedollar more than we now have!”

Thus, there are both rational and irrational sources offear about the financial status of a closely held enterprise.These organizations are, in fact, often under-capitalized,yet the fears frequently extend beyond the legitimateconcerns. In the most effectively run enterprises, thereis a high level of patience on the part of the entrepreneurregarding long-term financial goals and an enduring

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commitment to achieving these goals. However, there isalso an accompanying low level of financial stability inmany of these enterprises—which makes the long termstrategizing particularly difficult.

At the heart of the entrepreneurial challenge associatedwith this issue is the capacity (and willingness) of theentrepreneur to live with financial insecurity. Whenasked what she does as an executive coach, a colleagueof ours who works primarily with entrepreneursindicates that she helps people work on the problemsthat “wake them up at 3 o’clock in the morning.” These“wake-up” problems are often financial in nature forthe entrepreneur in a closely held enterprise. The coachis there is help her entrepreneurial client differentiatebetween the realistic and unrealistic fears and betweenthose financial matters that are in their hands (internallocus of control) and those that are out of their hands(external local of control). She also helps them clarifyworst- and best-case scenarios in some depth. If thebusiness had to close, what would the implications befor each of the stakeholders, including theentrepreneur’s family and employees’ families?

7. Multiple and Unacknowledged MotivesThere is a final issue that is commonly found amongentrepreneurs who lead closely held enterprises. Inmany ways, this is the most important of the issues wehave identified; yet, it is also often the most elusive andreadily dismissed by busy, results-orientedentrepreneurs. This is the issue of motivation: Why isthe entrepreneur engaged in this enterprise? Why doesshe put in so many hours doing this work? Why doesn’tshe get a “real” job, working for someone else, so thatthere will be less pressure? Why does she care so deeplyabout the survival and ultimate success of this fledglingenterprise? As one of our clients recently noted: “I’mnot sure why I work so hard and what I want to get outof this organization . . . Or maybe I do know, but don’twant to face the real reasons.”

This quotation suggests that not only is motivation anelusive issue, it is also an issue that can be threateningor even offensive for many entrepreneurs. We know acoach who was working with a small group of men andwomen who serve as chief executives of niche nonprofit

organizations. He asked them to identify whatdifference it would make if their organization went outof business tomorrow. Our colleague asked this questionin order to help his clients identify the underlying reasonfor their good, hard work. The reaction he got to thisquestion was stunning.

The chief executives immediately reacted with greatanger, indicating that they didn’t appreciate someonesuggesting that their organization might be expendableor “worthless.” They had dedicated their lives to theseclosely held nonprofit enterprises and didn’t wantsomeone coming in to suggest that their enterprise couldgo away tomorrow. They asked our colleague to leavetheir meeting and never come back again! Clearly, thesechief executives were highly motivated and committedto their work; but they all misunderstood what ourcolleague was asking and refused to explore their ownmotives.

What are the motives for most entrepreneurs? We wouldsuggest that they are rarely at the minimal level(survival) or even at the intermediate level (job security,compensation, safe working conditions). If theentrepreneur had been interested in job security orcompensation, she would probably work for a largecorporation or government agency. Rather, the primarymotivators are often a sense of achievement (often mixedwith a competitive spirit), the need for autonomy (oftenmixed with counter-dependency), the need for a creativeoutlet (often mixed with a desire to stand out in a crowd),and (using Maslow’s term) a desire for self-actualization. These motives are often difficult for anentrepreneur to articulate and are often not met in theshort-run by specific activities or accomplishments.

The capacity and willingness of an entrepreneur to beclear about their fundamental motivations is importantand inherent in the primary entrepreneurial challengeassociated with this issue—this challenge being theongoing planning of career by the entrepreneur. Clarityabout motivation is important because the entrepreneurmust frequently make decisions about the direction inwhich she wants her enterprise to move. She mustdecide if any potential move is aligned not only withthe long term strategic roadmap of the enterprise, but


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also with her own fundamental reasons for being anentrepreneur and for holding this specific enterpriseclose to her heart. Quite often the entrepreneur “knows”when something is “right” or “wrong” in terms of herown interests and fundamental commitments, but willneed assistance in articulating her motives.

It is also important that the entrepreneur remain flexiblewith regard to her motives. She must be capable andwilling to identify and engage shifting personalaspirations and career interests, for these shifts mayportend strategic changes in the direction of herenterprise. It is not uncommon for a successfulentrepreneur to have relatively low capacity for stablelevels of interest in specific tasks or assignments, whileholding a core set of values and motives that remainconstant over time and location.

One of our clients, who left a high profile position in alarge multinational corporation to start her ownbusiness, seemed very clear about her motivations: “Iwant control over my life. At (the multinational) I hadno control over my time. I traveled constantly and Imissed my son’s birthday four years in a row!”

Two years after launching her own business, Janet wasbeginning to see the fruits of her labor and was workinghard to maintain a healthy balance between her youngfamily and the demands of her new business. Whenshe was invited to present her product at a conferenceof her most high potential clients, Janet was initiallythrilled: this was the breakthrough she was hoping for!Then she realized that the conference would requireher to be out of town the week of her son’s twelfthbirthday!

With the help of her coach, Janet undertook a thoroughexamination of her business and personal goals. Sherealized that she was in the habit of thinking of herfamily and her business as competing interests, and ofherself as the go-between, the bridge. Whatever time,money and energy she devoted to her business was time,money and energy that she was depriving her family of,and vice versa. No wonder she was stressed!

Janet also recognized that the decision she had made

to start a business in the first place was largely out ofconcern for her family. She began to think about theconcept of “family business” and to read about familybusinesses. Eventually, Janet decided to work towardinvolving and integrating her family into her business– to build a “family business”- and to remove herselffrom her self-imposed role as “bridge.” She began byasking her family to participate in some of her decision-making - the first being what she should do about theout of town conference. Much to her surprise anddelight, the birthday boy proposed an ideal solution: afamily celebration of his birthday on the weekendfollowing the conference, in New York where theconference was to be held! He had never been to the BigApple and he was thrilled at the prospect!

The Challenge of Coaching EntrepreneursIn Closely Held Enterprises

In addition to working with entrepreneurs on the uniquechallenges they face as leaders in closely heldenterprises, the organizational coach faces severalchallenges of his own in working with theentrepreneurial leaders of these organizations. First, theperson he is coaching is likely to have very limited timeand resources to engage a coach. Because theentrepreneur is deeply committed to her enterprise andoften faces real or imagined financial constraints, it iscommon that the potential client decides that she hasneither sufficient time nor sufficient money to bring inan organizational coach: “only the rich and idle canafford an executive coach!”

The second major challenge for the coach centers onthe issue of privacy. Everyone in a closely heldenterprise knows what everyone else is doing. Theywould certainly know if someone is being coached.What is likely to be the reaction? Employees are likelyto worry about what is going wrong—especially if theyare very dependent on the entrepreneurial leader. Thisperson is supposed to be very wise or very brave or acharismatic visionary. Why is our leader looking foroutside help? Doesn’t she know what she’s doing? Isshe afraid or lost or discouraged? These unansweredquestions can send waves of anxiety through a closelyheld enterprise.

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Alternatively, the employees—who often share with theentrepreneur a profound fear about the financialviability of the enterprise—may resent the expenditureof scarce funds for something as “frivolous” asexecutive coaching: “Who does she think she is?” “Howare we going to afford this? “I know of a whole lot ofother things that are more deserving of these funds!”There is, of course, a third possible reaction—which isfull support for and appreciation of the benefits inherentin an entrepreneur getting some assistance from anorganizational coach in addressing the majorchallenges we identified above. One would hope thatthis third reaction is prevalent; however, the other tworeactions are very common in closely held enterprises.

A third challenge closely relates to the second. Not onlyis there a lack of privacy, there is also a lack ofconfidentiality. It is very hard to keep things “underwraps” when conducting interviews or using anyassessment instruments. Everyone knows who has beeninterviewed or filled out a 360-degree feedbackquestionnaire in most closely held enterprises. Anentrepreneur in a closely held enterprise will often knowthe source of feedback when receiving a coaching reportbased on these interviews or questionnaires.

A fourth and fifth challenge have to do with the blurringof boundaries in closely held enterprises. The fourthchallenge concerns the boundaries between work andfamily. It is hard to separate these two aspects of anentrepreneur’s life. Some coaches insist on coachingall members of the family or at least the spouses/significant others, when working in closely heldenterprises.

The fifth challenge concerns the personal values andcareer aspirations of the entrepreneur. As we mentionedabove, these personal motivations are inevitably centralto the life of the enterprise and, as a result, to thecoaching engagement. Coaching sessions withentrepreneurs are inevitably a mixture of personal, life,career, alignment, performance and executive coaching.2

They may even hover on the edge of personal counselingor psychotherapy. Critical distinctions must be madein this regard.

A sixth challenge is often ignored (or denied) byorganization coaches: a coach can easily exert too muchinfluence in a closely held enterprise. We should alwaysremember that Rasputin was coach to the Czar andCzarina in a closely held enterprise (the RussianEmpire)! We know of a famous author who coached thehead of a very successful management development firmfor many years. She met for two hours each week withthe charismatic entrepreneur who owned this firm. Atthe end of the coaching session each week, theemployees in this firm braced themselves for anotherset of major changes in the organization that werestrongly advocated by the author/coach.

This management development firm had been verysuccessful for many years, until the author/coach beganto command exceptional (and inappropriate) influenceover the owner of this firm. While the owner was at apoint in his career when he should have beenconsidering succession planning, the author/coachencouraged a new set of motivations for him and senthis firm in a totally inappropriate and misaligneddirection.

Obviously, this exceptional potential for influence isbased in part on the leverage that comes with workingfor (and on behalf of) someone who usually controlsmost of the operations in a closely held enterprise. Thispotential for influence also is present becauseorganizational coaching in this type of organizationoften intermixes with consulting processes. Consultingis usually associated with large-scale changes, whilecoaching is directed toward a specific person’s work inan organization. However, when the person beingcoached is central to virtually all decisions and activitiesin the organization, then it is oftentimes hard to separateconsulting from coaching. At the very least, the clientoften is unable to differentiate between (nor can sheafford both) a coach and consultant.

Finally, the organizational coach is faced with thechallenge of convincing his client that coaching is oftenlong term rather than being focused on a specificproblem. It is hard to convince entrepreneurs that theyneed to think in terms of (and provide funding for) long-


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term coaching. Short-term coaching is rarely successfulin closely held enterprises, for it is often hard for a coachto build trust in a closely held enterprise; yet, once thetrust is established, the coaching engagement can bevery productive—especially when it is long term._______________________________________________

Concluding Comments

We would like to conclude by making use of a metaphorthat we find helpful when coaching entrepreneurialleaders of closely held enterprises. This is the metaphorof “organizational anchors.” We often propose to ourcoaching clients that they identify the anchors in theirorganization. Some organizational anchors resemble abottom anchor. This is the traditional type of anchorthat most of us think of when imagining someoneanchoring a ship. The bottom anchor is very heavy andit sticks into the sand or mud at the bottom of the sea. Abottom anchor—often found in the formal rules,regulations, mission statement, policies and proceduresof an organization—typically remains firmly in placeregardless of the winds of change. We have found thatsuccessful entrepreneurs are rarely held in check bybottom anchors.

The successful entrepreneur who is leading a closelyheld enterprise is more likely to be held in check by asea anchor. This type of anchor is much smaller thanthe bottom anchor. It is cast overboard when a ship is atsea and the floor of the sea is many leagues below.

The sea anchor moves with the tide and wind; however,this type of anchor always keeps the boat facing intothe wind; furthermore, it slows down the movement ofthe boat resulting from either the tides or winds. Changein direction does occur with the sea anchor, but thisshift occurs slowly and deliberately. The sea anchorallows for change, but doesn’t allow for precipitousshifting with the wind or for the endangering of theenterprise from a strategy that does not face into thewind (that is unrealistic or not aligned with theintentions of the enterprise). When a closely heldenterprise is led by a reflective entrepreneur, then thisenterprise is likely to be guided by a sea anchor rather

than by a bottom anchor (or by no anchor at all). Askillful organizational coach can be of great value inhelping an entrepreneurial leader discover and inventways in which her closely held enterprise can bemaximally responsive to the complex, unpredictableand turbulent conditions of our postmodern world,while also retaining its closely held mission, valuesand purposes.

William Bergquist, Ph.D.

Phone: 207.833.5124Email: [email protected]

As author of 38 books and more than 50 articles, WilliamBergquist writes about profound personal, group,organizational and societal transitions andtransformations. Dr. Bergquist has conducted researchand scholarship in North America, Europe and Asia toestablish the foundation for his written work. Thegraduate school (The Professional School ofPsychology) which Bergquist owns is located inSacramento California. It has offered Masters andDoctoral degrees in both clinical and organizationalpsychology to mature, accomplished adults for the pasttwenty seven years. Bill has served as a consultant,coach and/or trainer to leaders throughout the worldin more than 1,000 corporations, government agencies,human service agencies, colleges, universities, andchurches over the past 35 years. He also serves as co-executive editor of IJCO and as a founding boardmember of the International Consortium for Coachingin Organizations.

Susan Boland, M.A.

Phone: 514.938.9527Email: [email protected]

Susan Boland is recognized as a leader in the field ofcoaching for closely-held enterprise. She spent the earlypart of her career as a marketing manager in theadvertising industry working with consumer productgiants, and later went on to test the marketing and

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management concepts she had learned, first in her ownsmall businesses as an entrepreneur, and then, as apartner in a venture capital company. Today, drawingon first-hand business-building experience, Susanbrings to her coaching clients a unique combination ofpassion and know-how for growing businesses andtheir leaders. Her most recent project is co-founding theCentre for the Advancement of Closely Held Enterprise,whose purpose is to provide training and coachingsupport to entrepreneurs through all phases of businessfrom start-up to succession planning. Susan holdsundergraduate degrees in Sociology and Psychologyand an M.A. in Organization Development.

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Endnotes

1 William Bergquist, Ken Merritt and Steven Phillips.Executive Coaching: An Appreciative Approach. Sacramento,California: Pacific Soundings Press, 2004 [Revised Edition].2 John Lazar and William Bergquist, “Alignment Coaching:The Missing Element in Business Coaching,” InternationalJournal of Coaching in Organizations, 2003, v. 1, no. 1, pp.14-27.

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