Moving from ‘Craft’ to ‘Enterprise’

The starting point for most of the workshops that we as Sirdar run with family-owned and privately-held businesses of all sizes, is to help them to understand the fundamental differences between a business or division that has been set-up to play the game of business as a ‘Craft’ and one set-up to play as an ‘Enterprise’.

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Craft

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‘Craft’ can be both a business construct and a mindset, hence a craft way of thinking can be an influence in any part of any business of any size.

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If we think of the game of business in a similar way to the way we think of a sport, ‘Craft’ is a game played by one or two players in a team, like golf, tennis, badminton, squash, or any of the other “individual” sports that one might think of. The outcome is determined by the skill and ability of the individual. Their fitness, their experience, their state of mind and their creativity on the day largely determines whether they win or lose the contest.

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For example, if an elite golfer is sick or injured, they are unlikely to win the tournament and get paid – imagine the consequence of not even being able to get onto the first tee. A craft business is no different. If the expert/founder/leader is not performing then the profitability of the business is directly affected. If the founder took a sabbatical for three months, they might not even have a business to come back to. I am a firm believer that there would be far less successful SMEs in South Africa if they did not close for two or three weeks over Christmas, because those running them would burn out as they could otherwise never have a break.

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Effectively they don’t “own a business”, they own a job. The business has very little value or continuity if they are no longer part of it, because the business is all about them.

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Enterprise

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In contrast, an ‘Enterprise’ is all about the team, systems and processes that support the operation to function. It has far less dependency on an individual.

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In the sport context, this would be a team sport such as rugby, football or hockey. If a player is injured or otherwise unavailable on the day, then someone replaces them and the game goes on. The ultimate test is to determine if the business can continue indefinitely without the founder being available for an extended period. If it can, then the business has a clear value in and of itself. It is easier to invest in or sell and it is more likely to survive multi-generationally.

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Mindset

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The difference between running a business with a craft or an enterprise mindset has been demonstrated to be very similar to the way that we act towards our children. This is explained in detail in Halko, Lahti and Hytonen’s article entitled, “Entrepreneurial and parental love—are they the same?”

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If I say things such as “I have my own business”, “No-one can run my business the way I can”, or “If I want something done right, I have to do it myself” then I am viewing the business in the same way that an overprotective parent views their child. The business is my everything, and I would be distraught if it was placed under someone else’s care. “My business is my baby”.

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If I am running an enterprise, then my relationship is more like the relationship between a parent and child who has left home and is learning to fend for themselves. I’m still there to catch them if they fall hard, but I am not going to be there for every scraped knee or twisted ankle. I need to let my child work things out for themself and become self-sufficient.

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Commit to a Game

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So which game are you playing and which do you want to play? The earlier that you make the decision, the easier it is.

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Neither is fundamentally better or worse than the other. However, it is important to understand that if you want to invest in the business and generate sufficient wealth that can support you through the easy and tough times, and a team to run the business to give you the freedom to take time off when you need it, then building an enterprise is the better option.

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If you wish to go it alone and play the game of a ‘Craft’ then you can also be incredibly successful, but the game is different and you need to invest in continuously developing your skills and abilities, put the profits into building wealth outside the business, and take out insurance to cover for emergencies.