The Peter Principle

February 3, 2009 at 8:04 pm Leave a comment

Most people start a business because they are good at what they do – bookkeeping, hairdressing, selling, fixing cars, cooking etc. They start off as self employed…(bookkeepers, hairdressers, mechanics ) and do fine. Over time they decide to grow their business. Soon they find they spend less time doing their business and they have to spend more time working on and growing their business.

That’s a whole new skill set and they find they get over their heads pretty quickly.

Here’s where the Peter Principle kicks in. It states: “In a Hierarchy Every Employee Tends to Rise to His Level of Incompetence.” The related and satirical Dilbert Principle created by cartoonist Scott Adams states that companies tend to promote their least competent employees to “remove morons from the productivity flow.”

Can the same be said for business owners?

Do we grow our companies just beyond the point of our ability to manage them? The businesses that make the transition are often the ones that hire professional management.

Or following the Dilbert Principle – do you know any people who started their businesses because they were not employable?

Sometimes people start a business because they figure they can run a business better than their boss can. Michael Gerber, in his E-Myth book, talks about how a person with a skill is hit by an entrepreneurial seizure and starts a business. This technician believes that because they know how to do the work of a business, they know how to run that business.

What do you think? Do the Peter Principle and the Dilbert Principle apply? Do you know of any examples? Do you see it in yourself?

Leave a comment and let me know what you think.


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Why do 80% of Businesses Fail? Hard Skills/Soft Skills

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The Three Success Factors

I have worked closely with 100’s of business owners and I have seen too many struggle. I have seen what works and what doesn't.

It takes 3 things to succeed:
1. Hard work - and I know you do that already.
2. Knowledge - domain knowledge: you've got that and continue to learn; and business knowledge: this is where everyone focuses and it's easy to find
3. Mindset - This is the killer app. This is what makes or breaks small business owners.

We work on Mindset here at the Business Owners Success Club: how you think about yourself and your business.

When you focus on a business that gives you what you need to live a Good Life and gives others what they need to solve a problem, everything else falls into place and you have a successful business.

Using that as a framework we work on one aspect of business every month. February is "Your Place in Your Community" month.

In March we will open the doors to our online community. Stay Tuned.

Sign up here to play along.


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