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Small Business | BUSINESS MAKE-OVER: Southern California
Companies Learning How to Succeed

Learning to Let Go

Owner Has Designs on Making Firm Stand on Its Own

July 22, 1998|CYNDIA ZWAHLEN | SPECIAL TO THE TIMES

When potential clients call interior design firm Bobi Leonard Interiors Inc., they want to speak to Bobi herself. Never mind that the Santa Monica company has a team of designers with a slew of successful projects under its belt, Leonard's high profile means she is the firm in the public's eye.

Leonard is proud of her success, of course. Her signature look--a neutral palette of clean-lined furniture set off by unique art and accessories and accented with potted palms--is a timeless style especially suited to Southern California.

She's designed celebrity homes, as well as spas, offices and hotels around the world. Traffic at the Main Street showroom, which accounts for about 25% of company revenue, is up. And overall sales, of which design fees are the lion's share, are climbing again. Annual sales at the 14-person firm have ranged from $1 million to $2 million in the last few years.

After more than a quarter century in the business though, Leonard said she is ready for a break.

"I'm at the point in my life where I don't really want to work every day," said Leonard, who owns several Main Street buildings, including the one that houses her showroom and design offices.

"I have to learn how to let go of control," Leonard said. "The problem is once you let go, knowing where you fit in."

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That's the classic dilemma for a successful entrepreneur, said consultant Eric G. Flamholtz, an author and UCLA professor who co-founded Management Systems Consulting Corp. in Los Angeles in 1978.

At some point, a company has to learn to stand on its own, without the minute-by-minute ministrations of its founder. The major challenge for an entrepreneur is to create an infrastructure and company culture that will make that possible, he said.

Flamholtz, who wrote "Growing Pains: How to Make the Transition from an Entrepreneurship to a Professionally Managed Firm" (Jossey-Bass Inc., 1990), conducted a "mini-organizational audit" of Leonard's firm.

Flamholtz visited the showroom and design offices in the building Leonard built 12 years ago. (She was an early believer in the once-decaying Main Street area.) He interviewed Daniel Schultz, the company president, sat in on management meetings and asked the management team to fill out the "growing pains" questionnaire featured in Chapter 3 of his book, which he gave to Leonard and Schultz.

He found a "very intelligent . . . likable and open" owner in Leonard, an energetic, upbeat office environment at the company and a product line that differs from the competition in its unusual accessories.

The company carries the work of several hundred artists, ranging from giant Italian baskets made out of grapevines to stone-framed mirrors to ceramic artwork. Flamholtz said he was impressed with the glass fish tank hanging from the showroom ceiling, "almost like a light."

What Flamholtz didn't find was a professional management structure or a strategic plan for organizational development.

"What they lack is the management mind-set and management tools to become a more professionally managed business and to develop that infrastructure," said Flamholtz, a professor of management at UCLA's Anderson School.

"They are in the red zone. They already have some significant growing pains for the size they are at."

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To the company's credit, this hasn't interfered with its ability to meet clients' needs, Flamholtz said. But without a professional infrastructure, the company's growing pains will only increase as sales rise.

Leonard has been aware of the problem for some time. She has taken a number of steps to remedy the situation, including hiring a president to handle operations and formalizing communications in the form of weekly written reports from her top managers.

"We tried very hard to start what we call the more corporate thinking," Leonard said. The problem came to a head when sales began to soar. "We couldn't seem to adjust quick enough."

Organizational planning is not an easy task, Flamholtz said, but it's critical to take that comprehensive approach for long-term success.

An effective strategic organizational plan lays out what the company wants to achieve in all the key areas of the firm, not just the sales department.

He recommended that Leonard's managers put together a three- to five-year plan detailing seven areas: customers and markets, products and services, resources, operating systems, management systems, corporate culture and anticipated financial results.

Before the company gets too far down the strategic planning road, the consultant said, it needs to determine its core customer--the "customers and markets" part of the plan.

"They know who that is in a broad, vague sense, and they know it has changed," Flamholtz said. Without specific customer information, it will be difficult to focus the strategic plan.

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