Microbusiness, motivation and the 21st century economy

Posted on | January 13, 2010 | Comments Off

Hey, watch this.

(I really have to see if I can persuade Dan Pink to do a podcast interview with me.)

Now, here is something I wrote back in 2005:

Microbusiness ownership seems to offer these disgruntled employees a way to enjoy what they do, and feel good about themselves as skilled workers, without feeling that they are at the mercy of anal retentive managers who care more about the amount of time they spend working than they care about the quality of the work. They often make significantly less money than they did as an employee in compensation for a great deal more work (particularly during the startup phase of the business), but they are not required to conform to anything except the standards of professional excellence they deem acceptable. Relatively unimportant matters, from office dress codes to office politics, can be put in their proper perspective.

For the microbusiness owner, it’s the work, stupid.

Above all else, these individuals want to feel their life’s work is enjoyable and meaningful. Ultimately, as unscientific and non-quantitative as it is to say so, one must acknowledge that people need to feel that what they do matters. Between the seeming randomness of layoffs and the sense many employees have that their departure from the company will cause it no pain, the average employee is often forced to conclude that nothing they do matters. At the opposite extreme of the experiential spectrum lies owning or working for a microbusiness, where everything done by each person involved with the business is important.

In light of all this, it is important to note that, in general, any activity that forces the microbusiness owner to spend his precious minutes (or the equally precious minutes of his employees) focused on tasks that detract from those intangible rewards becomes anathema to many of them. If the microbusiness owner feels as if he or she must sacrifice their devotion to their service or product in order to chase money, in many cases, they will refuse to make that sacrifice.

-snip-

Microbusinesses are also exhibiting a tendency to stay micro, as the statistics from recent years show. Between March 2001 and March 2002, the numbers of non-micro small businesses fell while the number of microbusinesses grew. This is unusual because, while there is always a certain amount of churn in firm size class data, there are usually enough microbusinesses that grow to non-micro size to compensate for the number of non-micro small businesses that are removed from the category due to closures, bankruptcies, acquisitions and graduation to “large” status. That did not happen during 2001, and it will be interesting to see whether that trend continues.*

The surface reason, the rationale for which many economists will immediately be able to perceive, is that business owners are finding they can produce as much and more with fewer employees. Therefore, they will not needlessly expand their organizations and add to the cost of running the business when they can make as much product and earn as much or more in revenues with their existing staff.

Another reason is the tendency among microbusiness owners to avoid allowing their companies to grow into such behemoth organizations that they will be unable to do the work that they love because they are too busy running a big organization. More employees translates into an increased need for supervision, more administrative duties, and a larger sense of ethical obligation for their livelihoods that can be burdensome during lean times when layoffs may become necessary. Again, for many microbusiness owners, the reward of growing the size of their organization is not often worth such burdens.

This is an important element of understanding how microbusinesses behave, so it bears repeating. Most microbusiness owners like what they do and they will be disinclined to pursue any growth path that takes them away from being a producer and pushes them toward being an administrator. That is the primary reason why microbusinesses tend to stay micro.

[*For the record, that trend has continued. Between 1997 and 2006, the share of non-micro small businesses in the U.S. has fallen from roughly 12% to 8.7% of all firms. Given the events of the last few years, that decline has probably continued; I'm expecting 2007 firm size data to be released within the next six weeks.]

Now, I’m not really here to gloat about how I arrived at this point five years ago, while Mr. Pink has only just arrived (he has just released a new book). He deserves his success, because he has a few things that I don’t have.

First and foremost, he has the research to back up his argument that changing the way people are asked to work increases the quality of that work on a variety of different metrics.

He also has worked to develop a bigger audience that I have.

Where we part company is the way we apply the information. Pink is trying to persuade corporate America to change the way it operates, so that it can get good work out of happy employees in a 21st century economy.

Good luck with that, sir.

I’m looking at all of us who have, for one reason or another, given up on corporate America and decided that we need to take the initiative in our quest for livelihoods for the non-brain-dead.

Autonomy.

Mastery.

Purpose.

I can’t think of a better way to describe running a microbusiness.

(By the way, if you haven’t, you really should go read my white papers. They are completely free of charge and I don’t even make you give me your contact information or sign up for a newsletter in order to get them. You’ll find them here.)