Lloyd Dorfman, the man who turned a single bureau de change in London into the Travelex foreign exchange business, realised his company had outgrown him when he went to a Travelex exchange counter and the employee didn't recognise him.
"I'm Lloyd Dorfman," the Travelex founder told the clerk, who replied "Yeah? So?"
Dorfman sold the majority of Travelex in February 2005 to private equity firm Apax for £300 million (€445 million), and stepped down as chief executive eight months later. He is now Travelex's executive chairman.
"Dorfman always understood that if he wanted to build Travelex into a big business he would need to be able to delegate," says Jean-François Manzoni, professor of leadership and organisational development at the International Institute for Management Development (IMD) in Lausanne, Switzerland.
"Some individuals will hit their limitations earlier than others when a business grows. Lloyd found it easier to let go."
Manzoni was recalling his conversation with Dorfman before speaking at the Leadership CEO forum organised by the scaling division of Enterprise Ireland last Friday. The scaling division is an Enterprise Ireland initiative designed to support Irish companies as they evolve into international companies of scale.
"It is important that chief executives adapt and develop their leadership capabilities to the growing needs of their companies," says Patricia McLister, manager of the scaling division.
"We are actively encouraging our chief executives to be open to assessing and developing their leadership skills in line with the needs of their growing organisations."
Manzoni was invited to the forum to address Irish chief executives on the leadership challenges people face when their business expands from a single idea to a company that operates in international markets.
Leadership of a large-scale organisation requires very different skills to those of small enterprises, and recognition of this is the first step in the development of a good business leader, Manzoni says.
"Initially you will decide almost everything yourself, but as the organisation becomes bigger, you need to start to formalising things," he says. "As time passes, other people will need to decide things on your behalf and you need to have the right systems and processes in place for that."
He continues: "When I discuss this matter with chief executives, they say there is a crucial moment when they realise the business is starting to grow - when they have to hire managers. If you employ more than 100 people, you are often going to have more than two layers of management. This is a very different proposition to running the show all by yourself."
As a company expands and a chief executive finds his skills challenged by the tasks at hand, he needs to surround himself with managers who have the expertise to drive the company forward, such as those who are talented at finding new markets or at inventing new concepts or products, according to Manzoni.
Leaders also need to strengthen their own competencies when their business reaches a certain size, such as by taking part in executive development programmes, receiving coaching and reading the right books.
This will help prepare a chief executive for the three key roles an entrepreneur needs to adopt to become a successful leader. Manzoni describes these roles as that of a strategist, an organisational architect and a mobiliser.
Chief executives need to define their strategy by asking themselves what their company does better than others, by determining how to compete best with rivals and by defining the playing field in which they operate.
"You have to ask if you are just selling products, or services connected with certain products, or solutions," Manzoni says.
"If you run a casino, you are in the gambling business and hotels and restaurants in the casino are side deals aimed at getting gamblers to come to your casino.
"But if you define your company as an entertainment business, your company is a lot bigger and the hotels and restaurants must become profit centres themselves."
The role of the organisational architect involves designing a structure that will enable a leader to translate their strategy into action, according to Manzoni. "This is about shaping an organisation and using levers that will allow you to extend your influence beyond your physical presence," he says.
A mobiliser's role, meanwhile, centres on upward mobilisation, which involves motivating the energies of the immediate team, the organisation as a whole, the management board and the shareholders. It also involves outward mobilisation of the banks, financial community, press and regulators.
"As the business grows, you will be spending more time as a strategist, an organisational architect and a mobiliser," Manzoni says. "You will also spend more time mobilising upward and outward as the business becomes bigger."
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