“Best Ownership” — A standard for evaluating entrepreneurial performance from business valuator Frank Di Lisio. #in

[I’m “reprinting” this article from Frank DeLisio, a business valuation specialist from Toronto, Ontario. His company is Alexar Consulting Inc.]

Best Ownership

A standard for evaluating entrepreneurial performance

By Frank De Lisio, CA, CBV


Best ownership embodies two elements critical to a firm’s survival and prosperity: productive entrepreneurship and managerial effectiveness. The best ownership principle provides owner-managers with the means to objectively assess their capacity to manage for value creation. Owner-managers pursuing wealth maximization as their primary objective need to be able to practice best ownership.

Having the right mindset helps

The long term survival and prosperity of entrepreneurial firms is closely linked with the quality of its management and key stakeholder relationships. For starters well-managed firms have a much easier time securing key stakeholder support than their poorly managed cousins. Secondly, given the choice investors will consistently choose a seasoned management team over an unproven technology or business system. Thirdly, most seasoned investors will confirm that it is much easier to adapt a faulty strategy or business model than to change a managerial mindset.

I like how you think!

We owe a great deal of our success to our cognitive style – the way we think through complex problems and make difficult choices. Because our cognitive style largely shapes our management and leadership style, it has attracted a great deal of academic interest. One of the most interesting areas of empirical study draws a clear link between our cognitive style and entrepreneurial success1. These factor studies confirm what most of us already know from experience. Stakeholders clearly prefer to establish business relationships with individuals who can exhibit what they perceive to be good judgment (i.e. like-minded individuals).

How can we demonstrate good judgment? The short answer is by practicing better ownership. In the rest of this note we will briefly describe four managerial mindsets we most commonly see in practice.

All the world’s a stage…

As managers we are expected to play different roles in different settings. We demonstrate best ownership by being able to adapt our management style to suit our decision making environment. Because we all have a predominant style of management, it is important that we recognize when our management style is likely to be effective and when it may lead us into trouble. As owner managers we can practice best ownership by recognizing the setting we find ourselves in.

As managers we perform in one of two distinct settings (i.e. decision-making environments): a corporate or entrepreneurial setting. The most suitable style will largely be dictated in part by the setting. For example, we would expect planning and adaptive styles Ricky Jean-Francois Authentic Jersey to be more dominant in corporate settings. Similarly, we would expect managers to adopt more entrepreneurial approaches (i.e. visionary or transformative) in new venture settings. The four dominant styles or modes of decision- making are planning, adaptive, vision and transformative2. Each of these styles is briefly described in the opposite panel.

An important distinction

It is important that we make a distinction between firms that compete in established markets and those that do not.

Firms competing in established markets are primarily interested in positioning – identifying and sustaining a valuable position within existing markets. Planning and adaptive approaches generally work best in established settings. New venture firms on the other hand are interested in creating new markets (i.e. developing, testing and validating new business models). Consequently, we expect visionary and transformative approaches to work better here. As venture firms grow and mature, however, we would expect their managers to mature as well. This is never an easy transition, as illustrated by the story found on the next page.

Mirror, mirror on the wall who is the best owner of them all…

By the age of 30 Steve Jobs had already achieved the success most entrepreneurs can only dream of. Apple, the company he started with Steve Wozniak out of his parent’s garage, was by then a $2 billion business, employing more than 4,000 people. Despite this success, the Apple board of directors Ricky Jean-Francois Jersey decided to replace him as its CEO. Twenty years later Steven Jobs reflected on this particular painful moment in his life during his commencement address to the graduating students of Stanford University3:

I’m convinced that the only thing that kept me going was that I loved what I did.

I didn’t see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced Ricky Jean-Francois Kids Jersey by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.

Everyone familiar with Ricky Jean-Francois Womens Jersey this story knows that Steven Jobs would eventually return to Apple and lead the firm during its most productive period ever. When he returned in 1997, Apple held only 4% of the personal computer market and was bleeding cash. In less than two years Steven Jobs helped Apple climb out of its financial nosedive by drastically shrinking the scope and scale of its business. The turnaround strategy he executed was simple to understand, yet still unexpectedly bold. It was the sort of strategy you would expect to come from the mind of a turnaround specialist not from visionary. Rather than take a conservative, wait and Ricky Jean-Francois Youth Jersey see approach, he acted boldly and decisively. When asked what his next move would be he simply said “I am going to wait for the next big thing”4. As it turned out waiting for the “next big thing” was just the sort of medicine Apple needed at the time.

The Apple story encapsulates many of the elements of best ownership. It emphasizes the role that passion, learning and growth played in Stephen Jobs’ eventual success as Apple’s co- founder and CEO. It also illustrates that, when called upon, even visionaries are capable of adapting their management style to suit the circumstances. Stephen Jobs was able to provide the style of leadership Apple most needed during a critical time. This is the very essence of best ownership.


This note is part of a management guidance series prepared to stimulate discussion on subjects that revolve around strategy, performance measurement and valuation. Readers are welcome to send their questions and comments directly to the author at frank@delisio.ca.

  1. “I like how you think”: Similarity as an Interaction Bias in Investor-Entrepreneur Dyad. C. Murnieks, J. Haynie, R. Wiltbank and T. Harting, Journal of Management Studies, 48:7 November 2011.
  2. What to do next? The case for non-predictive strategy. Robert Wiltbank, Nicholas Dew, Stuart Read and Saras D. Sarasvathy, Strategic Management Journal, March 2006.
  3. See videotaped address at: http://news.stanford.edu/news/2005/june15/jobs-061505.html
  4. Good Strategy, Bad Strategy: The Difference and Why it Matters, Richard P. Rumelt, 2011, Crown Business, New York, pp. 12-15.