THE BLOG

Why Are Entrepreneurs Better Managers Than Management Consultants and Investment Bankers?

08/13/2014 05:06 pm ET | Updated Oct 13, 2014

What makes you the manager you are? The type of manager you are is a reflection of your personal character, combined with how you have been told a manager should work and act. But how much does personal character vs. preconception define your management style? This depends on how critical and self-reflective you are, and how strong your character is.

Before you gained any management experience, the only perception you had of what a manager should be like came from various external factors, including superior examples, movies, articles, books, etc. These were then personally interpreted depending on your character traits, for example thinking vs. feeling, extrovert vs. introvert. However, once you work in a managerial role, external factors begin to play a much stronger role, as you become more sensitive to how other managers are behaving. You are even "coached" by your peers into their preferred management method. It is only when you are critical of these external factors and you constantly reflect on your own style that you stop yourself from falling into a preconceived approach to management. This allows you to develop a practice that fits your own style and most utilizes your potential. You want to constantly learn, not to simply adapt.

To assert your own management style in an existing business environment (non-startup), you need a strong character. It is only if you have confidence in yourself and your abilities that you allow yourself to stand up to influencing factors that try to push you into developing undesirable traits. It's only when you learn not to be influenced by these factors, that you can continue to progress down your own path, despite the other parties trying to persuade you otherwise. At this point, you have the possibility to reach managerial self-actualization.

In my opinion, it is those performers who are the most praised and in demand, working for top management consultancies and investment banks, who are furthest away from this point. Why is this? Well, the large MC and IB firms tend to be driven by high-ego managers who push, and to some extent force, their perfection of the must-be-this-way approach to the lower ranks of the hierarchy. The more senior the consultants and bankers get, the more uniform their style becomes, yet this is not in fact obvious to most members of this circle. The space where self-reflection once stood has been taken by an ever-growing ego.

The true contrast is in entrepreneurial management roles. In these roles, managers have the freedom to build something new, to develop a business model and to acquire all necessary resources. This flexibility goes hand in hand with building your own management style. When an entrepreneur starts their business enterprise, they have a personal stake in its development and ultimately its success. They take an idea from scratch and put everything they have into seeing it grow and flourish. Without any preconceived rules and regulations in place about the approach to management, entrepreneurs can take the path that works best for them, without influence from a higher power. As entrepreneurial projects grow in a non-predetermined way, so do the project managers.

The experience gained working for management consultancies and investment banks is undoubtedly of high value, but it does not prepare you to be a high performing manager, and it certainly does not lead you to true managerial self-actualization. With the flexibility, freedom and also pressure to create something new and to succeed, the entrepreneurial experience does.