This article is written by KMP Partner Cyndi Laurin, Ph.D.. She is the author of Catch!, The Rudolph Factor and the latest, Be a Frontline H.E.R.O.
Business is like a horse race…
There is no one-size-fits-all solution for small businesses because we’re all very different. However, there are a couple of basic rules to follow that serve us very well.
The first rule is that we must aptly split our attention, energy, and allocation of resources between growth and supportive functions that create the conditions for future growth.
Business often reminds me of a neck-and-neck horse race. Two horses coming down the final stretch, and neither has been able to pull ahead because the competition is so tight. One horse represents business “growth” — and all the things we do to grow our business. The other one represents “fulfillment” — operations, infrastructure, and all the things we do to ensure we can fulfill promises to our customers. If either horse gets too far ahead, problems show up. If growth gets too far ahead of fulfillment, we can’t deliver.
I worked with a client who said they hadn’t delivered on time in ten years!
Imagine that for a moment.
Growth outpaced infrastructure and operations for a whole decade! You might be thinking that this is a good problem to have, but you’d be mistaken. Issues with customer satisfaction, reputation, and losing market share to competitors negatively impacted their revenues, not to mention the morale and engagement of team members.
The second rule is knowing where your business is in its life cycle.
From start up through business maturity, there are many variables for consideration in each stage. Let’s walk through the different stages and see if you can tell which stage your business is in.
The first stage is startups. Startups make the world go around! They tend to be driven by balancing creativity and innovation with efforts to bring in funding via revenues or investment from partners. Startups are focused on making and selling. The culture tends to be informal, with a splash of chaos and the hope of being a disruptor in an established industry or the next big thing.
I love working in the startup environment, but it can get exhausting if the decision-makers cannot agree on proving the product or service or if they like the startup culture a little too much.
Startups are best for adrenaline junkies who are in it to win it… and the perceived payoff. Creativity drives success, and the ongoing work of bringing in revenue keeps everyone feeding the growth horse.
When hard work begins to take a toll, it is at this moment that leadership needs to refocus attention, energy, and allocation of resources on building infrastructure, mainly operations and fulfillment. With efforts to formalize the culture to be more focused starts, expect resistance to these efforts.
With burn and churn rates at the forefront of the leadership team’s minds, there is a struggle to shift energy and attention to efficiency of operations and minimize waste. In this phase, success will be driven by direction, structure and leaders stepping into their leadership role. They must elevate their focus on the bigger picture. The political structure in this stage tends to be a natural democracy or a dictatorship, depending on the emotional intelligence of the leaders.
At the end of the day, the startup has fulfilled its duty, and it’s time to pull in the reins a bit on growth and boot fulfillment into the lead.
If focused on elements of structure and accountability, the organization will move toward stabilizing and standardizing what’s been working. There tends to be a need for basic parameters, policies, and standard operating procedures. The culture struggles between the comfort of the familial and the risk of it becoming “too corporate”. The team may grow in number, and we begin hearing a need for better onboarding for new team members to get them up to speed as quickly as possible.
With more structure, discipline, and accountability in place, the political structure morphs into something more directive in nature. We’ve moved from “employee ownership” with possible equity propositions to salary and merit increases. All arrows – leadership, culture, political and reward structure – point to the next stage in the business life cycle.
Business is seemingly humming along, but if we’re closely watching, we see that the growth horse may be slipping a bit too far behind.
Businesses that want to stay at a sustainable and comfortable size, effort and allocation of resources will naturally vacillate between growth and fulfillment. Unfortunately, many companies may never go beyond this stage and can experience success for 30, 40, 50 years or more in the business life cycle.
For those seeking higher mountains to climb, it’s time to pivot and turn our attention to growth again.
This time around, it’s a bit different.
As a startup, the motto was “whatever it takes”. Now, we’ve got some structure under our feet. We’ve stabilized and begun the process of standardizing so we can scale. The most common fuels for growth in this stage are expansion of products, expansion of markets, or expansion via strategic partnerships, acquisitions, mergers, etc. As you can see, there are a lot of ways to get to town!
With efforts to expand, the culture again flexes and slightly decentralizes, often with subcultures showing up based on the regional expansion or acquisition efforts. The political structure shifts from directive to delegative, which can be a challenging transition for many managers.
The ability to thrive in an environment of autonomy with healthy delegation also causes a new layer of leadership to emerge, creating more meetings and the need for better communication to give time and space to focus on higher-level strategic initiatives. This is the ideal time to introduce a business operating system to the organization. As the growth horse gets ahead again, we see the next stage emerge quite organically.
With language around flexing, decentralizing, delegating, and autonomizing, you may be beginning to see the pattern.
It’s a bit like the organization is breathing. Exhale while growing, then inhale to build all the inertia, structure, and foundation to grow, exhale again to expand, and so forth. With each breath, the business grows and prepares for further growth.
The next stage responds by recognizing the need for coordination. All of that delegating and decentralizing has left the business on soft footing, so the focus and allocation of resources shift back to structure.
At this juncture, some organizations may fall into the trap of becoming a bureaucracy, where accountability is to policy rather than to each other.
With additional support staff, product groups, another layer or two on the organizational chart, the teams’ hands feel tied with red tape. This stage tends to go overboard with structure yet seeks to find that happy balance between a happy, healthy culture and a watchdog, micromanaged culture.
And then you have those present since the early days who wish it was like it used to be— that fun, crazy, adrenaline-pumping startup. With the right focus, there is hope for them to find the inspiration that started it all as business pivots from growth to infrastructure and opportunities abound.
Many businesses have some elements behaving as a startup with others behaving at a more mature stage, such as the culture of a startup with success being driven by delegation. It can feel disjointed to team members when a company is operating in multiple stages in the life cycle.
As a founder, it is critical to ensure intentional focus on redirecting energy and allocating resources between activities supporting growth and those supporting infrastructure at the appropriate time.
Seeing the signs that it’s time to pivot can be challenging. Your energy should also focus on the product or service’s relevance to the customer, minimizing waste in features irrelevant to them and building a culture of alignment and shared accountability. The MIND Methodology™, as described in “Your Most Important Number” by Lee Benson, details a framework that offers a path to focus on what matters most in your work at any given stage in the business life cycle.
The ebb and flow of growth and infrastructure can be effectively managed with awareness, alignment, and timely action to achieve optimal business outcomes. To see what stage your business is operating in, click here to take the KMP Business Life Cycle Assessment.