A guest blog by Les McKeown, President and CEO of Predictable Success.
How to not just grow your business, but scale it
As a serial entrepreneur – I helped start over 40 companies before I was 35 – and the co-founder of an incubation company that helped launch (and grow) literally hundreds more, I uncovered a pattern few entrepreneurs and business leaders spot: At any point in time every organization – including your business – is experiencing one of seven stages of growth.
Because each stage impacts businesses differently, you can obtain a significant competitive advantage simply by knowing which of the seven stages you’re currently in. In fact, it’s only by being aware of where you are on the growth cycle that you can truly tailor your strategies (and direct your team) to make optimal decisions for future growth.
Thankfully, the seven stages are hiding in plain sight – once pointed out, most people recognize them intuitively. Here’s a quick summary:
It feels like you’re hacking through the jungle as you fight to keep your newly-born business alive. The main challenge is finding enough cash to keep going until you’ve established a profitable, sustainable market for your product or service.
The mortality rate of organizations is high in this stage – around 80% never make it out of Early Struggle. Those that do are typically led by passionate visionaries who are highly focused on one thing: finding their market.
You’ve found your market and broken through Early Struggle. Now you have a sustainable business – it’s time to have Fun! The key focus moves to maximizing sales, as you shift from “finding” a market to “mining” your market.
This is the stage when the organization’s myths and legends are built, and ‘big dogs’ emerge – loyal high-producers who build the business exponentially during a time of rapid first-stage growth.
The success reaped in ‘Fun’ brings with it the seeds of Whitewater: the business grows, and inevitably becomes more complex. In Fun, you delivered consistent quality in a (relatively) simple environment; in Whitewater, you must learn to deliver consistent quality in the face of complexity.
Doing so requires you to put in place consistent processes, policies and systems, but this brings turmoil as the ‘big dogs’ and other old hands – maybe even you – chafe at their loss of freedom and autonomy. The organization seems to be going through an identity crisis, and you may even doubt your own leadership and management skills.
Despite the turmoil, you’ve persisted with the implementation of needed systems and processes. Now the organization has the tools it needs to manage complexity, and for the first time is scalable: you can grow the business to whatever size you wish, subject only to the constraints of your industry.
This new scalability hasn’t come without a cost, however – you may have lost some of the big dogs, who couldn’t accept their perceived loss of flexibility and freedom, and the culture of the business may have changed in a way that some find hard to accept.
In principle, any business can stay in Predictable Success indefinitely. In practice, the newly implemented systems and processes often expand, reaching ever deeper into the organization. In response, creativity, risk-taking and initiative decline, and the organization becomes increasingly formulaic and arthritic.
In Treadmill a lot of energy is expended, but there’s little forward momentum being achieved. With an overemphasis on data over action, on form over content, good people start to leave and the entrepreneurial founder(s) – if they’re still there – may become frustrated, and at worst, disruptive.
The Big Rut
Treadmill is a dangerous stage in any organization’s development: if it is checked in time, creativity, risk-taking and flexibility can be re-injected, taking the organization back to Predictable Success. Left unchecked, however, the organization eventually declines further, becoming a bureaucracy and sliding into The Big Rut.
In The Big Rut process and administration are more important than action and results. Worse, the organization loses its ability to be self-aware, and cannot diagnose its own sickness and decline. Once in The Big Rut, an organization can stay there for a long time, undergoing a gradual, slow decline into irrelevancy.
Eventually, for all organizations in The Big Rut, there is only one conclusion: after a brief Death Rattle (when illusory signs of life may be seen in a final attempt to resuscitate the organization, whether by the selling off assets or by being acquired), the organization dies in its present form.
Do you know which of the seven stages you’re in right now? If you’re not at the peak stage – Predictable Success – what do you need to do to get there (or get closer)? If you are in Predictable Success, what do you need to do to ensure you stay there?
You can learn more about Predicable Success by taking Les McKeown’s course Lead Your Organization to Predictable Success.