John Harper, CEO of a successful 98 employee manufacturing firm in the Pacific Northwest, woke up one morning to the realization that his company would hit the equivalent of a solid concrete wall going 120 miles an hour in just under 90 days. Disaster was at the door. Why?
Previously dependable employees were making huge mistakes, communications were breaking down between departments and inside teams. Managers and their staff were letting things fall through the cracks, customer orders were going out the door late and/or with unacceptable returns. Two large customers were being heavily courted by a powerful competitor and things weren’t looking hopeful that the clients would stay with John’s firm much longer. How could all this be happening to Harper?
After all he had always been a conservative CEO. He ran a clean organized shop with great products that were selling well at good margins. His firm had very little debt. He seldom had a huge abundance of extra cash but he always paid his bills on time and maintained a healthy balance sheet. Even though he had expanded his company to meet market demand, from 37 employees (18 months ago) to over 98 employees today he had carefully added the new staffing and had always been respected and liked by his staff.
Were there some hidden laws of business that he was innocently unaware of that were now forcing his company down a treacherous path?
Complex problems, like those at John’s firm, are rarely fixed by simple solutions. Companies are, in fact, complex adaptive organisms and not unlike complex adaptive organisms found in nature they are run by rules that often go unnoticed by their owners. Whether it is a salt water marsh, an aspen forest, a ½ acre pond, or a 98-person manufacturing company, survival in nature dictates a unique blending of powerful rules that dictate what lives and what dies.
The Rules of Nature
Our recent organizational research at The ReWild Group of over 1,150 firms and their CEOs provides new insight into how companies with 10-350+ employees grow. Strong evidence shows that entrepreneurial firms proceed through seven definitive stages of growth which inherently exhibit separate unique sets of rules for survival at each stage of growth. Operate within those rules and the odds are in your favor. Operate outside those rules and the odds move against you.
What John Harper didn’t understand was that the rules changed during the short period of 18 months when his company went from being a Stage 4 enterprise to a Stage 6 company. A whole new set of requirements were being made of John and he didn’t understand it. John had to not only understand and adjust to one set of new rules, but he also had to accommodate to the additional rules of the two stages of growth he entered during the that time.
Nature is well-known for being a hard task master. In this same spirit, the rules for each stage of enterprise growth must be mastered before moving on and demand the same level of obedience for a company to thrive as they do in nature. John made the classic mistake that if he just did what was making his Stage 4 company thrive it should work equally as well with a company with double or more employees.
Keeping Your Eyes on the Horizon
The primary goal of every business owner is to create, sustain and grow a healthy, profitable enterprise. Growing a consistently healthy enterprise requires a CEO to be aware of and abide by the appropriate rules of each stage of growth. They must also choose to organize their firm in such a way as to operate with intention. Simply being intentional about the achieving your desired results places you in an elite group representing less than 12% of all companies operating today. This group is made up of companies where:
- The right things get done on time and under budget
- The employee contributes, owns, and meets the goals and objectives of the company
- The blueprint or foundation for profitability is so powerful as to become a competitive advantage
- The leadership is aligned with the unique needs of the organization as to effectively predict the future, quickly adapt to change, and consistently focus the behavior of the enterprise
All this probably sounds simple. But, if it were simple, 80% of all businesses would be around to celebrate their fifth birthday. They aren’t. And they will continue to not survive unless new ways of seeing and thinking about our enterprises begin to surface inside the executive leaders running our companies.
How to Have Success In Rapid Growth
Recent research suggests that there are two underlying truths in building successful enterprises:
- Companies grow through seven distinct Stages of Growth based on the complexity of an organization.
- Managing extraordinary profitability requires a company to evolve into an Intentional Enterprise that can:
- Discipline the execution of the work of the enterprise
- Align leadership skills and intentions with the unique needs of the organization
- Design a powerful profit blueprint
- Access the core intelligence of an enterprise’s employee base
The three primary benefits of understanding where your company is in The Stages of Growth and growing your company with intentionality are:
- You are better able to adapt yourself and your organization to the vagaries of change and chaos in our rapidly changing economic landscape,
- You are better able to laser focus the resources (people, money, time and attention) of the company on the correct goals and strategies
- You are better able to effectively predict enterprise behavior well in advance of critical decisions that need to be made
Creating a sustainable, thriving enterprise takes time, patience and planning. And it takes practicing the art of intentionality and knowing how to navigate through various stages of growth.