Stage 5’s Gates of Focus are Profit, People, and Process.
In Stage 5, the attention must now return to Profit to ensure that enough capital is generated to sustain a larger organization. A leader can successfully focus on Profit in two key ways: 1) ensuring business development has a synergistic strategy across marketing, sales, and customer service to generate consistent and growing revenue; and 2) tasking departments to lower costs.
People increases to second priority in a Stage 5 business after being the third priority in Stage 4. The increase in priority ensures that leaders are spending sufficient energy to integrate key contributors of the management team into an interdependent, execution-focused leadership team. The added focus on People is also needed because a significant number of new employees are added throughout Stage 5.
The heavy investment in Process in Stage 4 allows this Gate to fall to third priority in Stage 5. It’s worth noting that if an organization didn’t take care of Process in Stage 4, they may be faced with playing catch-up in that area during Stage 5. If Process has been given sufficient attention, the company should be able to rely on the processes and systems infused during the prior Stage to handle the increase in volume and people.
With Profit as the top priority, business leaders embracing these Gates of Focus should be constantly thinking about how decisions will impact the company’s profitability. Their energy should be focused on activities that generate revenue and increase profits.
Gates of Focus Misalignment
The CEO of a company that designs and manufactures cell phone accessories has a natural tendency to focus on his employees. As someone who values his team, he has always made it a point to recognize and reward individual contributions. Part of his strategy to attract and retain top talent has been to offer great benefits and an exceptional work environment. As the company has grown, he wants to make sure that the new employees feel like they’re part of the family. He decides to invest in new office space as a way to celebrate a successful year, to reward the current employees, and to welcome the new ones. With the help of a professional designer, he creates a modern and vibrant workspace that thrills the entire team.
As he continues to grow the company and add new team members, he sees a dip in profitability. The total number of employees has reached 74 and he is concerned about being able to maintain the same level of benefits and salary structures for any additional hires. When an opportunity arises to start production on a new product, he seizes on it as a way to increase revenue. However, it requires the purchase of expensive new machinery. With so much money invested in the office space, he simply doesn’t have the capital to pursue it.
This CEO has put People as his first priority, and while his motives were good, he now finds himself in a position where he cannot afford any additional staff. He doesn’t have the funds needed to pursue new business opportunities that would ultimately lead to the expansion of the staff and benefit the entire team in the long run. If he had pushed through and maintained the old office space until profitability had improved, he would have more freedom to invest in the kinds of amenities that are popular with the team and raise morale.
The concepts from this article were taken from The Integration Stage: Organizational ReWilding Rules for Business Growth. Available through The ReWild Group and Amazon, the book explores this and other concepts in-depth while providing illustrations to help business leaders incorporate the ideas into their organizations. Get your copy today to learn the rules for growth for companies with 58-95 employees.