Many business leaders fail to achieve sustained significant organizational growth because they have been unable to transform their leadership capabilities and styles as their company grows.
A leader’s inability to adapt to an organization’s evolving needs will limit the organization’s ability to thrive or even to survive. In fact, businesses often hit a wall because the behaviors, habits, and processes that led to success during one stage of growth can actually contribute to failure in another stage of growth. As a business leader of a growing organization, it is important to recognize that different leadership skills and organizational practices are required at each stage of a company’s growth and development.
Let’s assume there are three distinct stages of organizational growth and development. The first stage being the start-up and initial growth stage, the second stage is continued growth and stabilization, and the third stage is accelerated growth and maturity.
Let’s look at each one of these stages closer with the goal of trying to identify which stage you feel your company is currently at. In addition, try to identify ways in which you can continue to improve the growth and development of your organization.
Stage #1 Start-up and initial growth
We can also call this the seat-of-your-pants stage. The goal during this stage is simply survival, which requires the acquisition of clients, as well as key employees to manufacture a product and/or deliver a service. It’s during this stage that the owner’s creativity, passion and energy breathe life into the organization. At this stage, communication tends to be informal, decision-making is centralized and controlled. There is an increasing pressure to achieve consistent growth in revenue in order to meet the rising expenses that comes from chasing too many opportunities. There is a lack of clear direction within the organization. As a result, the culture is often chaotic. Corporate planning (financial and operational) is either non-existent or is weak at best.
Stage #2 Continued growth & stabilization
The goal at this stage is to stabilize the organization and accelerate the speed with which it grows. Businesses in this stage are developing stronger leadership. The entrepreneurial leader is focused on realizing real growth in market share, revenue and profits. In order to accomplish this, they realize their leadership style and capabilities need to evolve to accommodate the needs of a growing and changing organization.
The leader begins to evolve, or they hire experienced management to assist in providing the focused direction needed to grow to the next level. Becoming analytical, as opposed to reactionary, provides leadership with the insights that enable them to make better decisions regarding which product/service offerings they should continue offering and which ones they should shed. The organization is beginning to find its niche. It begins to specialize in fewer products/service offerings, reducing overhead while maximizing profits. An organization in this stage of growth begins to develop a clear understanding of its core capabilities, core purpose, target market and core product/service offerings. At this stage, leadership is beginning to appreciate the value of becoming more analytical.
Some significant staffing deficiencies do exist, and owners often feel as if they are held hostage by a key employee or two. That being said, however, there is a clear understanding regarding the importance of strengthening and broadening the talent pool within the organization.
Leaders at this stage realize that communication and teamwork are leading indicators of future operating performance. Communication improves and becomes systematized within the organization ensuring consistency and reliability as it relates to receiving information and insights that can affect operating performance. Roles and responsibilities are beginning to become more clearly defined. Follow-thru and execution is starting to become more consistent.
Much decision making is shared, and there are more people on the team to delegate responsibilities to. Leadership focuses their efforts on the coordination of activities so that all efforts support the achievement of corporate goals and objectives.
Stage #3 Accelerated growth & maturity
It’s at this stage when the organization really benefits from strong leadership, proper staffing and strong cash flow. More times than not, this is what is needed for an organization to experience accelerated growth in market share and profitability. They have a clear understanding of their industry, market and risk factors, as well as trends affecting their future viability.
At this stage, the organization has achieved mastery as it relates to cross-functional collaboration and employee engagement. This is a very analytical organization, with a strong team and proper skill mix. Companies at this stage put their money where their mouth is. They consistently invest in the training and development of their employees. They have moved beyond their dependence on the entrepreneurial leader and a couple of star performers. They have achieved consistent operating performance, and there is a clear vision of the future.
Participation in the corporate planning process (financial and operational) occurs at all levels within the organization. All employees understand the key business themes and how they link to customer satisfaction. All team members have a clear understanding of the current year’s goals, and they understand how their individual and departmental performance contributes to the success of the organization. Teamwork, problem solving, and root cause analysis are very effective and part of a highly refined communication process.
As mentioned above, many business leaders fail to achieve sustained significant organizational growth because they’ve been unable to transform their leadership capabilities and styles as their company grows.
As part of reading this article, try to identify what stage of organizational growth and development you and your organization are at. Take the description of each stage and evaluate the strengths and weaknesses of your leadership style and capabilities according to the partial list of characteristics that describe each stage.
Based on this self-analysis, develop a list of priorities that support your growth goals and the changing needs of your organization.
Remember, a leader’s inability to adapt to an organization’s evolving needs will limit the organization’s ability to thrive and/or even survive.
