Growth is spoiling my business

My business is growing and turnover has increased but it looks like an adolescent boy getting dressed for the first day of high school.  Lots of energy, clumsy and poorly directed.  Somehow you were making more money when the business was smaller and you are frustrated with the additional responsibility of finances and staff.

According to Greiner (Harvard Business Review   May-Jun 1998) you are suffering from normal symptoms of growth.  He says that businesses go through stages of evolutionary growth and suddenly what worked for that age and size of business no longer works.  Then it is time for a revolutionary change to have continued growth or a contraction of the business.

Phase 1 : Creativity

Originally the founders of businesses are technically or entrepreneurially orientated.  They dislike management activities.  Communication is informal.  The market dictates and management reacts to customer needs.

Over time “the way we do things here” develop from trial and error.  These ways become entrenched and are difficult to change. As the business grows, the number of employees and activity increases, and problems of coordination and communication emerge.  The management style that worked for a smaller size no longer work and top level managers/owners experience frustration and lower level supervisors become disillusioned.

The challenges at this stage include:

• Founders find themselves burdened with unwanted management responsibilities
• Everyone longs for the good old days and they try and act as they did in the past
• Additional financing is needed
• Business systems for control becomes important
• Manufacturing efficiency is needed to return to profitability

The Crisis is of leadership and the solutions include a strong manager who has the necessary knowledge and skill to introduce new business techniques and controls. It is likely that the founders will resist stepping aside so the business manager must be acceptable to the founders.

Phase 2:  Direction

Organisations that install capable business managers then move onto a sustained stage of evolutionary growth.  The characteristic in this stage are:

There is a functional organisational structure. Job assignments become increasingly specialised

• Control systems for inventory and purchasing are introduced
• Accounting systems become more sophisticated
• Incentives, budgets and work standards are adopted
• Communication becomes more formal and impersonal
• The new manager and his/her key supervisors assume most of the responsibility for implementing strategic direction and lower level supervisors are treated as functional specialists with little autonomy

The solution at each stage, over time, creates the next crisis of management.  It is at the points of crisis that coaches can assist founders with a space where they can experiment with possible solutions, including how they see their own role in a business that will look and function very differently in the future.

I have only covered the first section of Greiner’s article.  For more on the Greiner theory, or to find out how a business coach can assist you through these revolutionary phases, please send a request to mariane@mybusinesscoach.co.za.