Doors to Growth – opportunities & threats
All growing businesses pass through the same transformation points, like a caterpillar turning into a butterfly. Each transformation is the entry point to a new level of business.
But these transformations are a strain on the organisation and require different management skills. Get it right and the business sails on triumphantly. Get it wrong and the business falters, loses impetus and may die.
Some businesses make the choice to stay at a particular level and grow no further. Those that choose growth need to understand the transformation points and what it takes to get through them. The transformations are:
1. Micro to Small – managing people
Micro-businesses are run by one or two entrepreneurs who do practically all the work themselves and keep costs low. If they want to grow, they have to recruit staff, employ professional advisors and, maybe, acquire new premises. The increased costs have to be paid for by increased capacity and increased sales.
It is not surprising that many entrepreneurs never take this step because they don’t want the responsibility of managing staff and finding enough customers to keep them busy or because they doubt their ability to do it. To go through the transformation successfully, managers need to develop the right skills – and catch a little bit of luck.
2. Small to Medium – delegating decisions
The manager of a small business (say up to 25 staff) may delegate tasks but rarely delegates decisions. The organisation has many hands but only one brain. For the business to grow, it is necessary to recruit more skilled people and, significantly, allow them to challenge the way the manager has always worked.
Managers find there is more and more of the business they feel alienated from. Both they and the original staff regret the loss of the “family” atmosphere. If managers find a new role, controlling direction and maintaining morale without direct supervision, then the business is likely to flourish; if they try to micro-manage, they will lose the most useful of the staff they recruited; if they lose control then standards will fall and customers will notice.
3. Acquisitions – understanding teams
A business may choose to grow by acquiring other businesses or it may be acquired. Either way, the managers must change their skills again. Integrating new staff and, possibly, multiple sites needs managers to communicate in new ways and build teams across the divides. Managers whose business is taken over must find out how the new organisation operates, what is acceptable behaviour, and where the levers of power are kept. The way they have always worked may no longer be admired.
Managers who find an effective way of operating the new, united organisation can open up new opportunities for themselves and the business. If they cannot change to suit the expanded environment, their careers will suffer and the acquisition will not realise the expected benefits.
4, Mega – keeping lively