by Patrick Sokolan and Claude Duguay
Helping guide your organization through critical growth while maintaining advantages at each stage is difficult, prone to unexpected failures if you don’t know what to look for. We’ll define each of these stages, their characteristics and specific advantages and disadvantages, providing a simple guide to successfully navigate in the right direction.
Growing your organization is challenging. The structure and methodologies used in smaller shops can be devastating at the Enterprise level, changing the way you must behave in order to be successful. Most business failures occur at one of these points. At each step, a significant chasm must be leapt. Small Companies
If your employ fewer than 25 people and have less than three levels of management, you are in the first stage. A key distinction at this stage is that the whole idea fits in a single person’s head. That one individual can effectively manage all key components and functions.
The main advantage here is speed. Consensus-based conversations are not required. There is no need for lengthy requirements documentation or expectations for the staff. A simple conversation usually gets the job done.
Another advantage is maneuverability. If a bad decision is made, a small company can quickly take a step back and follow an alternate path, without having to address the organizational inertia that constrains larger firms. In this model you can choose the wrong path more than once and still keep your timeline relatively intact.
There are disadvantages lurking in the shadows. Since ideas typically flow down from one individual, there are few opportunities for checks and balances. More heads are better than one.
The best balancing agents for superior ideas are far reaching vision, fiscal reality and experience. The right vision can spawn a historical event, but without addressing fiscal reality and experience you can bet your solution will never get it into production.
Another consideration is the effects on the troops. Frequent alterations to the vision have the tendency to leave line personnel with a feeling that their bus driver really doesn’t have a very good map.
If the driver gets hit by a bus, wins the lottery or gets an incredible offer he/she simply cannot refuse, the organization’s survival is at risk. Since processes are unlikely to be in place, the company can become inefficient, wasting time reinventing the wheel, and missing opportunities it could otherwise have taken advantages of. Medium Companies
If your staffing levels fall between 25 and 500, and your organization has 3 or 4 levels of management, you are a medium size company. Another sign is that the master plan tends to be managed by a single individual, with one or two trusted associates rounding out the coverage.
At this state a slight loss of speed and maneuverability is offset by several factors. A simple thought process for one person in a small company becomes a set of short, frequent meetings between a few individuals. In this scenario the added sounding board of a few trusted advisors easily outweighs the minor stretch to a daily calendar. More errors in judgment are likely to be caught prior to implementation.
There are disadvantages in this model. The key individual still tends to hold veto power over his or her advisors. There are cases where using this veto is useful, but this is typically akin to filling an inside straight. Irrespective of the correctness of a choice, the friction and divisiveness caused by vetoing major topics can damage relationships, making any win a hollow victory. This, in turn, destroys the responsive sounding board that was a primary benefit in this model.
There may be the beginnings of a process control system in place at this stage, but usually there are no advantages at this level for taking advantage of repeatable events. Large Corporations
The first indicator that your organization is at this level is the existence of a Human Resources department staffed with more than 3 specialists. Your total personnel may range from 500 to as high as 5000.
The primary distinction at this stage is that the vision is now “departmentally” segmented. It is much too large to fit in a single person’s head, usually much too complex to be held in one department’s collective. The person at the top manages the vision as a collection of delivered components, rather than owning a truly complete vision.
The most significant advantage here is process. Successful companies at this level have mastered the art of repeating a process and making it less expensive with each cycle.
The ability to assign vertical areas of specialty throughout the organization is highly advantageous, allowing the company to bring a broader knowledge and experience base to bear on problems. This stage is the first at which it is possible to loose key personnel without irreversible damaging to the organization.
There is a challenge here that virtually every company struggles. Communication goes from being a simple conversation or a short, easily scheduled meeting to a thoroughly involved process. It becomes very difficult to get the right people in one place, at one time, focused on the issue that needs to be addressed.
Season all this with a dash of politics. Remember that the vision is now jointly owned, and the likelihood of each department or individual having an identical vision becomes highly unlikely. Even if you have the floor and are loudly communicating your vision, if it doesn’t mesh with your listeners, it will very likely be ignored, forgotten, or worse, misinterpreted! A final disadvantage is the lack of speed at which most large organizations can adjust to changing markets. The kiss of death if you fail to retain some of the company’s earlier agility. Big Enterprise
If you have more than 2500 employees, more VP’s than a bank, or more Directors than Lloyd’s of London, you are an Enterprise (with a capital E). Other significant qualifiers are having offices in more than one country, a head office on an island nation, manufacturing divisions located in 3rd world regions, or multinational “Strategic Partners”.
Although there are incredibly complex business plans held at the highest offices, the one noticeable item that might be missing from the top floor are technical or operational wisdom. In other words the vision has switched from a product or service focus to a broader business vision. The stuff you are actually building or providing is dealt with at a lower echelon.
Raw power is an extreme advantage of enterprise-level organizations. If someone has introduced a better widget, you can outmaneuver them in countless ways. You can pour more money into research, development, and production, and then beat them to market. You might leapfrog their technology altogether. You can apply pressure to their partners to adopt your technology instead of theirs; go after their funding sources, supply chains, and fulfillment venues. You can even tie them up in court, or get the government to do it for you. If all else fails you can always buy them!
Not everyone would agree, but a well-run enterprise has the capacity for extreme maneuverability. It can re-task whole sub-organizations to new product or service lines. It can purchase companies that do the thing they want to do, and sell the one they don’t want to do. If that business vision is well thought out and continuously updated, there is little that can hurt this kind of focused juggernaut.
The obvious drawback here is you can be too successful at this kind of business approach. The lessons learned by IBM and, more recently, at Microsoft are cases in point. History holds numerous examples.
Poorly run enterprises can persist for what seems an eternity on inertia alone. These organizations can carry clientele with them in spite of poor delivery and performance. “Big Player” buy outs and sell offs keep these dinosaurs trudging ever forward. We have watched the successful ones re-organize themselves repeatedly without missing a beat. We’ve also seen the unsuccessful ones start re-organizations that to this day have still not completed. Leaps of Faith
Although these observations are especially relevant to entrepreneurs rising to CEO positions at multinational companies, they are just as applicable to managers rising through the ranks of a company or individuals who need to understand the dynamics of their organization to be successful.
It is a well-established fact that the higher up the chain you go, the more of your time you will spend managing upward. If you are not in management, you can use this information to gauge just how effectively the organization is growing.
Step 1 - Small to Medium
Help find those trusted associates to support the leap your CEO must take. Take this time to learn how to pose a problem and LISTEN to presented solutions. For those managers above you, help guide their behavior in this manner. The usual error here is to tell people how to DO their job instead of trusting them. The correct approach is to be absolutely open with the sounding board. Expect some disagreement. If you can’t respect their opinion you have either failed to hear the advice or have chosen poorly. Know that you cannot possibly be right on everything. It’s OK to be wrong once in a while. You cannot do everything. Delegate!
Step 2 - Medium to Large
Whether a CEO or a manager remember you must give up ownership of the minutia. The first key to success at this stage is to change what’s important to you. It is now the CEO’s job to oversee the different components of the products or services you are providing. He or she must remain keenly aware of the technologies and methodologies in use, but they are not responsible for them. The senior managers have this ownership. Their job is to assist in finding these key people, remove barriers, being a mentor, and make sure the components work together. The real trick is effective communication. If your people know what you want, they can most likely deliver it.
Step 3 - Large to Enterprise
This is truly big leap for the CEO. Not many can accomplish the entire journey. All responsibilities formerly held are abdicated. Their entire focus has become strategic. How does this fit in the market place? Who can we partner with? What is the competition doing? What is the economy doing? What is taking place politically in the countries you wish to have a presence in? Summary
Only a small handful of entrepreneurs can successfully make the transition from garage shop owner to CEO of a multinational. By far, the most successful approach for an organization is to hire people who are already comfortable at the new level. That way, there is no drastic change required of the individual.
The higher you go, the more mastery required. It is absolutely acceptable to stay the entrepreneur and keep starting new ventures. It is also equally valid to remain a manager or line person. If this is what makes you smile in the morning during the mirror test, this is probably what you should do. If you make it up a level and find yourself failing that test you should go back to the level at which you are passing the test every morning.
For non-managers navigating these changes watch and listen. It is actually quite easy to identify the points at which these changes should occur. If the organization is moving the appropriate people in at the correct time, you have a winner. If you can help influence the changes, be proud of your contribution. It probably means that you too are ready for the next step.
On the other hand if you notice all the warnings coming to play, and you do not see the likelihood of change, perhaps it is time to dust off your resume.