Why growth means death to most companies and how your company can avoid it. – (1 min read)

Valleys of Death

Is your company destined to die and it just a matter of when?

The following are five phases of growth with some attributes in each.  (N.B. The 5 stages of companies according to Larry Greiner, Management guru – originally written in 1972 but still holds true today.)

Read the full HBR article here.

Take a look and see if you can recognize which phase your company is in.  Just about every company that is growing goes through these stages (or ones very similar to these).  There are tried and true methodologies to help each company transition through each phase. More on this below.

Stage 1 – Creativity Phase

  • Founders are technically or entrepreneurially oriented
  • Communication is informal and frequent
  • Roles are general in nature

Stage 2 – Direction Phase

  • Increased organizational structure
  • More job specialization
  • Communication becoming more formal

Stage 3 – Delegation Phase

  • Decentralized decision making emerges
  • Formal incentive systems to motivate team
  • M&A activity increases

Stage 4 – Coordination Phase

  • Decentralized units merge into product groups
  • Formal planning processes
  • Centralization of certain process begin

Stage 5 – Collaboration Phase

  • Problem solving via cross-functional teams
  • Matrix structure evolves
  • More centralized management practices and meetings

Each of these phases, if not managed well, can lead to stagnation and/or decline.

It is also rare for each and every manager to survive through all five phases. Some leaders are phenomenal at one or a few stages but most of the time his/her strengths are not well suited for one or more stages of the company.  However, do not despair, this transitional process can be invigorating as new “blood” can add energy and new innovation leading to explosive growth.   Also, these leaders who are out of their depth are typically unhappy and are better off going to a company where his/her strengths can be put to good use.

My post related to this topic (30 years, 19 businesses, 16 startups, 3 lessons) from a number of weeks ago shares my personal experience and observations in a simplified, short and hopefully entertaining format.

Scaling a business can be a daunting task and not one to be done without outside guidance.  Surrounding yourself with the best brains that complement you and your team along with executing quickly has been a proven strategy for the small minority of companies that survive over the long term.

If you recognize yourself in any of the aforementioned stages and are stuck, I recommend you look at Gazelles, EOS/Traction and/or organizations such as EOor YPO to find like-minded folks that can help you with the transition upward.

“Vision without action is a daydream.  Action without vision is a nightmare.” – Japanese proverb

Best of luck in scaling your business.

Be Exceptional!

(www.catalystgrowthadvisors.com; bill@catalystgrowthadvisors.com)

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