As a company matures, it often experiences subtle but very troubling growing pains (The Top 12 Warning Signs of Success™). As you might expect, these growth tremors are amplified in a depressed market. Compounding the situation, management, in its haste to maintain growth, often fixes its gaze outward on the environment and toward the future, hoping perhaps that more precise market projections and better ‘relational selling’ tactics will provide the organization with the impetus it needs to go to the next level of performance.
All the while, the company may overlook the Overly Obvious and Embarrassingly Simple repairs it needs to mature and stabilize.
The current market dynamics offer the perfect time to refocus and redefine you and your company’s success strategies. Generally, companies tend to pass through a series of developmental phases (The Business Lifecycle™) as they mature. Transitions between these phases do not always occur naturally or smoothly, regardless of the strength or expertise of top management.
Unfortunately, as a company reaches the point where it needs to move into the next phase of development, it can become vulnerable and operations can become rather chaotic. Morale is down and management feels as if it is losing control.
Also, at this crucial time, some decision-making processes are skewed awkwardly and access to helpful information may be inadequate. In short — a variety of factors combine to prevent opportunities from being seized.
The irony is only successful companies get to experience these Warning Signs.
Below are The Top 12 Warning Signs of Success™ that block a company’s transition to a higher level of performance. When these characteristics present themselves in an organization, they often push it to become what I call a “treadmill” company. A “treadmill” company fights the same battles in precisely the same way, churning on and on, year after year, until ultimately, although the business does not explode, the owners and employees do, often at each other.
What a company does when these crises emerge determines if it moves on and becomes a mature, financially stable, professionally managed and led organization, or simply moves on aimlessly — or worse.
Check Your System
To be prepared for these changes, check DANDO’S Top 12 Warning Signs of Success™. Are any of these Top Warning Signs of Success™ holding your company back? It only takes one to hold back an entire company from meeting its goals.
- Right Idea, Wrong Person: You started out knowing exactly what type of people you needed, but somewhere along the way, flawed hiring or promoting processes caused you to have the wrong people in key positions. This lack of leadership grinds momentum to a halt. Stay ahead of this potential flaw with processes that help you find the best fit for the role and your company’s culture. Most often birthed in Level 1, but the consequences are often experienced in the Rapid Growth of Level 2.
- Drinking the Chaos Kool-Aid: Your business keeps you energized – you see potential in new products, new markets – there’s opportunity everywhere. The thrill of so much activity impedes your ability to say no, and you don’t have systems in place to reveal how to actually spend your limited resources. It all adds up to chaos, but it doesn’t have to, when you understand how to categorize and prioritize. Most often birthed in Level 1, but the consequences are often experienced in the Rapid Growth of Level 2.
- Open Door, Closed Mind: Your leadership team says they’re on board for change and growth, but their actions tell a different story. They dismiss ideas quickly, or impede others from introducing new processes. Once negativity or insecurity seep into the team, they start to play it safe – working “not to lose” rather than working to win, and things spiral down from there. Surprisingly, this can happen with the smartest people you know: the ones who think, “If it’s going to get done, I’ll have to do it myself.” It’s time to unlock, uncover, or find real leadership Most often birthed in Level 1, but the consequences are often experienced in the Rapid Growth of Level 2.
- Core Values Meltdown: You started your company with non-negotiable core values and culture, but things slowly start to break down. Compromises made for special circumstances or tolerance of brilliant jerks speaks volumes about your real values. Frustrated managers and employees create an “us-versus-them” environment. It’s simple – but not easy – to keep focused on core values, but it takes practice. Most often birthed in Level 1, but the consequences are often experienced in the Rapid Growth of Level 2.
- Communication Vacuum (aka: It Sucks): Despite countless emails, newsletters, meetings, and more, employees consistently identify poor communication as a core problem. As your company grows, senior managers have less day-to-day interactions with operations and employees, so communication falters in both directions. Executives feel out of control, and employees perceive poor communication from the top. Learn how to communicate clearly and regularly about what’s most important. Most often birthed in Level 1, but the consequences are often experienced in the Rapid Growth of Level 2.
- Random Acts of Accountability: Your business isn’t moving forward because not every employee understands exactly what they’re responsible for, and how their jobs align directly with specific company goals. There’s no transparent, consistent culture of accountability, so great employees flounder and less-than-great employees use the blurred expectations to their advantage. Understand and communicate corporate goals, and illustrate how everyone’s specific efforts create larger success. Most often birthed in Level 1, but the consequences are often experienced in the Rapid Growth of Level 2.
- Hope Is Not a Strategy: Though you can clearly state your corporate goals, you don’t have a strategic plan or robust problem-predicting process in place to get you there. Or perhaps you think you have a plan, but it’s really a short-term operational plan focused on solving existing problems. Just as important as the plan is implementing the plan – this is where the real work happens. Unlock your organization’s full potential by planning and executing effectively. Most often birthed in Level 1, but the consequences are often experienced in the Rapid Growth of Level 2.
- Incentivizing Failure: If management compensation isn’t tied to the right metrics, you may actually be rewarding mediocrity – or even failure. Incentives that don’t motivate, drive the right behavior, or produce the desired outcomes erode employee confidence – and keep you off course for too long. Tie compensation directly to what matters most – then get everyone headed in the right direction, for the right reasons and rewards. Most often birthed in Level 1 and 2, but the consequences are often experienced in the Rapid Growth of Level 2.
- The False Security of Revenues: Things look good; you’re focused on revenues and they’re growing. But you let this lull you into a false sense of security – expenses start to grow faster than revenues. You don’t have all the financial, performance, or market data you need to predict problems – or you don’t know how to analyze the data you have. Combine sophisticated process with proper analysis of the right metrics to stay ahead of chaos. Most often birthed in Level 2, with the consequences experienced in the Rapid Growth of Level 2 while trying to get to Level 3.
- The Leadership Bottleneck: A CEO who has too many direct reports can reflect a leader who’s afraid to lose control or doesn’t truly trust his leaders. When all decisions must run through one person, a weak decision-making culture prevails and the organization cannot scale. This leads to scattered focus as the CEO focuses on weaknesses, rather than strengths. Empowering your leaders creates success on many levels – for the CEO, all employees, and the company as a whole.Most often birthed in Level 2; if not corrected, you and your company will not get to Level 3.
- Management Happens: As a company grows, long-term employees get “rewarded” with managerial leadership roles – whether or not they have the skills or experience necessary. Some will thrive, but some will fall back to their comfort zone – working in the business instead of on the business. Strong strategy, clear accountability, and ensuring you have the right people in the right roles help alleviate this common syndrome. Most often birthed in Level 1, but the consequences are often experienced in the Rapid Growth of Level 2; if not corrected, you and your company will not get to Level 3.
- Sowing the Seeds of Decay: Your fast-growing company has outgrown your systems and processes – everything from accounting to people to technology. And you may not even know it, because you’re busy focusing on or juggling rapid growthand/or how to get and stay profitable. Although it is not intuitively obvious, systems that once enhanced your business are actually speeding its demise. Learn the signs of system decay – before they start to impede your progress. Most often birthed in Level 1, but the consequences are often experienced in the Rapid Growth of Level 2; if not corrected, you and your company will not get to Level 3.
Build Your Base
Although obvious, you also need to consider the following for a company to mature, grow and stabilize.
- Strong management team. A senior management and leadership team must be staffed with people who are skilled, established managers, as well as being technically savvy. The right people must occupy ALL key positions.
- Systems. Accounting, financial performance reporting, and control systems needed for the company’s size and level of complexity must be in place, and the information produced by those systems used by the management team in decision making and planning. The operating process systems also must be in place and working capably. These systems are necessary to get the day-to-day work done efficiently.
- Market niche. The company must be focused on a well-defined, viable market niche, stay focused on the business in which it has become expert, and produce or sell products and/or services that are compatible with the company’s market niche. Marketing and sales systems appropriate for the company must be in place and effectively working.
- Financial flexibility. The company must consistently meet a set of financial goals balanced among profit, cash flow and equity building.
The equity capitalization of the company must be balanced with the debt the company carries. The objective is to minimize debt capital and maximize equity capital. Companies that are heavily leveraged with debt may grow quickly, but they fall even quicker! This responsible stewardship of resources requires considerable self-awareness on the part of top management.
The critical task for management in each developmental phase is to find a new set of organizational practices that will become the basis for managing the next level of performance.
Leaders at the top must be ready to work with the flow of the tide rather than against it; and they should be watchful because it is easy to diagnose the symptoms and miss the onset of the disease.
We all need the mediation of others to help broaden our vision and deepen our perspective.
Why is it with all the business experts, business books, business college professors, MBA’s, iconic business gurus, etc. in the world who provide compelling “how to” and “need to” advice that so many companies and leaders grow themselves into predictable and somewhat preventable problems and never really meet their full potential?