I once heard someone explain life as a series of challenges. Life tends to throw a problem your way and continue to throw that problem at you until you figure out how to solve it. Once you solve the problem you never have to solve it again, BUT you will be presented with a new problem. For example, at one point in my kids’ lives, they wanted to learn to ride a bike. When they were learning they would often fall or run into a tree. I don’t know why they’d run into the tree it didn’t move, but they did. Eventually they learned to ride a bike – problem solved. The next problem was learning to do a wheelie or jump off a ramp. Then the falling started all over again. As you can see life is never without problems. Just like in life, your business has a series of problems to solve, like corporate growing pains. Today I am going to share some of these problems so you can look forward to what comes next!
Corporate Growing Pains
Most of what I am going to talk about today is my takeaways from the book Managing Corporate Lifecycles by Ichak Adizes. This book is eye opening and I highly recommend it. In this book, Adizes highlights the fact that at each growth stage of a company there are normal and abnormal problems. Understanding and overcoming the normal problems helps you advance to the next stage of development. When you don’t solve the problems of any given stage as you advance, the problem then becomes abnormal and can and will threaten the survival of the business. On your way to becoming a prime company, here are some of the stages you must survive.
Infancy is that stage when the business is born. As an entrepreneur, you decided to take a risk and start a business. You are full of optimism, hope and the future is looking good through your rose-colored glasses. In this stage of development, cash is king. It is all about making sales and brining in cash. Cash is the life blood of your business and without it the business will go under. There are investors to pay back, there is likely bank loans and the entrepreneur needs cash to feed his/her family as well. During infancy the business owner’s commitment will be challenged. Negative cash flow is the norm, and the investors are always asking questions to protect their interests. In this stage the business owner is focused on product development and brining in revenue!
Once you as the business owner finally makes it past the infancy stage and is generating cash, you enter the toddler stage, or “Go-Go”, as the author puts it. In this stage you want to try everything they can get your hands on. Expand into this market or buy this other business. You are chasing just about every shiny object that catches your eye. And why not? After all you have survived infancy and have proven your business can generate cash.
This creates a problem where the company can become spread too thin. Perhaps you lose focus a little on what the company’s core competencies are. Your energy is too widely dispersed, and you lack appropriate controls to aid in decision making and process improvement. Often you are reluctant to instill the discipline necessary to manage all the new aspects of the business and resist any attempts by anyone to exert those controls.
Those owners that finally do recognize that they need to have controls, discipline and processes in place are ready to move into adolescence. Just like your teenage years, adolescence is a turbulent time. This is when your business moves from the wild, “let’s try everything” to “now I have to create structure so I can execute effectively.” This is frequently when you, or your business’ board begins to hire professional managers. And, if you’ve ever read the book The E-Myth by Michael E. Gerber you’ll know that a manager and an entrepreneur are at odds with each other. The manager likes to create order and the entrepreneur is always looking for the next thing to go do.
In this stage there will be conflict throughout the organization. The founders will resist the manager, and the manager will resist the founder. The workforce will be divided with some people wanting and needing the structure that the administrator needs, while others will desire the freedom they had before “there were all these rules.” However, whenever a company can successfully pass through each of these stages, they will enter their prime, where there is the right mix of entrepreneurship, administration, controls, and processes for the company to reach its full potential.
This Week’s Challenge
I must caution you that I just summarized about 400 pages if information into less than 900 words. My intention was to highlight some of the normal problems have on their way to prime. This week’s challenge is to understand the problems your company has, and if they are normal or abnormal for whatever phase your business is in. Identify and solve those problems and your company can begin to thrive!
If you would like to discuss more ways to help your business grow or if you feel you have a specific problem that needs to be addressed, please reach out to me.