Like the small indie band that turn into stadium rockers, It’s tough to grow a business, but even tougher to preserve the beliefs and practices that made it special in the first place.
It takes a leader with courage and intelligence to turn a small business into a large one, but in the process of growing, why do so many lose touch with their customers and employees? Here is an example that demonstrates the three, key stages of development that businesses go through;
Anna starts doing some small repairs for friends and family and is soon keeping herself busy throughout the week…
1. A self-employed individual – Anna’s home repairs
- Meets customers every day
- Is motivated by personal pride
- Knows what customers need
- Knows how the work works
- Offers flexibility of service to fit in around the customer
- Completes work from end to end
- Knows exactly how much value for money is provided to the customer
- Fits admin duties around the work, as the customer is more important
By doing the right thing, Anna’s business grows through recommendation. After a year or two she has too much work to do herself and has to employ others to help her. With a few trusted helpers she has enough capacity to tender for some smaller maintenance contracts and larger, one-off renovations. Anna forms a limited company and offers a small number of shares to her key helpers. She is still able to keep a good understanding of what actually happens in the company and is keen to utilise the skills of her workforce;
2. Small-to-medium enterprise – Anna Ltd
- Often meets the customer at the start and end of jobs
- Employs a handful of trusted employees to do the work for her
- Tries to provide a good working environment and instil her own values in her employees
- Keeps a friendship with employees bounded by employment legislation
- Still knows the customer and remembers what they need
- Still knows how the work works
- Encourages colleagues to offer flexible services to meet customer needs
- Still has a good idea of the value for money given to customers
- Finds that admin has to start growing around the work
Retaining a great understanding of what is actually happening in the workflow allows Anna to keep excellent control of the business. Reputation grows and the company starts winning larger maintenance contracts. Long-term contracts and a good reputation make Anna’s business attractive to investors.
The increased demand for admin and red tape weighs down on Anna. It becomes a struggle to keep running the business the way she wants to and it’s not the small, friendly place it used to be. Stress is higher and the organisation needs capital to continue its expansion. New financing takes focus further away from the work though and brings with it fresh demands for traditional financial controls, procedures and structure.
Anna becomes disillusioned and decides to take one of the offers that come here way, selling to Private Equity Investors. The organisation transforms into:
3. Large plc – MegaCon
The Board and Senior Management Team;
- Have important strategic work to do
- Know what their shareholders need
- Employ managers to employ front-line workers
- Do not trust workers to have the same values as them
- Do not trust workers to be talented enough
- Break up work into small, repetitive tasks that are easier for the workers
- Create a series of admin rules to govern the work
- Create procedures that prevent staff offering flexibility of service to customers
- Create a system of targets to motivate workers to do the small repetitive tasks
- Cultivate a relationship with employees based around legislation and HR
- Do not have time to see the front line
- Rely on KPI’s and monthly reports to know how much value for money is provided to customers
- Create a system where the same KPI’s and monthly reports determine how much pay is received by the people who prepare the reports
The business has become a source of wealth and an important provider of jobs for a large number of people. Along the way though, it has lost the ability to delight its customers and the working environment stifles innovation, where once it encouraged it.
If you want to grow an organisation, does it have to follow the path to MegaCon? Can you become a stadium rock band, but still retain the youthful energy of your first single?
Think how much better MegaCon would be if the Board and Senior Management Team;
- Behaved more like Anna and spent time on the frontline, with their customers
- Trusted the people they employed to get on and do the work.
Why do we make it so difficult?
Summary of the three stages of growth: