Here’s the second part of our series on the “7 Stages of Every Growing Business” that Les McKeown, President and CEO of Predictable Success, described in his Inc. Live presentation last October. Part 1 summarized the first two stages, Early Struggle and Fun. In this part, we move on to the next two important stages, White Water and Predictable Success.
As we left the business last week, it was in the latter part of the Fun stage. It’s grown rapidly, become more and more complex, and the team is having difficulty managing it effectively, and losing control. At this point, the business now has a critical decision to make about its future.
There are only two real choices; 1) Stay small and continue in the Fun stage for as long as it can survive, or 2) Take the actions necessary to move forward, and grow the business for the future. The business can’t have it both ways, it must choose one of these directions.
If it decides to grow, it will need to enter, and successfully pass through the next stage, White Water, to scale for future growth. A businesses cannot scale from Fun to Predictable Success without going through this stage.
Stage 3 – White Water
The decision and commitment have been made to scale up for growth, and the business is now in the water. However, it is now much more complex, with more products and services, customers, people, and management.
The business activity has outstripped its capacity, capabilities and resources, and it’s out of control, losing focus on its direction, and customer requirements and expectations. As a result, customer problems and complaints are piling up, in terms of service, quality, and delivery, etc., operational issues are increasing costs, and customers are beginning to defect to competition.
The first tendency is to try to sell more to prop up the business, but this strategy will only make matters worse, as the problems and issues continue to increase with the level of activity.
To survive and make it through this stage, formal Systems, Processes, Structure, must be developed and implemented, the Culture may need to change, and an expanded Management Team put in place to effectively manage, stabilize, and get the business back under control. In most instances, however, the initial team and programs won’t work out, and the business will remain unstable for a period of time. In fact, it may take several years and attempts, and different team members, to finally get through this stage.
Also, during this stage, the business may go back and forth between Fun and White Water several times, and it will be a very painful process, fraught with challenges and opportunities. But, successfully navigating through this stage is absolutely necessary for future scale and growth.
The strategy is to develop and implement formal Processes, Systems, and Structure, Change the Culture (as needed), and to recruit the proper Management Team to effectively manage and control the business to provide long-term growth.
Once the business has successfully passed through this stage, it is now positioned for ….
Stage 4 – Predictable Success
The business has finally made it through the White Water stage, after several attempts. The Systems, Processes, Structure, Culture, and Team, are all in place and working well, and it is stable, growing, and profitable. Life is good for now.
Growing and maintaining the business in this stage, will require an ongoing, dynamic process of evolution and adjustment to consistently meet the changing expectations of the market, customers, and other stakeholders over time. As long as the business continues to do this, and maintain its focus on its vision, strategy, and customer base, it can remain in this stage for a long time.
The strategy is Keep Doing It, Evolve as Needed, and Grow the Business.
With long-term success, however, there is a danger is that, over time, the business may become too successful and stop evolving, resulting in complacency, a bloated and bureaucratic organization, and a loss of focus on vision, direction, and most importantly, its customers. Once this happens, the business may eventually fall forward through one, or all, of the last three stages, including Treadmill, Big Rut, and finally, Death Rattle.
What will happen next? Will the business survive?
We’ll find out in Part 3, next week!
“The great thing in this world is not so much where we are, but in what direction we are moving.” – Oliver Wendell Holmes
“Making an enduring company was both harder and more important than making a great product.” – Steve Jobs