Business Growth Can Kill!

Business Growth Can Kill!
27 June 2014 John Moore

Growth is exciting, exhausting, scary and painful for most businesses. As the Business Development Director of a rapidly growing business and now as Managing Director of Exponential, I find growth all of these things.

Business growth should come with a warning… GROWTH CAN KILL!

Whilst this might sound a little over dramatic, it is true. Many a company just cannot find the extra cash flow to provide the necessary working capital to keep the business cogs turning. As funds run short, pressure mounts on paying suppliers, credit lines become over stretched and the sticking plasters holding the creaking systems and processes together start to fail.

Apologies for stating the obvious, but growth needs to be planned well in advance of it happening. Getting the balance between designing the perfect growth plan, having all of the foundations in place before embarking on a growth strategy and just getting on and doing it is a one trick to get right. There is a lot to be said for learning in action and modifying and adapting your plans accordingly providing this is done within the context of the strategic direction of your organisation.

However, that is not what many MBA professors or graduates think or do – they advocate that you search for the ‘RIGHT solution and plan’ from day one. Take a few minutes to watch the Tom Wugec’s TED video: The Marsh Mallow Challenge and you will see what I mean. There is a lot to be said for learning through trial and error, piloting and starting small before scaling up. The kindergarten graduates certainly demonstrate the value of starting before you have the final solution.

The paradox is that without a detailed plan, it can be difficult to raise finance to support your planned growth, yet without having tested your innovative idea, your market changing business model, or your unique value proposition you cannot be sure the plan will deliver. I guess striking the right balance is partly dependent upon how much growth and finance you need and are aiming to achieve.

Good Housekeeping and the Basics

The start of any growth plan is to make sure the basics are working and that your housekeeping is good. A thorough review of core business processes is a must leading to improved, replaced or up-graded processes. Exponential’s growth plans have been in full flow for some time alongside a deep spring clean. The result(s): a new telecoms system, migration from an ageing server to the cloud, improved Learning Management Systems, a new Customer Relationship Management (CRM) system, streamlined utility, insurance and IT support service contracts and so on.

Slowly and carefully, we have been building new capacity and capability to cope with the increased levels of activity as the established systems and processes were starting to creak! We were beginning to experience growing pains!

To ‘grow forward’ knowing that the processes and capacity were under pressure would be folly, yet so many organisations do just that. They grow hoping the plasters will hold and cover the cracks.

Signs and Symptoms

What are growing pains and how can you spot them? Just like ‘growing pains’ in children which often show up in their legs and arms, in business it often shows up in customer service, quality and staff. Growing pains show up in the form of lost customers due to poor service; they show up as stressed team members and the need for ‘fire fighting heroics’; they show up in long hours, flash points and conflicts; and they show up in inferior quality and making do. You know the signs and the symptoms, but you need to understand that they are NOT the underlying causes.

Rarely does the sticking plaster solution work for long. The time always comes when you have to identify the root cause and address it. Just as growing pains in children show up in muscles rather than joints, so too do the growing pains of a business – they show up, or rather their symptoms, in the quality of outputs rather than where the root cause actually lies which is likely to be something to do with planning, systems or processes.

Having the right planning processes, systems and infrastructure is crucial to the success of any growing business. Whilst during the early days of a business tasks and challenges can be addressed on an ad hoc basis, to ‘get the job done’, as the business grows it is no longer enough.

Business growth demands more management time, more labour and resources. Growth means making more decisions, managing more customers, processing more transactions, carrying more inventory, tying up more working capital, completing more paperwork and managing more people. There comes a point when the value of your time and skills spent on day-to-day administration outweighs the cost of investing in new systems, technology and processes. But how can you tell you have outgrown your systems?

What are the Warning Signs?

At Exponential, we started to ask questions like, “Where on the server will I find x,y,z file?”; “Have you updated both the customer and student database?” “Why have you not followed up last weeks sales enquiries?”

We started complaining about how long it was taking to manage the growing number of sales enquiries; we started worrying about the reliability of our ageing server system; and became increasingly stressed at not having sufficient time to analyse the data that we collect, which would help us to make better-informed decisions. In short, the old systems, technology and processes were growing and creaking and the ‘sticking plasters’ were no longer working. It was time to take action.

Warning Sign 1: Manual processing is becoming unmanageable

Does your organisation rely on any manual processes to complete routine transactions? As a business grows, it is inevitable that the number of transactions will increase. It will quickly become apparent that systems and people are struggling to process transactions. If you completed a ‘transaction audit’ it might look something like this:

  • Increased sales enquiries resulting in more responses to be handled
  • More sales and orders requiring invoices to be raised
  • More sales and therefore an increase in production
  • More hours worked on overtime and more temporary staff engaged
  • Larger stock orders placing pressure on storage space
  • More packing needed to prepare and dispatch orders
  • More deliveries with higher maintenance costs on delivery vehicles
  • And on and on …

The growing pains or warning signs might be:

  • Staff struggling to cope with data input in a timely manner
  • Staff becoming frustrated and stressed at having to manage a backlog
  • Your so-called ‘real-time’ reports get later and later and fail to give you timely, accurate information and intelligence that you need to make decisions
  • Documents and papers are being passed from person to person building in time delays and misinformation
  • Morale is slipping and the number of staff absences is on the increase

Warning Sign 2: The figures do not add up

A lack of integration between departments and business functions start to become problematic. The systems and processes that enabled the organisation to grow in the past are likely to be under pressure. Many were probably created as separate, standalone systems or processes (e.g. invoicing, expenses, wages, sales enquiries, customer management) for using different spreadsheets, databases or applications – now the lack of integration is starting to create problems when the numbers stop adding up.

Knowing your numbers is vital. If you are having to chase around to get your numbers or if you are having to constantly keep checking your numbers because there are inconsistencies then I worry for you. I worry that your energies are going into the wrong activities because you should be focused on analysing and using the numbers to make well-informed decision and NOT data collection and data processing.

In this hi-tech world, there is no need for any of these to be a problem. There are systems and tools to help with joined–up working.

Warning Sign 3: People (including you) keep dropping the ball

There comes a time with most of us they we can no longer see and know what is happening through your organisation, department or business.

  • When you start to feel that there is too much information to process role over load is already setting in – IT IS TIME TO ACT
  • When you notice knowledge gaps are becoming detrimental to business development and growth you have already lost time, sales and wasted valuable organisational resources – IT IS TIME TO ACT
  • When you (and/or others) spend time outside of the planned and scheduled working week on a regular basis just to catch up on core activities such as analysing financial performance – IT IS TIME TO ACT

Warning Sign 4 : Your systems are preventing business growth

People around you are grumbling about not being able to order new stock because suppliers have put your account on hold; or they are complaining that they have to spend too much time chasing up people or completing copious amounts of paperwork – you have got growing pains.

Systems and processes are there to assist and simplify work flow, but when they become the masters of you and your team, it is time to find new systems and processes. The moment you get the smallest indication that a lack of systems and support is holding your team back but you need to start planning ahead and search out an alternative solution.

Addressing Growing Pains

Any organisation whether new or established, large or small, public or private sector, there are likely to be times when you experience growing pains. Tools such as Greiner’s Growth Model can provide you with clues about the nature of the growing pains you can expect as your organisation grows and develops. My advice is not to wait until you and your team experience these growing pains or as Greiner’ calls ‘crisis of transition points’. Anticipate them, plan for them – do your housekeeping and making sure the basics are working effectively and efficiently.

Like most organisations, Exponential is always seeking to benefit from new applications and technology without being early or first adopters. ‘Growing forward’, the Exponential team is continuing to make sure we have the basics right.

Our approach is based upon:

  • Starting with the problem and the objective not the solution is important. Just because there is an up-date or a ‘deal on a new application’ or a consultant who is able to offer you an all-singing-all dancing’ solution is not the right justification for making a decision. Decisions need to be linked to your organisation’s strategy plan and objectives  – make it about what you need rather than wouldn’t it be nice to!
  • Making use of the cloud-based solutions which reduces the cost of software up-dates and provides for increased working flexibilities and access to real-time data when and where it is needed
  • Use software-as-a-service models (SaaS) so we are free to focus on what we do best
    Increased IT automation to capture and process data and to generate information-based reports
  • Providing multi-user access so that team members can work collaboratively and access and up-date information
  • Increasing integration making sure departments and process support joined-up thinking and working thereby avoiding duplication of effort and silo-based decision-making
  • Building in scalability and adaptability so there is scope for future growth and processes can provide a robust, future proof(ish) solution
  • Building in auditing and controls so that it is quick and easy to spot and rectify inaccuracies and inefficiencies so that the value of data and information is maximised
  • Checking compliance and control removes human subjectivity from processes – it makes all systems fair and transparent and can ensure there are checks and balances in place. However, always make sure there is a human-side to your processes otherwise the ‘machines’ have won and they sometimes do not allow for the exceptions and people being people!
  • Making processes person-centric is not a great phrase, but always remember that technological solutions can isolate people, make people peripheral and alienate them. People run organisations – technology is there as a servant NOT the master, so make processes people-friendly. The next time you miss a deadline, quality slips, people complain or you feel overloaded, decide if it is a growing pain. If it is a growing pain, it will only get bigger and more painful as your organisation grows, therefore IT IS TIME TO ACT!
John Moore has over 20 years experience of training and developing Managers, Coaches, Consultants and businesses. As Managing Director of Exponential Training, John researches, speaks, blogs and writes about how to improve performance. He also designs and delivers engaging, fun and interactive learning programmes. John is a Fellow Chartered Manager and has worked with managers and organisations in over 20 different countries.

0 Comments

Leave a reply

Your email address will not be published. Required fields are marked *

*