There are many challenges a growing business will face, including:

• Reactions from strong established competitors
• Disruption from other startups
• Economic weakness
• Lack of funding on suitable terms
• Changes to regulation

But additionally, there appear to be a number of distinct growth phases that a company will go through - rather like us, as we grow up from childhood, through teenage years into adulthood. Each phase tends to end with a crisis which, if successfully handled, provides the basis for the next phase of growth.

Phase 1 - creativity

• A startup with creative founders launches products successfully but leadership skills are required to manage the growing organisation.
• Crisis - lack of leadership.
• Typical solution - introduce leadership capabilities to provide direction while retaining the creative spark.

Phase 2 - direction

• Strong leadership provides shape structure and direction but as the organisation grows further a command and control style becomes ineffective.
• Crisis - need for autonomy.
• Typical solution - introduce systems for more delegation.

Phase 3 - delegation

• The leadership style changes to delegate more authority through the structure but things go too far and control is lost.
• Crisis - need for control (without regressing to phase 2).
• Typical solution - introduce mechanisms for coordination and monitoring.

Phase 4 - coordination and monitoring

• More sophisticated structures are put in place to coordinate between head office and departments or regions but bureaucracy becomes too much.
• Crisis - too much red-tape.
• Typical solution - encourage culture of collaboration so that people work more flexibly.

Phase 5 - collaboration

• Common sense prevails and people start working flexibly together around the rules but limits are eventually reached regarding organic growth.
• Crisis - growth stall.
• Typical solution - look outside for new capabilities and opportunities (extra-organisation).

Phase 6 - extra-organisation

• Build external alliances or outsourcing or mergers and acquisitions to get access to new capabilities to fuel growth.
• Crisis - potentially various, based on the complexities involved.
• Typical solution - ditto.

So, which phase of growth is your organisation in, and how are you addressing the challenges?


Recommended reading:

• "Evolution and revolution as organisations grow" - Greiner (Harvard Business Review)

Tags: Troubleshooting