By Markey Read
Launching and growing a company is a journey filled with many twists and turns. The origin stories of how an innovator grows an idea into a thriving business entity often centers on a combination of the founder’s talents and hard work and how they responded to opportunities and luck breaks.
Underlying the story is a description of the company’s current culture, including how and when the company grows, who makes the key decisions, and what kinds of people work there. You see, company culture is a lot like a petri dish – the base culture of a petri dish will support certain types of life forms better than others. At the start, every company culture reflects the owner’s personality, and it’s into this base culture that the first employees are hired.
As a company evolves, however, the PH of the petri dish needs to be able to support more diverse lifeforms that perform more and more specialized functions. If the Founder intentionally refreshes the PH of their company culture and recognizes which of the three basic stages in growth and development they are in, they can hire and develop their employees to better respond to and anticipate the next turn in the road.
The basic stages of business growth include:
- The Launch: generating the inspiration and vision in order to initiate the concept.
- The Muck in the Middle: developing and adapting the operations, products, and services through the twists and turns of a new venture.
- Staying the Course: stabilizing operations and strategizing for growth with a reliable team.
Each of these stages requires different skills, personality styles, and energy levels. As a company grows, it must hire a different kind of employee, in the later stages than in the first. Moving through the stages of launching, growing, and maturing requires the culture to change and the first employees who thrived in the original culture will need to adapt; some will thrive, and some will not.
Business Growth Stage: The Launch
Before launching a new venture, an entrepreneur gets inspired with a concept. This inspiration can come from adapting current professional skills that directly compete with similar businesses, noticing a product or service gap in the market and introducing this concept to serve a local or regional population, or true innovation that transforms an industry sector or creates a new one.
In this stage, the environment is entrepreneurial, highly energized, and requires everyone to wear many hats. Hiring people who are flexible and who are willing to make mistakes, learn, and adapt quickly will move the company through this phase with success and relative humor.
While some levels of technical skills are required for any industry, seek people who share the enthusiasm and vision that launched the business. This initial team needs to collaborate closely, share information quickly, and bounce off each other’s ideas and energy. This stage typically lasts for the first three to five years, depending on what kind of products and services are offered.
Business Growth Stage: The Muck in Middle
At this stage, a company is typically in the midst of reconciling what products and services customers are actually buying with the original vision or inspiration that launched the business. This is a time to adjust the message, align products and services, and introduce a few specialists who can bring some depth of skill and knowledge required to provide quality products and services to current customers. Some areas of specialization include customer service, sales, marketing, finance, operations/administration, and technicians.
In the meantime, the leadership needs to stay focused on the big picture. Depending on how committed the founder is to the original vision; there may be some focus on educating the public about the vision to gather enough interest. If the founder is willing to adapt the original vision, leadership will need to get ahead of the stampede and build a roadmap for how to guide the new vision of the company into the future.
The natural need for more specialization changes the culture from a free-flowing intimate team into a slightly more structured and larger organization. This phase demands more management processes and formal procedures, as well as additional leadership and management education.
Some of the original team members who were superheroes in the time of “wearing many hats” may find it difficult to function in this changed environment. Some will say the owner has “sold out” and leave; others will gracefully adapt into new roles; and a few will likely be promoted into management/supervisor roles for which they are poorly suited simply because they have been loyal.
The mistake here is to search for people who are both specialist and generalist. It is a rare individual who can do both, and it is even more rare to find someone who does both well. Hire specialists where they are needed and let them specialize; develop some members of the current pool of generalists into managers who can supervise and potentially join the leadership team; and allow others to choose specialization or graceful departure.
The primary reason people leave or get inappropriately promoted in this stage is due to poor management by the owner or leadership team. Management in this stage requires being transparent, admitting ignorance, apologizing for mistakes, allowing people to vent their frustrations, and being honest about how each person fits into the new culture or not.
Hire people who enhance the operations and skills already present, welcome some structure, and are still able to adapt to the imminent changes. Beware of hiring people who want to replicate too many systems or structures from previous employers. Success in one environment does not always translate to success in a new one. If the systems and structures were used at a similar stage of development, they can be useful. Be selective about adopting systems based on distant future aspirations for the company.
It is critical at this point to start establishing a strong leadership or executive team. If a company does not establish a leadership team, it tends to muck around a lot under the leadership of an owner/operator who has not realized their limitations.
Many companies obtain profitability at this level and can sustain operations for decades. They can also suffer from high turnover and dysfunctional departmental management if the founder does not include others in decision-making.
Business Growth Stage: Staying the Course
At this stage, the company has a grasp on who its’ customers are, what it’s selling, and it is actively initiating new ventures. It is critical at this point to have a strong leadership or executive team in place.
If a company has not established a leadership team whose members share decision-making with the founder, it will be increasingly difficult to stay the course. This stage brings with it higher levels of responsibility and accountability, more specialization, and more structure; without a strong leadership team accountability is difficult to sustain.
By this time, those who were promoted to their highest levels of incompetency have usually departed, some external professionals have joined the management ranks, and the company has a firm understanding of its mission/vision, strategy, and implementation plan.
Strong communications, personal/professional responsibility and accountability are crucial at this point. The culture will have overt structures and, at least, some light hierarchy so that employees are clear about their roles, who their resource people are, and how they can professionally progress within the organization. If no formal human resources manager or department has been created yet, this would be an important addition at this juncture.
The people who will support this next level are likely to seek formal planning and systems. They expect a more traditional structure with specialized jobs, clear expectations, and tangible rewards. People joining at this stage are usually implementers. They are the people who will take the ball and run hard with it, while relying on the strength of the team. They enjoy the diversity of a team and reliability of an established organization.
Whether the company focuses on promoting from within or hiring expertise from outside, hire people with enthusiasm for the company’s products and services, provide them with appropriate professional development and training, and give them the opportunity to develop personally and professionally.
Riding the Ebb & Flow
All companies have a natural ebb and flow of employees, and some will revisit the “Muck in the Middle” several times as new divisions are added, or new acquisitions or mergers are integrated. Naming each phase is useful because it allows leadership to identify potential trouble spots and address the real issues.
Structuring Your Business Growth Strategy
When hiring new people or promoting from within, talk about these stages and the inherent challenges and opportunities. Be clear with current and potential employees about the expectations of the current and future stages of growth. Hire people who match your level of development.
Along the journey, by the way, long-term employees may complain about how the company has changed. Provide them with the coaching and support to clearly choose if this company remains the best for them as it develops into the next stage.
Yes, all of this takes time, resources, and forethought, the results are worth it. But trust me, in the long run, it’s a lot cheaper than the alternative.
Markey Read, Chief Consultant at MRG Inc. in Williston, specializes in creating effective leadership teams for growing organizations.
Editor’s note: this article was originally published in 2015 and has been revamped and updated for accuracy.