The rate of growth of medium-size businesses often slows considerably as they attempt to scale their operations further. In this series of articles, we’ll discuss the signs that growth is being blocked by operational limitations, likely causes and possible strategies to unblock growth.
In the early days of a successful start-up, things move fast, and everyone is excited and engaged. As the organisation grows, operations stabilise and mature. Economies of scale begin to kick in and margins rise. New products and services are launched. Happy days!
But then, as volumes increase and headcount rises, things begin to stagnate. No matter how hard the leaders push, the rate of growth slows. Diversification and acquisitions look like the answer but fail to deliver. Meanwhile, competitors seem to be gaining fast.
Often these businesses are still highly profitable and successful but are missing out on significant opportunities to increase their value to shareholders, customers, employees and society.
Signs that your business is constrained
So, what are some of the symptoms that can indicate that there are systematic barriers to growth in your organisation?
People
Unsurprisingly, it’s usually the behaviour of people in our organisations, at all levels, that provides the best insight to the state of the organisation, as suggested in the table below:
- are frustrated at pace of change.
- have too many direct reports.
- are always in the detail, managing day to day tasks.
- have no time to focus on the future.
- have no time to delegate.
- become single points of failure.
- start lots of initiatives and programmes, but never quite finish them.
- have often progressed their career entirely within the organisation.
- are unclear on how their objectives affect the business performance.
- adopt “silo mentalities” and create internal barriers.
- see competition as an internal rather than external factor.
- behave politically.
- are unable or unwilling to secure specialist resources to deliver change.
- are disengaged and lacking in enthusiasm for the success of the business.
- are more likely to be absent or leave for other opportunities.
Performance
Operational metrics can also give valuable insight that processes are not coping with increases in scale, for example:
- Margins being squeezed.
- Worsening quality, with more defects found in house and by the customer.
- Complaints about poor customer service and delivery issues.
- Loss of key accounts.
- Staff and management attrition
- Reduced productivity.
- Audit and compliance failures.
Technology
Problems can often be exposed when we look at the use of technology in established businesses. Whilst IT is undoubtedly a major asset in the modern world, systems that were effective and efficient in a small business rarely scale up well. Increasing service complexity and diversification of products adds layers of systems and interfaces, multiple suppliers and interdependencies.
Often is seems that the systems are defining process, rather than other way around! The ability to adapt is limited by tools that were put in place to get to where we are today. Our needs are being captured and “road-mapped”, but the promised delivery keeps shifting into the future as priorities change!
Next up… How did this happen?
Want to know more?
Contact us at https://protean-ml.com/contact/ for an informal chat about how we can assist you today.
Phil Chater
Managing Partner
