Editor’s
Note: In our work with middle market companies, we focus on identifying the
barriers and obstacles to growth to the next level that that companies can
build over time. In a 2016 book, The
Founder’s Mentality¹, authors Chris Zook and James Allen identify that when
companies “fail to achieve their growth targets, 90 percent of the time the root causes are internal, not external.
These include increasing distance from the front lines, loss of accountability,
and proliferating levels of processes and bureaucracy, to name only a few.
What's more, companies experience a set of predictable internal crises, at
predictable stages, as they grow.” As we look at 2017, perhaps we can all
benefit from some self-examination. I hope you find this article helpful. - dpm]
As Business Owners and
CEOs – Are we our own worst enemy?
Many times
we are our own worst enemy. This is certainly true when it comes to companies
failing to grow and thrive. As referenced above, 90% of the root causes that impede company growth are internal. For
many years, our consulting business has begun virtually every assignment with a
scan of the company to identify barriers and impediments to growth to the next
level and recommendations to overcome these barriers. As we identified in a recent article, “Are
your Strategic Planning Efforts Doomed to Failure before You Start” the
following are some of the typical barriers:
Barriers
to Planning Success
- History of only partially developing plans
- History of unreasonable expectations and unachievable goals
- Lack of internal understanding about customers, competitors, and the market
In addition to barriers to planning, company teams have a
lack of confidence and skepticism about their ability to execute plans. This
could come from a company history of abandoning projects, a history of unclear
objectives and metrics, too many strategies and plans, a history of poor
communication, a history of poor delegation and leadership, gaps in management
capability, or a lack of true accountability.
Barriers to Execution Success
- Gaps in management depth
- History of abandoning projects
- History of lack of openness and poor communications
- History of poor delegation and leadership development
- Lack of true accountability
Organizations that have barriers to planning and execution
have one characteristic in common: there is little or no connection between the
plans they create and management behavior around execution. Most management
teams quickly get swept away with the urgency of the day-to-day business and
the plan is forgotten.
In the book,
The
Founder’s Mentality, the authors identify
three crisis points experienced by companies:
1.
Overload. The first crisis, overload,
refers to the internal dysfunction and loss of external momentum that
management teams of young, fast-growing companies experience as they try to scale
their businesses.
2.
Stall –out. The second crisis, stall-out,
refers to the sudden slowdown that many successful companies suffer as their growth
gives rise to layers of organizational complexity and dilutes the clear mission
that once gave the company its focus and energy. Stall-out is a disorienting
time for a company: the accelerator pedal of growth no longer responds as it
used to, and faster competitors begin to gain ground. Most companies that stall
out never fully recover.
3.
Free Fall. The third crisis, free fall, is
the most threatening. A company in free fall has completely stopped growing in
its core market, and its business model, until recently the reason for its
success, suddenly no longer seems viable. The management team often feels it
has lost control. It can’t identify the root causes of the crisis, and it
doesn’t know what levers to pull to escape it.
The authors
go on to describe characteristics of Founders that need to be maintained and
encouraged if companies are to continue to be successful:
1.
Insurgent mission -
Founders
have the focus of waging war on behalf of under-served customers, or redefining
the rules of an industry, or creating a new industry. If that passion wanes within the company, or
the mission becomes unfocused, employees will no longer be operating on the
same page.
2.
Owner’s mindset – Founders have an aversion to
bureaucracy, a bias for action and a strong cost focus. Their teams tend to
feel and act like owners, treating expenses and investments like their own
money. Analysis paralysis, multiple levels of decision-making, risk averse and slow
to act companies begin to wither as they miss opportunities. Managers and employees
who are just getting through the day or picking up a paycheck will slowly suck
the life out of a company.
3.
Front line
obsession
– Founders are
obsessed about their customers, always wanting to learn more about their changing
needs, making certain that they are well-served. Founders are obsessed about
the front-line employees, making certain that they have what they need to be
successful providing the best product and serving the customer. When decisions
are made at corporate levels with managers who are removed from customers and
front-line employees, bad things happen.
As you begin
the new year, I would suggest that every business owner or CEO could benefit
from reading this book and take stock of what is going on in your company. Does
your company have the characteristics of a Founder’s mentality?
If you would
like to discuss how to identify and overcome the barriers to successful growth,
please contact me.
¹ “The
Founder’s Mentality: How to Overcome the Predictable Crises of Growth” by Chris
Zook & James Allen, 2016
