|February 18, 2013
from the desk of Chuck Violand...
Good Monday morning, <<First Name>>—
In today’s Note I address the first of the four most common factors that lead to Stage II Stall ™: Loss of Focus. As I point out in the article one of the complicated things is that it frequently shows up in our businesses at a time when it’s least expected.
Overcoming Stage II Stall™, Part III
Cause 1 -- Loss of Focus
by Chuck Violand...
During nearly three decades of working with business owners I’ve discovered the times they and their companies are least at risk is during the start-up phase or when experiencing financial trouble. While on the surface this might seem counterintuitive, it makes a lot of sense when you look close; it has to do with the focus of the owner.
During the launch phase of a company there’s a lot of enthusiasm and passion. Every day brings new challenges. The adrenalin flow within the company can be almost palpable during this time. While the company may not have a formal vision or mission statement there’s no question about where everyone’s focus is—on survival and growth.
The same concept holds true when the company is experiencing financial difficulty. If you want to get an entrepreneur’s attention, just mess with their money! When their money is threatened an entrepreneur will focus all their resources (time, emotion, energy, and financial reserves) to solve the problem and remove the threat.
Things change and it’s easy for them to lose their way when a company starts enjoying success. The adrenalin that kept everyone energized in the beginning, and the close proximity everyone had to the owner in Stage I, isn’t possible to sustain as the company enters Stage II. A previous experience with a client illustrates this point.
This company enjoyed several years of aggressive growth, strong profitability, and healthy cash flow. They had grown from $1.5M to $7M in annual revenue in just four years. The company worked day and night handling the work that flooded in. Their energy was consumed maintaining the high level of quality their customers demanded, putting out operations fires common in fast growth companies, and staffing front line and management positions in their rapidly growing company. While the company’s strong CFO kept them always operating from a budget, the rest of the strategic plan was weak and gave little attention to sales and marketing, organizational health or operations. Furthermore the plan was held close to the vest by the owner/CEO.
The owner of the company was engaging with unquestioned integrity; the kind of person everyone likes and who easily enlists the respect and loyalty of those around him (a key strength in Stage I and even more so in Stage II.) Everyone had access to the owner when the company was small, but as it grew and managers were added to handle different divisions, that changed and he was no longer able to personally communicate his vision for the company to his employees. Because of the owner’s reluctance to share the strategic plan with his management team and to assign accountability for its execution, no one knew what their jobs were beyond daily to-do lists and extinguishing fires within their own divisions. The division managers worked on their own agendas with little regard for the needs or agendas of other divisions, sometimes even working in conflict with them. There was no common, long term goal, no “flag on the hill” that everyone could see and work together to capture. Unable to maintain the pace without a common objective and clear accountabilities the company went into stall. Fortunately we were able to identify the problem in enough time for them to turn things around.
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