By Dave Gardner, CEO, Gardner & Associates Consulting
A Canadian colleague, Rich Martin, used the expression “growing pains” during a conversation we had recently. I had not heard that expression in a number of years. In the business world, “growing pains” usually describes inefficiencies that creep into a business over time until such a point when the cumulative effects are quite debilitating.
For example, let’s look at the Boeing commercial aircraft division back in the 1990′s. Boeing’s processes hit the wall when annual unit volume hit 600 commercial aircraft. During a 90-day period, Boeing had to stop production and carefully audit the completion status of each plane as it was no longer clear what manufacturing processes had been completed and which remained. It was a huge embarrassment for the company, caused late delivery of aircraft and a revenue disruption which impacted Boeing stock price. This set-back came just as Airbus was beginning to take market share from Boeing. It was a very costly and humbling stumble for Boeing.
Growing pains are almost expected to occur at different revenue plateaus in a business’s evolution. High-tech companies have traditionally considered those plateaus being a “natural occurrence” at the $1, $5, $10, $20, $50, $100, $200 and $500 million dollar revenue levels and again at the $1 billion dollar revenue level. Companies that enjoyed levels of success relatively rapidly never operationally planned for their success making “hitting the wall” all the more predictable and harsh when it occurs. Consider the Boeing example above.
During the past 4 years, many businesses have downsized and, due to revenue declines and limited budgets, needed action to optimize their systems and processes around new, lower revenue levels and lower staffing levels has been deferred. These companies are doing more with fewer resources with great pain, pretty much driving those who remain at the company nuts. The employees are chronically overtaxed, highly stressed and waiting to flee the company in search of a new opportunity just as soon as they can.
A lot of smaller businesses, however, never took the time to figure out what they needed from a process standpoint to efficiently run today’s business as well as tomorrow’s business. The owner took the lead and created jobs for himself/herself and others but left a business largely dependent on him or her. This imposes severe limitations if there is an opportunity to rapidly expand the business. When it comes to time to sell those businesses, there’s not much in place that is attractive to a potential buyer in terms of residual value and business upside undermining years of hard work and goodwill built over the years.
A business is more than what it does. For a business to be “in business,” it must have systems and processes that eliminate people dependencies and allow new people to join the organization and make a positive impact in short order. This allows for greater agility and speed. It allows for growth or contraction. And, it’s what makes a business far more valuable should the owner decide to retire or sell.
Does a business have to be brought to its knees from a business execution standpoint before action can be taken? Absolutely not. My best clients proactively engage with me to look at these issues.
© 2012 Dave Gardner