Strategy

5th December 2013

Step Changes Part 1 by Ian Kinnery

The growth of a business is never linear, it is never smooth. There are many step changes that growing businesses experience.

It is inevitable if you think about it. Just look at the mathematics of it all.

If there are 2 people there are 2 relationships, A with B and B with A. if there are 3 people there are 6 relationships. Increasing the number of people by 50% adds an increase in complexity of 300%.

Growing from 10 to 11 people is an increase of 10% in headcount and an increase of 22% in complexity. So as we add people and products in a seemingly linear fashion the complexity is growing in a logarithmic fashion. Consequently there are stages when what has previously worked for us simply becomes inadequate and needs to be upgraded or replaced.

One of those step changes happens when the size of the business simply outgrows its management structure. When a business is small it is possible and often preferable that the business leader is able to touch every aspect of the business, to be involved in every decision that is taken, to influence every interaction and to be on top of everything.

There will come a point though when that strategy is no longer possible, when the complexity of the business is just too great, and often that is where the business leader can find himself getting stuck. At that point the very qualities that have smoothed the way for the business leader can very clearly get in the way. When the strategy of taking decisions for everyone else backfires and we need those colleagues to take decisions for themselves we find that they are unable to. And it is not enough that they take decisions, they have to be the right decisions. But of course we have schooled them to do only what they are told. We have never coached them on how to think through a situation so that they can make a conscious decision, which is more likely to be the right one (in our eyes at least).

Inevitably frustration is the result.

This is why businesses often plateau and we all know that standing still in today’s fast moving and highly competitive world is really a euphemism for moving backwards.

Business leaders can become stuck and angry.

The skills and techniques of running a business through the senior leadership team are very often not the skillset that the business leader has ever learned or ever needed, up until this point.

I often ask my clients who was the best leader they ever worked with. I get all kinds of answers, but one of the more common responses goes something like this “They were all rubbish, that’s why I struck out on my own”. So with no-one to model where can a business leader learn this most necessary of skills?