When I start working with a founder and their team, one of the first issues we have to address is a big one: How they approach growth. Typically, up until this point, they have grown by selling as much as they can and then scrambling to keep up.
It’s like playing a game of Jenga; you pull from whatever you can wiggle free at the base so that you can add to the top line. It’s a revenue game. The business is still small enough and simple enough to get away with it. If you get enough money on the top line, the bottom line will work itself out. Your company will grow, and as a founder, you’ve got a lot to be happy about.
The work is so hard, but it’s rewarding. You seem to be up against the clock every order or project or week, but you know what it takes to win, and you get the job done.
There’s nothing wrong with this for quite a while. In fact, those companies that succeed the most in the early organic growth stage do so because they are the best at the revenue game.
They are the best Jenga players. They know precisely what the next move is and take action quickly without the burden of over-analysis to slow them down.
They build tall. They build fast. They make a lot of money.
Then one day, they find themselves with no more easy moves. Every movement is riskier. It’s more complicated. And you have to move slowly, very slowly; otherwise, the whole thing could come crashing down.
Then you hit the wall. There are no more possible moves. And for many founders, this feels like it is game over. And to an extent, that is true. But not in the way you may think.
It’s not the end of the business. It’s not “as far as you can take it.” It’s not any of these fatalistic assumptions.
Instead, it is the end of the organic growth stage, which sounds like a bad thing until you realize that it is also the beginning of the structured growth stage, more commonly known as scaling.
And the structured growth stage offers way more revenue and greater profitability than you could ever hope for with your current business model.
The problem is you can’t Jenga your way to success in the structured growth stage. It’s a new game with new rules. And if you can evolve as a leader, you’ll find this stage to be far more satisfying and far less taxing on your time and energy as a leader.The problem is you can't Jenga your way to success in the structured growth stage. It's a new game with new rules. And if you can evolve as a leader, you'll find this stage to be far more satisfying and far less taxing on your time… Click To Tweet
Let me boil this all the way down for you. If you do this right, you’ll reach greater success with less personal effort.
It may sound too good to be true, but it really isn’t.
However, you have to stop playing Jenga and start creating capacity.
If you’re a founder or a leader in a growing company, you can find out if you are still playing Jenga with your business by looking out for these three signs.
You are top-heavy
In the organic growth stage, overhead is a startup sin. You only want to hire people and pay for things that allow you to sell more and are essential to delivering on what you’ve sold.
You don’t need fancy furniture, droves of HR personnel, and 200-page employee handbooks. And you know it.
You need something to sit on, sure. One founder I knew personally, sold $1.5M in a year sitting on a trash can he had flipped upside down.
You need to hire and train employees, of course. But an interview is a 15-minute phone call to make sure you are still breathing and can string together a few coherent sentences. And that works because their training is sink or swim. If they can’t make it, they’ll leave on their own pretty quickly. It takes something special for someone to succeed in these early businesses. The Darwinian nature of a startup has a way of weeding out the bad ones on its own.
If you tried to write a handbook in the organic growth stage, you’d do a lousy job. It would probably be woefully non-compliant, or you would ignore it altogether, and you would waste loads of incredibly precious time you would have been selling or delivery.
But there is something sinister at play. Because we are so focused on keeping overhead low in a tactical sense, we fail to see that we are pulling piece after piece from the bottom. Our management structure is so flat that we don’t have the leadership and process to keep the growing structure stable and strong.
As leaders, however, we are often oblivious to this reality. We are more likely to believe that we have figured it out. We are stealing sales from much larger competitors. We are creating double, triple, even quadruple growth year after year. Every chart is up and to the right, or so we think.
The truth is we aren’t creating half as much as we think. We are like a boat riding a wave going faster and faster, without realizing the engine has run out of gas.
All too often, we don’t realize that we aren’t in control until the wave crashes down. It’s at that point that we are forced to see what has actually been happening. We’ve been borrowing pieces from the bottom of the structure and left it perilously weak.
You are bottom-weak
There are many symptoms of a bottom-weak business.
- You have heroic managers but are missing true leaders.
- You have infighting and confusion among employees.
- You have key people whose role’s have outgrown them.
- You are dropping the ball on customer orders and projects.
- Your profit margins fall each time revenue goes up.
- You make still make decisions quickly, but they take forever to execute (if they are even acted on)
And here’s what it feels like for you as the founder.
- You feel like you are carrying the weight of the business on your shoulders.
- Your voicemail box has been full for months, and you’ve got over 100 unread emails in your inbox, and you’ve missed several critical messages.
- The only way to push through is to work more hours.
- You can’t focus on growing the business because you’re too busy trying to holding it together.
- You don’t feel like you can make the right decisions fast enough.
- You end the day stressed. You work through the weekend. You may even catch yourself on Sunday night, dreading the start of another workweek.
- There is no more room for you to dream about the future.
- You wonder if the best days are behind you.
All of this is what drives my passion for what I do. It’s what gets me out of bed in the morning and what keeps me going at 110%. So many founders are caught in the bottom-weak businesses that they created and have no idea how to get out.
If your business is bottom-weak, don’t worry. The solution is much simpler than you think. Though it requires a significant mindset shift, it is nowhere near as difficult to correct as it was for you to get the business to where it is today. That is if you know what needs to change.
In the organic growth, doing is 80%, and knowing is 20% (or less; you’ll just cross that bridge when you get to it). In the structured growth stage, doing is still important, but it’s no longer the founder’s job. The ratio flips to 20% doing (on your own) and 80% knowing, understanding, and directing. And that brings us to our final point.
You are the master planner, but you don’t have a plan
I know this is harsh, but it needs to be said because, more often than not, it is 100% true. When you are playing Jenga, the goal is to take the right action now. To know and understand the next move and to execute fast and effectively. Planning is mostly irrelevant because one move by your opponent can render your entire strategy useless.
This is true of the organic growth stage for business. The ROI of planning just isn’t there. You don’t know enough about the future, and you don’t need to. You’re going to ride the wave whether you want to or not, so you develop the skills to ride the wave well.
As the founder, as a leader, the structured growth stage requires you to evolve. You don’t have to change who you are by any means. You just have to change how you win. You win by casting a vision, challenging your team to change, and creating a context.
Casting a vision
The primary job of a CEO is not to examine P&Ls, developing detailed strategic plans, or micromanage every employee.
The primary job of a CEO is to cast vision, and I don’t think anyone can do it better than a founder. Vision is essential for any business. In the organic growth stage, that vision keeps everyone going no matter how tired they are. The structured growth stage keeps everyone moving in the same direction, creating massive momentum and true economies of scale.
A well-aligned company with a strong vision, and a founder at the helm, is a force to be reckoned with.
Challenging your team to change
A CEO’s second job is to challenge their team to change. Honestly, this can be hard for a founder if they are too set in their ways. The best way to challenge a team to change is to change yourself. It’s not to change who you are. It is to better harness who you are and use your natural strengths for the good of the entire organization.
Founders have two advantages in this respect. They are highly visionary leaders, and the vision of a better future is all they need to make the hard choices today for a better tomorrow. They are also intensely resilient. You can’t lead a company to success in the organic growth stage without resilience.
Even though you may be tired now, you’ve got what it takes to pull through.
Creating a context
The last job of a CEO is to create a context for the company to succeed. This can be the most foreign of the three tasks for a founder, not because they aren’t capable, but because it often looks like doing the opposite of what they’ve done to succeed. Jim Collins eloquently captures this truth in his book Built to Last. In it, he divides leaders into two types: time-tellers and clock-builders. Time-tellers are exceptional, geniuses in their own right. They have an incredible personal skill, but a company led by a time-teller will lose to one run by a clock-builder in the structured growth stage 100% of the time. Clock-builders focus on turning their incredible skill into an incredible system that can scale beyond them. They build an environment for excellent decision-making and execution without having to be the decision-maker or doer.
Your business needs you
Now that you know these three signs, you can probably see some of them (if not all of them) in your business. If so, you have a decision to make. You can change how you lead your company into this exciting new stage, or you can take a step back to “the way things were,” or you can step out of the business entirely.
My heart breaks when I see a founder settle for less than they’ve dreamt or exit their business far earlier than they should. They limit their potential (and their profit), and they limit the potential of their business. They do so much work and then leave just before the most profitable and rewarding business growth phase.
To add insult to injury, it’s the premature loss of its founder that will cause a business to accelerate straight into the decline stages. It will hit a glass ceiling that is far too low, and the business itself will never reach the heights hoped for by its founder.
You don’t have to change who you are, but you have to change how you lead. Since knowing how is more than half the battle, I’d encourage you to study this transition or find someone who can help you through it. With the right plan and a great guide, you can make more forward progress in a few short months as you would in a few longs years of fumbling around in the dark. The articles and videos in my blog are packed full of great resources that I’ve created to help you do just that. You’re also welcome to schedule a call directly with me via the link below.