Managing growth is about more than just the present. Considering and seizing opportunity only as it arises may work for some, but it isn’t enough for the entrepreneur who is seeking genuine, sustainable expansion for their business.
Growth can contain an insidious threat that is couched deceptively within current success. The picture is repeated every year across the global business world; revenue is increasing, clients are flooding in and as suddenly as success appears, it is followed by failure.
Naivety (the lack of experience) goes hand in hand with ignorance (the lack of knowledge) in dooming many a company. Indecision and poor prioritisation follow as common culprits, leaving the entrepreneur with the proverbial rug pulled from under their feet.
That isn’t good enough for a period where confidence in the global economy is rising. Business is good – recent figures from PwC suggest 91% of CEOs expect their revenue to increase in the next three years – but your ability to manage the expansion of your company is still an element of leadership that you simply can’t afford to ignore.
Recent figures from PwC suggest 91% of CEOs expect their revenue to increase in the next three years.
So today we talk growth: why it matters, where entrepreneurs get it wrong and how you can learn to capitalise on it safely.
Common growth mistakes
While learning from personal failure is a foundation of success, it’s obviously best for our ventures that we identify potential pitfalls beforehand. If failure should occur during a period of growth, the primary challenge lies in disassembling the situation to discover the underlying issues.
How can it all go wrong? Here are four common mistakes:
1. Refusing to be a student:
The ubiquitous phrase ‘we’ve always done it that way’ is appallingly prevalent in business, even within successful companies. Established entrepreneurs and senior management can prove surprisingly resistant to learning new strategies. Conviction is a powerful driver, but go too far and your confidence can shut out the willingness to learn from mistakes.
The idea of ‘servant leadership’ – where humility combines with action-driven behaviour – is key to entrepreneurship in today’s world. According to Antonio Argandoña in his study, Humility and Decision Making in Companies, the practical benefit of cultivating humility is that it offers the chance to bring your venture closer to the needs and desires of your clients.
Humility and open-mindedness should not be viewed as optional traits in business. The willingness to have your views and processes called to account, no matter how deeply, is crucial to ensuring a durable and competitive edge in your entrepreneurial career. A 2011 study by Startup Genome found that founders who learn are far more successful. While this was conducted seven years ago and is aimed more at tech startups, it is still instructive for any company finding their feet today.
2. Poor people management:
Poor management of your most important resource will sink your business – it’s that simple. Leadership combines with strategy to create success, and a lack in one area leads to situations that may shake the foundations of any company.
Leadership That Gets Results, part of Harvard Business Review’s ‘Must-Reads on Managing People’, speaks on how the most effective executives match flexibility with six distinct leadership styles (Coercive, Authoritative, Affiliative, Democratic, Pacesetting and Coaching) to motivate and inspire their staff. This is exceptionally important where growth is concerned; periods of transformation within your company will bring about new and uncertain situations that will test your leadership skills.
3. Inefficient processes:
Growth will challenge your ways of working. This is a threat that many a company will understandably miss until it’s too late. The BP Trends 2016 State of Business Process Management found that although individual companies are increasingly investing in the improvement of their processes, the overall state of investment has changed little in over ten years.
These companies – the ones that don’t review and improve their processes – leave themselves on the path towards an inevitable and unpleasant meeting with the challenges associated with growth. It’s particularly important to keep in mind that peak growth periods are time-sensitive; if your entire business needs to be overhauled to take advantage, you may miss the opportunity entirely.
4. Being too bold:
This is a subject easily spoken on in retrospect. There’s no doubt that balancing boldness is the realm of the entrepreneur; it’s where we blaze our trails and succeed where others would not.
With that said, it’s also the graveyard of many a business venture. Studies such as the 2013 publication Risk Tolerance and Entrepreneurship have found that while risk-tolerant individuals are more likely to become entrepreneurs, they’re also more likely to begin ventures that are of lower quality and are more likely to fail than less risk-tolerant people. Another double-edged sword and a telling tendency of the average entrepreneur.
A useful point to consider where risk is concerned is that of preparedness. Mistaking a risky, compulsive decision for a bold one is a fatal error that you can ill afford to make. It’s an error made by the amateur, not the expert.
Genuinely bold actions, then, can be identified as ones that are made within the context of an established plan. You aren’t bold if you make a knee-jerk strategic move towards a sudden opportunity. You aren’t a trail-blazer if you throw your company towards an uncertain, nebulous new goal. You aren’t brave if you choose an action that has far more risk than it does potential reward.
As the saying goes, luck is being prepared enough to take advantage of opportunity. Your long-term strategy must cater for the agility and sudden increase in resources needed to safely capitalise on growth.
The rules of growth
Whilst the specifics of your venture will bring with it its own priorities, the following four rules will serve you well as an ongoing reference in safely managing growth.
1. Refine and review your purpose:
The core goals and principles of your venture – sometimes referred to as it’s ‘authentic purpose’ – are often overlooked once the ball starts rolling. Having a vague authentic purpose or failing to periodically review and update it will leave your company unstable in the face of growth.
This is because it is the true purpose of your company that determines its priorities and USPs. A vague mission statement will hamper your wider strategy, and a stale one will fail to recognise the shifting priorities of a company that is expanding. When planning strategy at any level, return to your authentic purpose. Refresh it with findings from the present and respect its role in the realisation of long-term success.
2. Attract and retain talent:
Bringing in new talent to foster growth is a staple goal for any business, but this counts for nothing if you’re unable to retain them. The sudden loss of staff can cripple a business at a time when it is poised to flourish, turning a period of opportunity into one of recovery.
With PwC’s 2014 Talent Challenge report finding that 93% of CEOs recognise the need to adapt their strategy for attracting and retaining talent, it’s clear to see just how seriously this subject should be taken. The topic of retention and talent management is broad, but don’t let that intimidate you into inaction or your company will pay the price in missed opportunities or outright failure.
3. Scrutinise your skillset:
As the driving force behind the future of your company, you cannot afford to rely on an instinctive understanding of yourself. Whereas the founding of your business and its initial stages will succeed due to your current skills, future challenges resulting from growth and ongoing operation may test you in areas you are weak in.
The ability to switch between different requirements and actions enables you to exploit opportunities within your market and being critical of your capabilities may reveal areas ripe for improvement.
The ability to switch between different requirements and actions enables you to exploit opportunities within your market and being critical of your capabilities may reveal areas ripe for improvement.
4. Improve in advance: Failing to identify weak spots in advance of peak growth periods is a common business mistake. Instead of leaving this to the last minute, predict areas that may challenge you and your company ahead of time and invest in these before they are needed in earnest.
This will improve the agility of your venture in addition to making it more competitive and durable. For instance, investing ahead of time in a more customer-driven approach, encompassing factors such as improved relationship management, may help you capitalise on growth in an area where customer retention and satisfaction are low.
Your future secured
Addressing the subject of growth properly can be a daunting task, but it is one that forms part of the ongoing challenges that come with entrepreneurial success. Understanding that it has the potential to sink your business as much as explode it into prosperity is an important lesson in maturing as a successful entrepreneur.
By applying these lessons to your activities, you take another step towards becoming a high achiever in the business world. Growth is your target, but it’s an unruly beast you need to learn to tame.
