Do You Have to go Through Them? No.
At first all the activity in a company is outward focused – finding and serving customers. If this works you get a lot of business. Some recurring, some re-occurring depending on the business model. People are hired, some of them loyal, some good. The company is profitable. It provides a good living and perhaps even more.
But the owner’s hands are in everything. Most things are accomplished by experience and intuition. Owners are strapped for time because they haven’t worked out how to make the day longer than 24 hours. There’s a lot of potential: expansion, new markets, M&A. But those are untapped due to lack of time or difficulty finding good people. Good people means those with the right mix of experience and intuition.
These are what I call the pre-teen years.
At that age, your kids can feed and dress themselves. They are fun to be with and you can take them places you even want to go. They have sort of reasonable likes and dislikes, they have budding abilities. They’re starting to find their way in the world. Like the company described above, they have potential.
Both companies and children need to mature to realize their potential. But unlike children, companies don’t have to grow up. Many companies remain at this stage. Some for decades. And it works – up to a point.
Companies at this stage can be appealing to searchers. There’s a lot of untapped potential. You can see what these companies would look like as “adults.” And if you put the systems in place, it improves efficiency and promotes growth.
But there’s a danger. For a company to realize its full potential it has to look inward for a while. It has to move as Melissa Withers said “from people to process.” And you have to do this without alienating too many employees or customers. Some employees don’t do well in a systematic environment. And you have to tread carefully because at first the knowledge that you need to put into the system is all locked in people’s heads. I call this change the teen age years.
Picture from Calvin Walton via https://upload.wikimedia.org/wikipedia/commons/3/3f/Teenage_Mutant_Ninja_Turtles_%285234965966%29.jpg
Teenagers Can Do More than Pre-Teens
They can drive, date, get a job. But they’re gangly, not strong in the wisdom department. And like a business going through this stage, teenagers can be expensive.
What does that mean in practice? It means disentangling the things that the owners and maybe even key leaders do by gut feel or intuition and replacing them with systems where you can predict the output. Systems make you more comfortable handing things off because a good system has built in checkpoints.
When I say systems, most people think of technology. But there’s more to it than that. If you automate a poorly designed system, you’ll just get stupid stuff done faster. You must understand and document the four parts of every system before you get technology involved.
The trigger is what starts the system
The input is what it needs to act upon
The transformation is the work to be done
The output is the reason for the system
I wrote more about these four parts here
The teenage growth spurt of a company can also mean outgrowing some early employees who were hard working a loyal. This is not fun. It can mean a disruption in relationships that the company had with key customers or suppliers who may or may not be as profitable as you need them to be.
These growing pains can be expensive. The writer at Guesswork Investing did an interesting post on how to understand the costs involved in this process.
But it’s more than just the cost. It’s the mental anguish. It’s the cultural change. And it’s doing all that while you’re still trying to retain employees, and if not build the customer base, at least keep the revenue stable.
So, where do you start?
If it’s your company and you grew it to the pre-teen stage. First decide if you want to grow it. You have a choice. If you’ve purchased a company at this stage, you may not have a choice because your cost basis is higher and you need growth to pay back loans.
Next, realize the company is working because of the people who work there. Respect their accomplishments and their efforts. Show that respect in concrete ways – better pay if it’s not up to standards (perhaps with an incentive bonus) and in personal ways as well. Compliment jobs well done, perhaps swag.
Then share your vision for the future. You want to inspire people to go there with you. A good vision doesn’t have to “put a dent in the universe” as Steve Jobs famously said. But it has to be bigger than you and the employees. How your company is making life better for customers is a good place to start. Show people how their work helps to achieve that vision. This is leadership.
It takes leadership and management.
But you need management as well. That means documenting how people produce the output that is making things work. And providing tools, training, and structure for people to perform better. You’ll want to account for shadow outputs – things people produce that aren’t officially part of their role. If you don’t track these you’ll have a problem promoting people.
Then as operating those systems becomes more routine and you scale the company, you’ll need to duplicate and bifurcate the systems as appropriate. Duplicate means having multiple people operate similar systems in parallel to produce more output. Bifurcate means breaking a system into sub-systems where the output of one is the input of the next. I wrote about the difference here.
Finally, with good systems in place, and the right people to operate them, your company can grow out of the teenage years and be on its way to adulthood. You’ll be able to enjoy the famous quote by Mark Twain:
“When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished at how much he had learned in seven years.”