It is intriguing how successful tech businesses often mirror this situation. By stumbling upon a niche market (usually by chance), they continue using haphazard management methods despite growing revenue and headcount.
In our experience, this is frequently disregarded by both owners and senior executives. They fail to recognise that they are managing an organisation's complexity that grows non-linearly, paralleling the number of people and earned dollars. Such growth includes the following:
- ideas generated by employees;
- ineffective decisions made by managers;
- information channels and, therefore, associated delays;
- the time required to onboard new employees.
As an organisation rapidly expands, its culture becomes "blurred" and gradually shifts. Such a shift often goes unnoticed while:
- a fast-growing organisation seemingly requires additional managers, whether hired from large, well-established corporations or promoted internally without sufficient experience and or maturity;
- many of these managers may not share the founders' values;
- the organisation lacks the resources to focus on developing new products and serving existing customers at the same time, leading to a disregard for customer interests;
- knowledge, traditions, and history are not passed down by word-of-mouth, as the number of newcomers significantly outnumbers the original team;
- coalitions form quickly, causing the unity present during the start-up phase to dissolve;
- the agility and speed inherent in start-ups gradually dissipate.
As a result, an organisation that has yet to start to experience financial success may also lose support from within. Several executives leading companies through such periods report not even knowing how many products their companies have. During this time, as true entrepreneurs, they focus on the growth of their companies by testing as many hypotheses as possible and concentrating on regularly introducing innovative products.
An organisational system exposed to such a test during an active growth period (the companies we are talking to rose 2 to 10 times in headcount within a few years) has a high likelihood of "breaking." Modern approaches to organisational development offer leaders the opportunity to reflect on the situation and adapt. However, this requires considerable courage, as it may require changes in the following areas:
- approaches to product, project, and people management;
- some (and, sometimes, many) senior managers who have been with the organisation from the very beginning;
- the degree of founder involvement in critical operational decision-making.
Developmental psychology tells us that success in child and overall life-span development comes from overcoming life's "crises." Successful organisational development also relies on similar "shakeouts." Knowing how to act during such moments of crises (for individuals, awareness of when such situations are likely to occur) enables more effective coping; as the saying goes, "forewarned is forearmed".
Authors:
Pavel Charny, ORTALEX, Managing Partner, Dubai
Mikhail Lvovskii, ORTALEX, Associated Partner, Wroclaw