HIGH GROWTH CHALLENGE: MATCHING YOUR ORGANISATION TO YOUR SALES GROWTH
Simply put sales can grow discretely and tends to be quite smooth as shown as the red curve. Organisations growth, by contrast, tends to be much more lumpy. This is because a certain staffing complement has a finite growth capacity and beyond that point just adding people doesn't help. In fact at some point adding people reduces performance. What is required is an organisational restructure which will create a step change in a companies ability to support its growth. However this is not easy to accomplish because most businesses address this problem too late. This often results in business growth reverting to the typical "lumpy" organisational restructure rather than a smooth increase. The reason for this is that sales now have to wait for the organisation to catch up so you tend to end up with a year of rapid growth followed by a year of of no growth or even negative growth.
TYPICAL SITUATIONS
Smaller Businesses tend to rely too heavily on a few key people, this results in a stagnation of performance of the remaining staff who have little or no chance to develop their skills. So when the time comes to reorganise the business owners or management are reluctant to make the step change necessary to reorganise the business because they cant see who, apart from the usual suspects, who will be able to take on additional responsibility. What this results in is either a re-organisation which is often half hearted or is implemented too late. To provide a sporting analogy, hammer throwers are always told that they must remain ahead of the hammer. So as they speed up their revolutions in the circle they can properly time an effective throw. Small businesses are rather like the novice hammer thrower, who ends up behind the hammer (read sales growth) so losing control and finding out the hammer is in the wrong place with unpleasant results.
THE SOLUTION
"Stay ahead of the Hammer!"
What does this mean in organisational terms? Below are some suggested key actions:
First; Always! Always Always! Implement a reorganisation ahead of its need. This gives you time to fine tune; it is also the only way you can maintain that rapid growth.
Second; Establish a model for organisational growth. That is how will your business deal will sustained and rapid growth. Your plan must also be able to estimate at what point (size of revenues) will you be needing to consider the next reorganisation.
Third; Reorganisations must have longevity. Typically a major reorganisation should last about 24 months, with interim adjustments taking place yearly. Recognise that reorganisations get bigger and more complex as you grow, so put in place a post reorganisation quality control process.
The challenge for a business in maintaining high growth is to grow the organisation consistently over time to match sales. In supporting businesses to understand and undertake this challenge in a knowledgeable way we are much more like to provide sustainable high growth businesses.
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