by Ron Carucci
In our last post, we discussed strategic patterns that can enhance or stall growth in midcap companies. In this post, we’ll turn our attention to organizational patterns, issues occurring within the organization that affect sustainable growth. These patterns have consistently revealed themselves as we have accompanied executives in midcap companies (again – $100M-$1B) on journeys of transformation.
By organization, we are not referring to merely an “organizational chart.” We are referring, holistically, to the set of processes, systems, cultural norms, structures and leadership that combine together to translate what you say you aspire to accomplish (your strategy) into results you have targeted to achieve.
Many organizations in their early years have highly organic, loosely formed organizations. In the most entrepreneurial environments, you hear terms like “responsive 24/7,” “pivot” and “embrace chaos” to describe organizational disorder that is intended to execute the work. Yet, like a tall 14-year-old boy wearing his dad’s suit jackets, these organizations grow in size but don’t necessarily grow in maturity (see part 1 for the difference between them). So how can they ensure both growth and maturity?
Maturing requires intentional work to design the organization needed to accommodate the current and future requirements of growth. While there are many aspects of the organization that could arrest maturity, the following four seem to most commonly get in the way.
- Don’t resist standardization to protect the entrepreneurial vibe.
Of all the words that make entrepreneurs shudder, few do so more than the word “process.” They immediately associate this with large, corporate bureaucracy and nonsense. Their innate fear is that standardizing approaches to work will neuter entrepreneurial freedom and stunt creativity. This is rarely the case. Standardized processes liberate freedom and creativity because they free up distracted energy consumed by having to reinvent approaches every time something is done.Throwing more bodies, cobbled-together technologies or bolting on another department becomes the easy Band-Aid in the heat of battle. But, over time, such organization designs become a mass of confusion, redundancies and cash bleeders. They are costly in human, physical and financial resources. Intentional maturing means preparing the organization with systems and processes that allow creative freedom while clarifying repeatable, sustainable and efficient approaches to work that give needed cohesion to keep the organization integrated.
- Raise the altitude of leaders.
In most younger organizations, the leaders are often doers too. The phrase “player coach” has been nicely adopted to account for those who need to keep their hands in the work while leading others. The problem arises when you lack leaders who are keeping an eye on the future, ensuring all the pieces of the organization are working in a coordinated fashion; therefore, you stunt maturity.Leaders must raise their game by raising the altitude at which they play. This means founders, owners and those at the top should deliberately transfer power to others. There have to be leaders who are working on the most strategic aspects of the organization, leaders who are coordinating the translation of strategy into the daily work of the organization and people who are running daily operations and executing the organization’s core work. When any two of these three roles collapse into one, or fail to exist, the organization’s maturity stalls.
- Accept the limits of “culture.”
What makes young, growing organizations special is often the intangible aspects of their culture. There are “unspoken” rules of the road that intensify a sense of community, almost a tribal nature within the organization. You see it in the passion, sacrificial dedication and pride for the organization expressed by people at all levels. These are, indeed, sacred aspects of growing organizations that should be preserved. Too often, unfortunately, attempts to preserve them come in two immature forms. First, organizations try to codify their values — to take what is implicit within the organization and define the “values” so expectations are clear. In and of itself, this isn’t bad, but it usually backfires when instead of making the culture clearer, it trivializes it. The resulting posters, screen savers, coffee mugs and other swag become objects of mockery.The reason is this: If you are going to codify your values, you must ensure they are deliberately designed and deeply embedded into every aspect of the organization.Human Resources processes like hiring and performance management, financial processes like budgeting, and governance structures where decision rights are clarified are all opportunities to bring your values to life. If this doesn’t happen — or worse, if these parts of the organization contradict the espoused values — you’ve taken your unique cultural identity and translated it into a weapon people now use against you, pointing out every inconsistency they find.The second form of immaturity is based in the assumption that the culture is so strong and so pervasive that the rest of the organization needs no attention. We commonly hear leaders in such organizations declare, “Our culture drives us. These people know what to do — they don’t need formal processes stifling them.” As such, these leaders forfeit efforts to deepen the maturity of the organization under the naïve assumption that a deep sense of loyalty and pride will take care of everything.Culture plays a critical, even sacrosanct, role in organizations, but it does so alongside other equally important aspects of the organization — systems, structures, standards and leadership. In concert, they work together to deliver great results.
- Clarify decision rights.
“Whose decision is it anyway?” could be the game show played in immature organizations. As organizations grow, the importance of shifting decision rights commensurate with growth is monumental. When decisions are retained in the hands of too few, you slow the organization and limit people’s ownership of outcomes. From leaders on the ground executing work, information goes up, awaiting a decision to come back down.Conversely, when decision making is unclearly dispersed in environments characterized by a free-for-all, “empowerment” is confused with anarchy, decision quality is diluted, analytics are exchanged for “gut” calls and individual agendas replace a collective sense of priorities and performance. Customers become infuriated and are played against each other. Blame becomes the surrogate for accountability. “Everyone’s in charge so nobody’s in charge” becomes the rule of law.Avoid these extremes by setting up simple, clear governance structures that put the right leaders around the right tables with the right regularity and the right data and clear boundaries about the scope of their decision-making authority. Do that, and you will synchronize your organization in ways that enable sustainable growth.
There is an endless list of issues that can hinder or enable growth and maturity regardless of an organization’s size. But if you want to set your organization on a course for greater maturity and sustainable growth, regardless of the size you are or wish to become, pay attention to these strategic and organizational patterns as they appear within your organization, and address them head on. You will find your aspirations more in reach than you imagined.
For more on this subject, watch for the upcoming Navalent and C-Suite Network White Paper debuting in September, titled “Building for Sustainable Growth: How Midcap Executives are helping their Organizations Grow Up and Win.”
Ron Carucci, Co-owner and Managing Partner of Navalent, is a seasoned consultant with more than 25 years of experience working with CEOs and senior executives of organizations ranging from Fortune 50s to start-ups. He has consulted to some of the world’s most influential CEOs and executives on issues ranging from strategy to organization to leadership. Best-selling author of 8 books, including the recent Rising to Power, The Journey of Exceptional Executives, he has been featured in HBR, Bloomberg, CNBC, CEO Magazine, BusinessInsider, Business Week and Fortune.