There are four patterns of problems that cause growth to stall for small and medium-sized companies. The chief executives don’t know how to lead a growth company; they don’t know how to hire and retain the kind of people that will enable the company to grow; they don’t know how to market and sell; or they haven’t figured out their growth strategy.
These growth-stoppers are holding back tens of thousands of companies with the potential to grow.
1. Getting stuck in a leadership rut
Mothers and fathers need to provide a different type of parenting to teenagers than they did when their teens were primary school age, or newborns. By the same token, chief executives of growth companies need to do everything and make all the decisions for their startups, but they quickly need to learn to hire others to whom they can delegate, set the direction, plan, and develop the muscle of execution.
Of the 200 chief executives who have passed through our business clinics and programs over the past two years, very few seem to understand that companies go through stages of growth, and while the chief executive has a consistent set of responsibilities, their roles need to change as the company grows. This is not an easy transition for a chief executive to make and many get “stuck in startup” because they think the job of the leader is to tell everyone what to do, and because many enjoy being at the centre of the action.
Growth leaders know they need to hire great people to whom they can delegate and spend less of their time on the “doing” and more of their time on communicating, planning and making sure everyone is executing on the plan.
2. Not being able to find and keep great people
This is an issue for many companies, regardless of size or industry. Many chief executives hire people who they think are right for the job, but don’t take time to orient them, delegate properly, or “inspect what they expect”; to make sure that people understand the expectations and are performing in ways that meet those expectations.
When people don’t perform, the chief executives are perplexed and not sure what to do. And when their people problems are bad enough, the last thing they want to do is hire more people. They think more people equals more problems! Chief executives need to learn how to hire people who are good match with their company values. And this means the chief executives need to be very explicit about what their company’s values are.
To find and keep the best people, you need to know how to identify people who have the capacity to perform at least two levels above the level for which they are being hired, so they can grow with the company.
3. Not knowing the marketing and selling basics
Too few chief executives know the basics of marketing and selling. They haven’t figured out their mission (purpose), their values, their vision, or their “why”. Why do they exist and who would care if their company disappeared? Once the chief executives figure out their ideal customer, the channels to those customers, what the customers value, and how to describe their value to the customers, it’s easy to sell. The chief executives begin to understand that selling is not about pushing something you hope a customer will buy, but making it easy for the customer to buy what is being offered, because it’s something they value.
4. Not having a strategy in place for growth
Most founding chief executives know enough to get the company started, but not how to shift gears and go faster. And too few small and medium business leaders understand the importance of strategy, or that different strategies require different organisational competencies.
For example, if a company wants to grow by selling more to current customers (or similar customers), operational efficiency will be key to profitability. If it wants to sell to new markets, then differentiation will be critical. If it wants to grow by developing new or different products, then product development and tactical delivery be important. In other words, chief executives need to make strategic choices about the level of risk they are willing to take on, and whether they are going to be the low-cost provider, sell to a specific market segment, or sell a highly-differentiated product for which customers are willing to pay a premium. They cannot be all things to all people and hope to grow.
The good news is that, in the past two years, we’ve found that most chief executives are quick learners. Once they identify the biggest growth-stopper holding back their business, they begin to make changes. And once they now know why, what, when and in what order those changes must occur, they begin growing again.
Jana Matthews is the chair in business growth and director at the Australian Centre for Business Growth at the University of South Australia. She has a doctorate from Harvard, has founded five companies and written eight books, and was selected as one of the most influential women in Australia in the AFR and QANTAS 100 Women of Influence Awards 2018.
This article was first published by Smart Company