The evolution of a business follows an arc from exploiting opportunities through to a functioning business that acts strategically. Each shift is an internal disruption that can threaten the company.
This is true for entrepreneurs starting new business and for leaders of a growing team within a larger enterprise. Scaling always presents these challenges.
There are four key steps. The first one is to identify and exploit the opportunity. This in itself is a massive challenge requiring a dedicated effort.
Success in opportunity definition brings on the second challenge. As the business or team grows the founders will not have enough capacity to continue growth, so they will need to hire people. At this point the founders face a delegation challenge, they need to teach others to do their jobs then manage performance rather than do the jobs.
This is a huge challenge for people who are good at finding and exploiting opportunities and requires a completely different skill set.
Many founders are good at delegation and can manage this first transition. Others can't and their businesses will grow then flounder as a result. They may add people to the point where they can no longer manage then shrink the business to make it more manageable, growing again only to shrink again.
Breaking out of this cycle requires adding not just capacity, in terms of people, but capability in terms of management. And it also requires that the founders let go.
This performance management stage however, also has limitations. Even the capacity to manage and the founders become a management bottleneck. Getting out of this requires systems - yet another step away from the work for management. But management teams that can leverage systems can very effectively scale their businesses and teams.
Finally the next stage is to manage the systems strategically. At this stage the teams must be looking forward and developing foresight to manage the external disruptions that they will inevitably face.
Those companies that can manage their systems strategically can stay ahead of the market, developing new tools, services and products to profit from a changing market. But those who can't will eventually face decline.
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