If you have children, you might be familiar with growth spurts. Those create some changes (sometimes very visible) in our offspring and prompt a rush to the department store to purchase new clothing and shoes to match size and shape changes, sometimes just for a few months, for our dear beloved child to look well dressed and wear a civilized outfit (at least we hope so).
Companies are no different. Their growth spurts have symptoms and consequences that might be dismissed for a while until that T-Shirt or pair of sneakers really will no longer fit.
Many successful companies started in dorms, garages, or in some of the most remote locations you could ever imagine. Now they have a global presence, thousands of employees, and many offices around the world. How a startup gets to become a Google, Microsoft, or Apple is part of the magic and creativity of its core team (usually the creators), as well as about the constant search for improvement as part of its own culture. Most importantly, the success of having managed the transformation of a company during its growing spurts must be achieved via observation, change management, and a lot of good communication.
HBR’s 5 Stages of Business Growth
In a 1983 article from the Harvard Business Review, the authors lay out how many companies pass through very similar growth phases (like in most of our human friends). Yet, companies sometimes jump or mix some of the symptoms and this could create some confusion.
In addition, the management style of the different decision-making levels impacts the way that one can see the symptoms of a change due to a transformation rather than a reaction to a market situation.
The five stages of evolution of a company include its initial existence (stage 1), its survival period (stage 2) and then its success (stage 3). In some cases, there is a stage 4 which is take-off and finally, maturity (stage 5).
From observation and experience, the move from the survival to the success stage is the most significant one that will prove if a company and its management are ready for the final stages of take-off and maturity.
According to the U.S Small Business Administration Statistics published in September 2019 (before COVID-19), 80 percent of created establishments survived their first year in business, but only 50 percent will pass the five year anniversary and only a third will reach 10 years. These statistics can be linked to the five stages of small business growth. One can easily overlay them to see that stage 2 to stage 3 is usually within the 3-5 years of existence depending on the business field and market conditions of the moment.
From Puberty to Success … Sourceability’s Story
What is important about the passage from survival to success (or “puberty-phase”) is that the company’s management (many times the founder or group of founders) have to step out of the day to day business. They need to make a significant decision about continuing or stopping active engagement in the decision making process on behalf of the company. It also comes to a point where functional managers (usually in the field of operations and marketing) have to be taken on board and trusted to take over some of the decisions of the founder(s) to enable the full transformation and reach the next level of success.
One example of applying the pattern of growth spurts to the transformation of a company is Sourceability LLC. In July of 2020, this company will turn five years old. As such, it is at the stage of this “puberty-phase” when the strategy has to be revisited, evaluating if there is a need for pruning any unneeded elements of the initial game plan and reviewing the effectiveness of its structure to provide the right fabric for the next period of global growth.
The Digitalization of the Supply Chain strategy announced in December 2019 by its CEO, Jens Gamperl, fits exactly into moving the company from stage 2 to stage 3: Success.
As an example, the creation of a Corporate Global Marketing and Communication team to support internal and external communication and messaging of its brands and products, show that refocus and adaptation of the strategy is being applied to the company’s core in order to be prepared to sustain growth.
This effort is enhanced with the development of a new mission statement focused on providing customers and partners with products and services that take advantage of the company’s strong background in distribution and logistics, gradually developing and providing online supply and design chain tools to drive incremental revenue and broaden its audience to provide greater stability that, as a consequence, provide resilience to market down-turns.
Mature Companies Need Mature Leaders
The growth spurt signs of businesses are not to be dismissed and it takes trained leaders to recognize when adaptation must come into play, avoiding the trap of staying too long in a situation that does not promote the move to the next development phase of the company. It takes courage and ambition to decide to step back or change the structure of the company, sometimes shedding some talent to be replaced with the right management profile to take the enterprise to the next step.
As such, Souceability is working to prepare itself for the “walk on the coals” and become the adult company that it wants to be.
Follow Sourceability’s progress as it transforms itself into the next stage of success with the Digitalization of the Supply Chain.