Growth: It starts out great, but then . . .

An organisation, no matter how well designed, is only as good as the people who live and work in it.  ~Dee Hock

When organisations or businesses get started there is always the buzz of excitement.  Everything is new and exciting.  Opportunity is endless and optimism palpable. And one of the reasons is that things tend to be well-organized and the organization work. The strategy is fresh and bold, the organization structure is clear and straightforward, and people have been selected to fit the business and technical requirements plus to fit in well with the style and purpose of the company.  Everything is aligned. Everyone knows where they are going and how to get there (strategy), who does what (structure) and how we work together to get things done (culture).

In a classical model, the alignment looks like this:

alignment

 

Things tend to work, the strategy takes hold, customers respond. The company grows. So far, so good.

But with growth comes an unforeseen set of issues. The leadership team switches from start-up mode and excitement to the grind of operational mode, thus focusing a great deal of their time and attention on customer issues, operational challenges, financial decisions, and a myriad of other important issues.

Growth and Fragmentation

growth fragmentation

What is not clear at the time, and what tends to remain hidden just over the management horizon, is that growth (a good thing) brings an inevitable fragmentation of the cultural glue that has been part of the company’s success (a not so good thing).

Growth in most companies means adding people and putting in place more controls and business processes. Costs increase, which in turn puts management attention on efficiency and productivity. All very understandable.

But what most leadership teams fail to see is that hiring large numbers of people, all who come from different company cultures and with different work experiences and expectations, quickly dilutes the existing company culture.  Instead of a common understanding of how things work around here and what behaviours are required and acceptable, the company becomes filled with people who think and behave differently.

Okay, this is normal and in an ideal situation the company would quickly develop a “new employee on-boarding” program that helps new recruits understand the culture and work behaviours required. And managers would spend time coaching and reinforcing the company values and cultural behaviours. And even before, HR would develop “hiring profiles” to select those with the right skills and the right attitudes and cultural fit.

But in 90% of the cases, none of this happens and the once aligned culture moves out of synch with the strategy and structure. And not only does it move out of alignment, it also fragments into strong subcultures which in many cases focus their loyalties on the subculture team and their team goals rather than on the overall strategic business objectives.

Now our classical alignment model tends to look like this:

culture fragmentationThe forces inherent in growth tend to push the culture out of alignment and strong subcultures tend to form, further fragmenting the culture.

Then leadership starts to voice their concerns:

  •  this company is hard to manage
  • we’ve lost the magic
  • people don’t work together like they used to when we were smaller
  • this isn’t the same company I joined
  • we are our own worst enemy
  • nobody seems to see the big picture any more.

If these are familiar statements, then it’s time to refocus on leading and managing corporate culture as diligently as you manage budgets and sales targets.

If you spend as much time on culture as you do on costs and profits, you will run a great company.

 Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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