The Second Decision and Your Company’s Future

Randy Nelson Business Planning

By now, you’re more than likely familiar with what I call, the second decision – deciding where you want your business to go next and how you’re involved in that future. I’ve previously written in greater depth about the “second decision” – which you can read about here .

This decision will be different depending on where in the life-cycle of your business you are at. For instance, it may be a different choice if you are in a wildly successful growth phase or coming out of a challenging recession over the past few years.

Things change. And one must change with it in order to maintain growth, aka continued success. Think about which phase your company is in and use that as a place to start your self-assessment. Doing this will help you understand what kind of leader is needed. The “Greiner Curve” was created by Larry Greiner in the 1970’s and the five phases apply to all businesses.

Phase One: Growth Through Creativity

At this stage, there usually isn’t a lot of staff, so the few that are involved are working long hours and in general adhere to informal structure and communication. As this phase comes an end however, the need for more formal management styles becomes necessary which can be a significant adjustment.

Phase Two: Growth Through Direction

Growth continues in an environment of more formal communications, budgets and focus on separate activities like marketing and production. As products and processes become more numerous, there are not enough hours in the day for one person to manage them all. Leading into the next phase there’s a need for a new structure based on delegation as more individuals are introduced to the business.

Phase Three: Growth Through Delegation

This stage is dependent on delegation. However, many businesses flounder at this stage, as the manager whose directive approach solved the problems at the end of Phase 1 finds it hard to let go, yet the mid-level managers struggle with their new roles as leaders.

Phase Four: Growth Through Coordination and Monitoring

Growth continues with the previously isolated business units reorganized into product groups or service practices. Investment finance is allocated centrally and managed according to Return on Investment (ROI) and not just profits. Eventually, work becomes submerged under increasing amounts of bureaucracy, and growth may become stifled.

Phase Five: Growth Through Collaboration

The formal controls of phases 2-4 are replaced by professional good sense, as staff group and re-group in teams to deliver projects in a matrix structure supported by sophisticated information systems and team-based financial rewards. At this point in the life cycle, continued growth requires the development of partnerships outside the organization that are complementary to the business.

Ultimately, entrepreneurs who wish to continue contributing to the company need to anticipate, recognize, embrace, and adapt if they want their company to continue to be successful.