Growing Pains and the

Management of Growth: Strategic

Planning: Part 12
Posted on September 22, 2014 by Foley Tan Group

In the previous 11 parts of this ongoing series on Strategy and Strategic

Planning, weve explored various models and frameworks that help companies
formulate and execute high-level corporate plans. Some of these are more on
the objective & quantitative side, and others are more on the subjective and
qualitative side. But, despite their differences, all of them are connected by one
central commonality they all are designed to facilitate growth. After all, isnt
that what all of us strive for in business: isnt the promise of fast-track growth,
the business strategists equivalent of the Holy Grail?
In my previous article Joined up thinking Connecting the dots, Strategic
Planning: Part 11 I introduced the McKinsey 7S model. This suggests that
creating business excellence requires incremental and continual improvements
across 7 core areas. This concept ofinterconnectedness between seemingly
disparate functions is important; it encourages management to enhance the
entire organization, including its Strategy, Structure, Systems, Shared Values,
Skills, Style (Culture) and Staff rather than just focussing exclusively on the
numbers! So, if this model helps us achieve business excellence and superior
profits, what other challenges exist for companies in terms of achieving and
maintaining growth?
Ive written before about companies being alive in the corporate sense, and
progressing through similar patterns to organic life; that being, birth, growth,
maturity, etc. And, just like humans face different challenges at each stage of
their development, so do companies in terms of achieving and maintaining
growth. Indeed, Greiner proposed 5 main phases of growth, in Evolution and
revolution as organisations grow (Harvard Business Review, Jul-Aug, 1982).
Simply put, each stage has a primary objective (i.e. how growth should be
achieved) and an associated primary challenge (i.e. how managers must
behave). So, lets explore these 5 phases:

1.

Growth through Creativity; Crisis of Leadership

In phase 1, growth is dependent upon Creativity innovative product
development and sales take precedence, with a small team of individuals. As
growth continues, managers experience a crisis of Leadership; employees cannot
be managed through informal policies, and the need for financial / operational
expertise and discipline arises.

2.

Growth through Direction; Crisis of Autonomy

The crisis of Leadership is overcome by injecting systems and structure (e.g.
budgets, quality assurance, formal policies); in effect, growth comes through
Direction. As growth continues, managers experience a crisis of Autonomy; the
once entrepreneurial employees feel restricted and shackled: unable to exercise
initiative, due to the new levels of control.

3.

Growth through Delegation; Crisis of Control

The crisis of Autonomy is overcome by the decentralisation of decision-making
powers; in effect, growth comes through Delegation. Often, employees are
incentivised to perform to higher standards (e.g. via promotion, bonuses) to
climb the corporate ladder. As growth continues, managers experience a crisis of
Control; C-level executives feel isolated and disconnected, as mid-level
managers develop strongholds.

4.

Growth through Co-ordination; Crisis of Red Tape

The crisis of Control is overcome with improved communication systems and,
often, a move from geographic to product or customer focus (i.e. eliminating
parochial cliques); in effect, growth comes from Co-ordination. There is an
increased focus on formal corporate strategy, such as budgeting, forecasting and
strategic planning. As growth continues, management experiences a crisis of
Red Tape; paperwork and administration increases, organizations become
bureaucratic innovation is stifled, and schisms form between head-office and
regional offices (e.g. power struggles).

5.

Growth through Collaboration; Crisis of the Unknown

The crisis of Red Tape is overcome with strong C-level management, fostering a
participative and inclusive corporate culture; in effect, growth comes from
Collaboration. Often, real-time information systems help alleviate paperwork and
administration. At this stage, the business is mature and growth has been
delivered. The crisis of the unknown, sometimes referred to as ?, suggests any
future Crises are unlikely to conform to a particular pattern.
Its an interesting and thought-provoking analysis, which neatly describes the
constant corporate struggle between evolution (the growth phases)
and revolution (the crisis phases). As humans were familiar with the concept of
No pain, no gain and, once again, we can see parallels in the business world.
From a leadership viewpoint, evolution explains the mechanisms by which
growth is often achieved (the gain); and, revolution explains the obstacles we
need to overcome (the pain). In understanding this framework, it helps us
understand the right strategies and tactics for each stage, to ensure the growing
pains are minimised and the profit gains are maximised!