Are You In The Dangerous No Man’s Land in Business?
If you have read the book “No Man’s Land” by Doug Tatum, you know it is what he refers to as an Inflection Point (a firm with between 20 and 100 employees). It’s where less than 5% of fast growing companies transition through this Inflection Point and become business breakouts.
The subtitle of the book is “Where Growing Companies Fail.” He further describes the problem as this, “What to do when Your Company is TOO BIG to Be Small but TOO SMALL to Be Big?” Some might say it’s like swimming with the sharks.
What Are the Problems in No Man’s Land?
Doug Tatum observes that there are four problems that a CEO faces. They are as follows:
- Market Misalignment
This is about delivering relevant products and services. Early on this is easy because of direct contact with customers. Over time customers request new products or services. These requests require the company to adjust and realign. At some point, misalignment occurs.
- Outgrowing Your Management
This is about hiring and delegating to key managers. The CEO letting go is one of the biggest challenges a CEO faces. The people who started with the company often discover that their management skills will not meet the demands of the company as it grows and becomes more complex.
- Outgrowing Your Model
Most entrepreneurs start by providing high performance with cheap labor. As the company scales up, this model breaks down. The key is to find a business model that sustains profitability.
- Outgrowing Your Money
Growing a company demands capital. The problem in raising capital is the fact that the firm may be perceived as too great a risk. The way to address the risk issue is to address each of the previous three M’s – Market, Management, and Model.
An Alternative Approach to No Man’s Land
The Edward Lowe Foundation sees firms with 10-100 employees as a challenging phase. They call these firms Second Stage Companies. Their program is called Economic Gardening. Its approach to help companies continue to grow larger is by assisting them with strategic issues and providing them with customized research. Their focus is on marketing. Firms that enter their program are provided a set number of hours by marketing professionals using sophisticated corporate databases, geographic information systems, SEO (Search Engine Optimization) and Web marketing tools. The idea is that better marketing will lead to more sales and thus more employees.
A New Approach to No Man’s Land
James Fischer book “Navigating the Growth Curve” also recognizes the impact of growth on a company. A basic premise behind Fischer’s research, is that people cause complexity. Based on interviews and working with 650 CEO’s in 35 different industries he was able to identify 7 Stages of Growth. The findings apply to firms from start-up with 1 employee to 500 employees. Fischer further breaks down Tatum’s No Man’s Land into 5 different stages of growth. Fischer helps a business owner recognize what specific challenges they will face in each stage of growth.
Getting Ahead of a Company’s Growth Curve
You can understand that an organization with 15 employees will be quite different from one with 45. It follows that the organization with 75 employees will be quite different from one with only 45. My work with business owners is about helping them understand what the leader needs to do to adjust to the changes that occur as the company adds people.
The following provides a brief insight into the 7 Stages of Growth and how it can help a CEO focus on the right things at the right time and see what is coming at them next so they can successfully navigate their own growth curve.
Stage 2 Ramp-up (11-19 employees)
At this stage, the CEO is dominate. Their leadership style should be visionary and coaching. Their primary focus is on revenue and profit. Hiring quality people is a primary challenge.
Stage 3 Delegation (20-34 employees)
At this stage, the CEO is facilitative. Their leadership style should be coaching and democratic. Their primary focus is on people (employees). Employee buy-in is a primary challenge.
Stage 4 Professional (35-57 employees)
At this stage, the CEO remains facilitative. Their leadership style should be coaching and affiliate. Their primary focus is on process. Weak project management is a primary challenge.
Stage 5 Integration (58-95 employees)
At this stage, the CEO is still facilitative. Their leadership style should be democratic and visionary. Their primary focus is back on profit. Expanding sales is a primary challenge.
Stage 6 Strategic (96-160 employees)
At this stage, the CEO returns to being dominate. Their leadership style should be affiliative and pacesetting. Their primary focus is back on people. Staff buy-in returns as a primary challenge.
Successfully Navigating No Man’s Land
No doubt about it, No Man’s Land is a challenge. Few companies grow to have over 100 employees. Most often, entrepreneurs are specialist (for example think of a trade, e.g. an electrician) with a vision. Some of these entrepreneurs don’t want to grow beyond a certain size. However, many entrepreneurs lack the management knowledge and experience. Thus, they cannot manage beyond a number of employees (often 19). It doesn’t have to be that way. There is a research-proven road through No Man’s Land. James Fischer’s research provides that roadmap. Using this map, a CEO can know the challenges they will face at each stage of growth. It helps them to be able to avoid chaos and focus on the right things at the right time. This allows them to get to the root cause of problems rather than the apparent ones. It also helps them to adapt their leadership style to the needs of the company as it grows. Equally important, it helps them know what challenges they will face next.
If you would like to learn more about the 7 Stages of Growth and how it can serve as a roadmap for you through No Man’s Land, contact me today. Call 763-691-8585 or email me at Tom@trwconsulting16.com