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On reflection I think I may have jumped the gun (by no means for the first time) with my last post: urging entrepreneurs and their senior teams to learn how to plan holistically, rather than strategically. Many don’t yet do the latter.

But, just as you a growing business needs the structures and processes of the next stage now, the entrepreneur needs the thinking and planning style that will take them through a looming transition to the next phase of growth.

As a way into this topic, let me share with you a diagram from a recent presentation I made at the UK government’s  Department of Business, Innovation & Skills (BIS)

The terminology here arose out of a somewhat bleary-eyed yet energised New Year’s Eve morning I spent with NESTA’s Jon Kingsbury thrashing out our respective approaches to supporting creative businesses. I’m the first, especially when I’m running positioning or branding workshops, to cry ‘don’t wordsmith’, usually in a desperate attempt to maintain focus on the content and not the expression. It’s one of those recurring human traits; to feel much more comfortable pushing words around into near-perfect shapes than pushing the sense of something into a semblance of meaning. My only excuse for breaking the rule on the last day of last year is that: a) it took no time at all and b) we’d already generated so much flipping meaning that I am still working my way through it.

In trying to find a neat way of characterising three recurring early stages of business growth, we certainly weren’t going to attempt to reinvent ‘start-up’ and the idea of a ‘grown-up’ enterprise seemed to fit the ones that had got through the worst bit. (by the way, those indicative team sizes below the transitions are just one loose way of defining the stages – it is just as easy to mark them by ball-park turnover numbers). It was JK who coined ‘stay-up’: not only did it fit the format we’d established with the other two; it captured graphically the plate-spinning, hamster-wheeling, Groundhog-Day state of running to stay still that seems to be a dominant feature of this stage. It describes the state of the business, the implicit strategy, the focus of the leader – and probably their sleep pattern. The MD’s number one question, while they’re in it, is ‘how do I get out of it?‘ (see an earlier post: ‘The Reluctant MD‘)

Having given JK his (well-deserved) 15 minutes, I want to focus on the three transition points, those junctures where (I’m oversimplifying to the point of caricature here):

– the individual freelance or sole trader (who often mistakenly thinks they’re already a business, just because they have a limited company) begins to build a workload and team bigger than they can handle on their own

– the initial team grows beyond the point where they can all sit around one big table, in a single room, and everyone can keep up with what’s going on by earwigging, so an informal ‘mate-y’ style of team management and communications becomes less effective at getting the work out the door

– the ‘Reluctant MD’ may be reaching their limit and the organisational structure (which resembles an upright dumbbell, flat at the top and the bottom, thin in the middle) , production and business processes are creaking at the seams.

Each transition the business inevitably goes through requires a parallel transition in the mindset and management repertoire of the leader or leaders. Einstein’s “We can’t solve problems by using the same kind of thinking we used when we created them.” becomes less of a pejorative and more a statement of plain fact. The thinking, before anything else, needs to change.

It’s not easy to do that by yourself, to yourself. It’s no accident that Einstein used the active verb ‘using’; we don’t have to possess the new thinking ourselves, we just need to use it. So we could learn it, or get it from somewhere or someone else and apply it. If we express Einstein’srule in a different way, from the entrepreneur’s point of view, it might say ‘ You can’t solve problems [of negotiating one of these transitions] by being and behaving the way you did as you built towards this point.’

Each successive watershed demands the entrepreneur expands their management bandwidth, their strategic management skills. Their operational management expertise, that enables them to run the business they have right now from day to day, is good enough to maintain the status quo; it becomes seriously challenged when called upon to envision where to go beyond an endless repetition of the day to day and to then figure out how to get there.


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People talk about growing a business as it were an option, a lifestyle choice. It isn’t. It might well feel empowering to ponder an imagined bifurcation in the entrepreneurial path, to consider a couple of jauntily-angled signs that point, on the one side, to frantic scaling and untold wealth and, on the other, to a genial working day that goes on (more or less) forever. Except it doesn’t quite work like that.

Like an adolescent offspring, a young business is a pain; it will keep trying to grow up. Despite your best efforts to hold it back – conscious or otherwise – there’s an inexorable internal dynamic that makes a business, if it’s any good, need to expand. No doubt a smart economist, or maybe just a decent accountant, has a good explanation for this. Whatever. For a business owner it is either a blessing or a curse;  for many, in theory it’s the first but in reality it’s the second.

Paradoxically, this unstoppable momentum doesn’t stop a lot of creative businesses staying more or less the same size for years. They grow a little, push up the evolutionary scale for a while, only to settle back down to where they were a year, or eighteen months, ago. Having briefly entered the choppy waters of growth, they beat a retreat back to harbour, to calm water. Only it isn’t calm, back where they came from. It’s just a different kind of chop: too much work; not quite enough revenue; too few hours in the day; too little structure; flimsy processes, management structures and profits.

I worked, briefly, with a business that has gone through this cycle every couple of years since its inception. It has tremendous expertise, a charismatic leader and enthusiastic clients who tend to get on board at the top of the cycle and ended up questioning the quality of outputs, the attention to the subtleties in the brief and the evident chaos in project management.  What they experience is the point where the business has the opportunity to push through to the next level of growth but fails to grasp it.

A whole sorry catalogue of causes get blamed for this sort of entrepreneurial Groundhog Day, including – surprise, surprise – our old friend, a lack of investment. The most common culprit, though, is much closer to home; it’s the entrepreneur themselves.

Indeed, the syndrome  is so common it defines a key rule of entrepreneurial expansion; a business only grows at the speed with which the MD and directors can increase their personal Management Bandwidth.

The peak, from which these businesses invariably fall back, marks the limit of the leader’s (or leaders’) current management capabilities. Commercially, growth is there for the taking. The vision, goals, confidence and skills to grab it are not.

They need to be acquired, in either sense of the word – learned or purchased – for the cycle to be broken.