Something just doesn’t feel right

Over the last two newsletters I have discussed how businesses evolve through a common lifecycle, and how that lifecycle has plateaus and dips as well as the rises and successes.  I’d specifically spoke last week about that period of plateau through which some serious soul searching is required, before you can move into a shrink, stabilise and regrow mode.

The Symptoms

So exactly how do you know how to diagnose this situation? Well it usually starts when your gut tells you that something just isn’t quite right.  What you need to do is step back, look unemotionally at your business holistically, and start to review each area in detail.  As an example, here is a starting guide.  If you are starting to agree with one or more of these statements in each section, its a definite sign that you’re reaching, or have reached, a hidden ceiling in your business.

Your People

• You are starting to see a drop in performance from previously high performers
• Staff turnover feels like it has increased
• Employees seem to be disengaged with their work, but feedback is really vague as to why
• Your time managing people related issues is on the increase
• You are starting to lose confidence in the ability of your team

Your Finances

• Revenues are growing but profits are not
• Cashflow pressures are increasing and impacting on delivery
• Every one feels busier, but this is not reflected in profit or bank balances

Your Customers

• Client churn is definitely increasing
• You are fielding more reports of customers being unhappy with what they were delivered
• Sales pipeline is drying up 
• Price driven decisions seems to be leading your ability to win new work

Your Operations

• Projects seem to be continually suffering from scope drift
• Daily tasks are driven by what is urgent not what actually feels important
• You have software in place which doesn’t seem to deliver any data you can review
• There are so many manual workarounds and the systems are too isolated across business functions

Your Leadership Team

• You cannot get the leadership team together often enough to actually plan
• Cashflow and client work always override your own business development and strategic planning
• You are often wondering if this is all worth it

The Root Causes

Well, how did that go? Did you answer yes to more than you answered no? If so, this is pointing towards one of, or a combination of, these root causes:

• Growth has outpaced your systems: you have scaled sales and delivery but operations, finance and HR / People haven’t been equally invested in. The cracks are now showing and causing damage in front end functions.
• Everything is too dependent on you: sorry, but you are the bottleneck.  If you are micro managing and taking part in activities and decisions across the business, the company can only grow to a certain level.
• You are doing unprofitable work for the wrong clients: due to overservicing, and selling to a wider range of clients without clear instruction to marketing and sales, you are working higher volume and lower margin work by underchallenged, unhappy employees.
• Your team are confused: as the team grew, expectations were unclear, leading to confusion instead of collaboration.

The Fix

If you were driving at maximum speed allowed on the motorway and your car started screeching and veering to one side would you put your foot on the accelerator or the brakes?  Almost certainly the brakes. Why, because more speed will not fix whatever is misaligned.  You need to stop the car, get out and get to the bottom of what has happened.

Similarly, when you are in the plateau the fix is not:

• Hire more
• Sell more
• Market more

It’s Less.  You’re just going to misfire more often with more.  Instead its Pause, Diagnose, Stabilize.

We’ll cover this in more detail next week.