7 Stages of Growth: Stage 5

Integration: 58 – 95 Employees

What does a Stage 5 company look like?

Stage 5 has the CEO focus back on profit as the Gate of Focus for one simple reason. The company has many more moving parts and requires a consistent source of fuel — sales! In Stage 5, the company must start integrating teams and processes — it’s important that the divisions have their own budgets. With upwards of 95 employees, the CEO has to rely on key managers to help direct the business.

Required Leadership Skill Base:

  • The awareness to set into motion the design of a business plan with detailed budgets.
  • The ability to manage a competent team of professionals.
  • The ability to address Human Resources issues with regard to the team.
  • The ability to see the need to manage growth.
  • The ability to wear just one hat – Chief Executive.

The company has entered a larger, more competitive arena and subtle changes can mask bigger problems. For instance, managers hired and trained back in Stage 4 are much more confident, asserting themselves daily and fundamentally making changes to all aspects of the company. It’s critical in Stage 5 that the managers help develop their own budgets — they are held responsible for the strategic implementation of that budget and should understand the impact of not meeting their forecasts or expenses.

By Stage 5, a company should also have started to develop stronger financial reporting systems that go along with supporting divisional working budgets. The need for a qualified controller or CFO becomes more urgent. The CEO, if he/she is the one controlling the budget, will have a hard time being a builder one day and the protector the next day.

The divisions or departments, because of the work done in Stage 4, are now working well together. Marketing and sales, if separate divisions, share information regularly and compare notes to make sure marketing messages align with sales promises. Product development meets regularly with sales and engineering to make sure products meet demand and more importantly, drive the customers to want more.

The CEO’s skills as a leader are more critical than ever as he/she will want to encourage his/her managers’ autonomy while still making sure he/she protects and maintains the culture and the values the company has developed over the years. The CEO’s presence in the company must take on a more Facilitative modality — the ability to encourage and offer guidance to those managers must be balanced by getting their feedback and listening to their ideas on larger issues. The CEO should lead by showing value in people’s input and should work to get commitment through participation, not dictation. Having spent the time and energy to build a great team, look to them for guidance and advice in their areas of expertise. Teamwork and collaboration is crucial to lead the team into the future.

A Stage 5 company has 58 – 95 employees. Improving sales is its primary challenge, and its Gate of Focus, not surprisingly, is profit. The CEO must spend 60% of the time as a Manager, 30% is still as a Specialist and only 10% of his/her time needs to be Visionary. The top leadership style is Democratic. Transparency and empathy are essential competencies for this stage of growth.

The top five challenges in Stage 5:

  1. Improving Sales
  2. Difficulty Forecasting Problems
  3. Cost of Lost Expertise
  4. Weak Profit Design
  5. Staff Training

The company went through another Wind Tunnel as it moved from Stage 4 to Stage 5, so letting go of methodologies that no longer work is now the responsibility of the managers. This is a difficult transition to navigate, requiring diligence on the part of the CEO to make certain managers aren’t becoming complacent. The CEO must make sure that managers have identified and are tracking key indicators for their divisions so at any time the CEO knows what is working and what isn’t working. It’s again time to rethink how processes work and uncover areas that are no longer as efficient as they once were. Examining profitability, productivity and performance from a company-wide perspective must be the job of every manager.

Companies enter Stage 5 in a Wind Tunnel where the level of complexity creates staff confusion. This will occur as leaders begin to move the company from a departmental focus to a companywide focus. It is a transition that will initially confuse staff because the leaders previously wanted them to build strong departments.

On the market front, the company is no longer invisible to the outside world. The competition now knows about the business and is beginning to attempt to steal market share. It’s a whole new environment. The business must continue to improve in all facets to continue to move upward along its growth curve.

As CEOs navigate through Stage 5, the primary goal is to integrate and unify their senior executives into a collaborative company-focused team. When entering Stage 5, it’s possible the management team was more focused on their own departments than the company as a whole. During Stage 5, the leader needs to broaden each manager’s focus from a single focus to a dual focus. As the teamwork builds, the managers will begin to work together, which will allow them to take the business to a whole new level. This will also prepare the company for Stage 6.

There’s a subtle difference now that the company has reached or surpassed the 50-employees level. Teamwork and collaboration is crucial to lead the team into the future. Thus, the CEO’s leadership modality should be Facilitative, while managing is still the major role (60% of the time). The leader should lead by showing that he/she values people’s input and by getting buy-in through participation and influence, not by dictating. Having spent the time and energy to build a great team, look to them for guidance and advice in their areas of expertise. While managing this dynamic organization is the number one priority, leaders have to begin shifting toward a more Visionary role (30% of the time). Managers should be running the day-to-day operations, while the CEO focuses his/her attention on new opportunities (and makes sure the managers have the support they need). The Specialist role is diminished to insignificance (10% of the time), but the leader must continue to understand how well the product or service is meeting the needs of the ever-changing market and constantly evaluating if the products and services are solving customer problems.

The Builder/Protector Ratio (BPR) is a measurement of “confidence vs. caution.”  It is a critical tool to gauge the business’ ability to accept change, respond with confidence to change and successfully navigate the change.


  1. Thrive on risk
  2. Are always looking for new opportunities
  3. Don’t back down from the everyday challenges


  1. Thrive on caution
  2. prefer to apply the brakes (and should be encouraged to do so when appropriate)

In Stage 4, as the company transitioned to being professionally managed, the ideal BPR was 3:2.  For Stage 5, the Builder/Protector Ratio is 2:1 — two builders to one protector. In Stage 5, because there are experienced managers who have built strong departments, the builder mindset is twice the protector mindset. This allows the leader to place more emphasis on expanding the business. However, there needs to be some caution to avoid overconfidence or carelessness, which could give competitors an opening to attack.

Foundation Building Blocks for Stage 5:

Management Systems

Use a performance management system that address objectives, goals, measurement, feedback, evaluation, and rewards. There should also be a project management system and templates.

Financial System

The financial system should include profit plan, financial modeling, cash flow forecast and dashboard.

Work Community

The hiring system should help identify the skills that are needed and then find, recruit, select and hire great employees. There should be a plan for each employee describing expectations, performance measurements and actions that will be taken to help him/her succeed.


Utilize a well-defined sales and marketing system that salespeople are using.  Implement a customer intelligence system to stay abreast of customers and market data.


In-house or outsourced COO, CFO and HR professionals.

The Non-Negotiable Leadership Rules for a Stage 5 Company:

  • Integrate management team into an inter-dependent execution-focused leadership unit -focused on company goals.
  • Overhaul the profit design.
  • Establish a one-year operational business plan.
  • Establish a fully integrated “living budget” by revenue group and by department.
  • Allocate 3% of the employee salaries for training.


What does a Stage 6 company look like?