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7 Stages of Growth: Stage 7

7 Stages of Growth: Stage 7

Visionary: 161-500 Employees

What does a Stage 7 company look like?

A CEO’s challenge in Stage 7 is all about transitioning into a large organization without losing what made it such a successful entrepreneurial business. Management’s efforts to professionalize the company often crush the entrepreneurial spirit that is so necessary in order to not to be left behind by newer entrepreneurial firms. A Stage 7 company has between 161–500 employees. Because of its size, the company has started to form layers of bureaucracy that quickly impede performance and growth. Stage 7, called the visionary stage, is a very different world than what’s been encountered in the first six stages.

As the CEO listens to his/her direct reports as well as what other employees are saying to each other, is he/she hearing any of the following:

  • “That’s the way it’s always been done; I don’t know why they want us to change.”
  • “We really don’t have the right people on board to make that change.”
  • “No one cares about what I’m doing, so why should I care?”
  • “I don’t know what’s going on — they never tell us anything anymore.”

If the CEO isn’t telling employees what’s going on, they are making it up on their own. The employees’ verbiage is much different than the leader’s. Theirs is more than likely full of fear, uncertainty, negative speak and attitude.

The primary role of the leader is to spend 75% of his/her time as the Visionary. The leader needs to engage, excite and empower employees to think about and see the new vision of where the company is going from here. The CEO should spend time communicating the vision, the strategic plan and his/her desire to maintain the entrepreneurial spirit of the company that got it where it is today. The CEO needs to make sure he/she is walking the talk.

Don’t let the company fall prey to the invisible employee syndrome. There are now enough employees in the company that the mediocre ones can simply disappear from the day-to-day operations. There may be employees in the company that just aren’t performing at the level they should. It’s sometimes easy to overlook them, allowing these employees to become invisible, and if the leaders do, they are making a mistake. Don’t let them become an invisible negative force in the company — either focus on raising their performance level or part ways.

Required Leadership Skill Base:

To recapture the same entrepreneurial spirit necessary in Stage 1.

  • To operationalize the entrepreneurial spirit in the ranks.
  • To identify emerging markets and emerging technology.
  • To get out from underneath the strategic and operational challenges and to identify and carve out both new opportunities and fields of endeavors.
  • To be able to act as a steward of the culture and the company vision.

The goal is to create a corporate culture that supports entrepreneurial endeavors. The leader’s job is to sustain and propagate the vision and create a degree of disequilibrium and chaos within the company to keep it competitive in all areas. Don’t be afraid to ignite fires of entrepreneurism throughout the company, giving people a sense of what can happen, a new sense of purpose and a desire to step outside the box and find new and better ways to deliver products and services.

The top five challenges in Stage 7:

  1. Products Not Differentiated
  2. Inadequate Profits
  3. Slow Getting Offering to Market
  4. Weak Profit Design
  5. Marketplace Changes Too Quickly

While managing this transformation, the CEO’s number one priority will be the Visionary role (75% of the time). The managers should be running the day-to-day operations, while the leader focuses his/her attention on developing a vision, strategies and culture to reinvigorate the entrepreneurial spirit. The Specialist role is diminished to insignificance (5% 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 customers.

A company in Stage 7 will have an overwhelming tendency to gravitate toward safety and equilibrium. It will start to act like a large company — its decision-making is slower, the product innovation is slower and the bureaucracy is formidable. It’s harder to respond as quickly as a smaller, more agile organization. A leader’s job in a company of this size — along with sustaining and propagating the vision of the company — is to create a degree of disequilibrium and chaos within the enterprise.

What’s the goal of the CEO? Create a corporate culture that supports entrepreneurial endeavors. How? Start by going through the company lighting fires of inspiration and innovation. Be relentless in allowing for mistakes in the pursuit of new endeavors. Get out from underneath the strategic and operational challenges in order to identify and carve out new opportunities. As the leader navigates through Stage 7, the primary goal is to re-instill an entrepreneurial spirit in the business. The CEO needs to create a corporate culture and structure that supports entrepreneurial endeavors. Re-instilling the entrepreneurial spirit that the business had when it was a much smaller, much more nimble company is critical.

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.

Builders:

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

Protectors:

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

For Stage 7, the Builder/Protector Ratio is 2:1 – two builders to one protector. This is an aggressive BPR. It is aggressive because the CEO needs to instill the entrepreneurial spirit by encouraging risk-taking and challenging the status quo. However, there needs to be some caution to avoid overconfidence or carelessness, which could give competitors an opening to attack.

Identifying new opportunities, fostering exploration, developing action plans and assigning the necessary resources to manifest those plans is the new paradigm. There might also be several other options to consider — from creating smaller entrepreneurial divisions by product/service to spinning off ventures as separate entities.

Foundation Building Blocks for Stage 7:

Strategic Plan

Implement a sophisticated strategic plan that addresses how to create competitive advantages. The plan should address markets, products, resources, operational processes, management systems and company culture. Use the board of directors to develop the plan.

Management Systems

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

Financial Systems

The financial system should include a three-year profit plan, financial modeling, cash flow forecast and dashboard.

Work Community

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

Marketing/Sales

Develop a well-defined sales and marketing system for salespeople to use. Have a customer intelligence system to stay abreast of customer and market data.

The strategic focus the CEO is now using will not work without the buy-in of the leadership team and the entire staff. Seize the opportunity to tune into the perspectives of the team. An emotionally connected leader who will listen and learn will be rewarded with strong growth, targeted planning and engaged employees. It is also about improving the quality of his/her staff from hiring, to assimilating, to making them an important part of the company’s success and to unifying them as a team.

In Stage 7, it’s also critical to strategically rethink the company’s positioning in the market. It is no longer a big fish in a small pond, but a small fish in the ocean and the company’s ability to survive just took on a different focus. But, there are also new opportunities available because of the size of the business. Challenging all assumptions as they relate to the leader’s vision, mission, customer needs and products and services is crucial. Don’t allow managers to simply rehash old issues.

The CEO’s challenge is to become the Visionary senior executive, while still maintaining the teamwork and collaboration that are crucial to leading the team into the future. The leader needs to engage, excite and empower the employees to think about and see the new vision of where the company is headed. Spend time communicating the vision, the strategic plan and the desire to re-instill the entrepreneurial spirit of the company — the very culture that got it where it is today. Then the CEO needs to make sure he/she is walking the talk.

As the CEO evolves into a Visionary executive, the leadership modality (how to lead the whole company, the leaders presence in the company) should be Dominant. This is important, as he/she becomes a catalyst to innovation, risk-taking and challenging the status quo.

The Non-Negotiable Leadership Rules for a Stage 7 Company:

  • Overhaul business model.
  • Get to know a little something about every employee.
  • Sell everyday.
  • Create a company-wide leadership succession plan.
  • Generate, track and preserve cash.

 

Back to The 7 Stages of Enterprise Growth Overview

Learn More:

The 7 Stages of Growth – Definitions

The Growth X-Ray Process

 

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