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What does Business Growth and Mother Nature have in common?

Posted by Joanne on February 13, 2013 Comments Off

I am taking a course called Grow to Greatness through Coursera, an online platform for open-access, non-credit classes, available at no cost to audiences around the world. Along with 67,000 students from the across the globe, I am learning from Edward D. Hess, Professor of Business Administration at the University of Virginia Darden School of Business and author of Grow to Greatness. Professor Hess is so good that I actually forget that his lectures are recorded and not real time. He a great story teller which is one of the signs of a very good lecturer.

The focus of the course is on how to successfully grow an existing private business. It is based on the Hess’s research and thirty years of real-world experience advising private growth companies. I am taking it because many of my clients are small business owners and I have seen first-hand how accelerated growth (or no growth at all) can diminish the success of an organization. I also run my own business providing HR, recruiting and training solutions to organizations wanting to create happy, healthy, and productive workplaces, so the key learning applies to my business as well.

The first week was awesome and we were asked to highlight three key moments that stood out. Only three?

Growth is like Mother Nature. Growth can be good and it can be bad.

Mother Nature gives us sunny days (good) and it also gives us tornadoes (bad). Just like Mother Nature, growth can be good or it can be bad. Growth is good when everything is in place to support it, but it is bad when it happens when people, processes, and controls are not in place or ready to support that growth. Businesses need better and more people, processes, and controls in place for successful growth. Many businesses have imploded when growth happened to quickly without people, processes, and controls in place. Growth can stress quality controls, financial controls, diminish your customer’s value proposition, dilute your organizational culture, and put you in a different competitive space. For example, perhaps your size of organization put you in competition with other small businesses, but once you grew, you found yourself competing with larger organizations that you just could not compete against. I worked for a privately owned real estate company back in the day when it was a small company. The company merged with a larger company. I happened to be interviewed for the company newsletter, along with other employees and managers, about the change. I remember saying something like, “It’s an exciting opportunity, but I hope it does not change the small family-like culture we have right now.” I was an administrator at the time and I remember managers telling me how brave I was to say what I said, because everyone was thinking the same thing. Of course, the culture of the organization changed. There was no way it could not change. The organizational culture was certainly “diluted” and the merger put the company in competition with other big players in the field.

Businesses must “improve or die” NOT “grow or die.”

In week one, we learned the truth about growth. One of the myths perpetrated in the business world is “Businesses must grow or die.” This is a business axiom that has no validity or research to back it up. In fact the adage, “Businesses must grow or die” is a myth that is much better replaced by, “Businesses must improve or die.” Was that what happened to RIM, now called BLACKBERRY? Growth (and innovation) in the earlier days put them on top and allowed for the financial funds to build a stunningly beautiful building, but not enough was channelled to improving the product and keeping up with the competition. It’s focus should have been on improving.

Always carry something on your worry plate

Good entrepreneur always have something to worry about. There is always something on the entrepreneur’s worry plate, and the minute that worry disappears that is the start of problems and business decline. I know that one of my favourite clients had a lot of worry during the recession. He told me he stayed awake at night worrying about whether he had the sales to keep all forty of his employees and their families safe from the impact of lay-offs. (How can you not love a client who thinks like that?) I think always having something on your worry plate, also has something to do with ego. If you have a successful entrepreneur thinking he’s got it made and focusing on ego with no worries about the business, customers, and employees, that is the moment the business is in trouble.

Growth is not linear.

Growth is not linear and businesses need to expect the ups and downs that come with evolving a business. At times the business might even move backwards, and then forward. It is unwise to expect year after year of consistent growth in a linear fashion. That very rarely ever happens.

Successful growth depends on more and better people, processes, and controls.

If growth is on the table, make sure that your people, processes, and controls are ready.

People: Do you have the right people in place? Hire slowly and fire quickly. Hess states that research shows that most business owners do the exact opposite. They hire too late and too quickly when there is chaos, and they put up with poor performance or poor fit for way too long. Based on my HR practice, in most cases with my clients, I found the same to be true. Take the time to understand the competencies (skills, knowledge, and attributes) necessary to help the company succeed. Don’t hire a clone of yourself; rather hire someone who has complementary skills. If you like sales, but hate execution, hire someone with great organizational and tactical skills. Listen to your employees and observe the workplace. Is there high stress and tension that does not seem to abate? Are there increased conflict and sickness? These may be signs that your people are not keeping up with growth. Trust and engage your employees, and indeed, love them like you love your customers.

Processes: Design, manufacturing, sales, and distribution processes need to be researched and in place. Face to face contact with suppliers and manufacturer, if you decide not to do this in-house, is key to developing trusting relationships. Research the best processes. Are your suppliers slipping? Are deadlines being missed? Is your database and invoicing experiencing glitches? These may be signs that your processes are not keeping up with growth. There are so many variables with growth. If your invoicing system won’t handle the volume and keeps crashing, that is not good for business.

Controls: Don’t abdicate check signing to someone else and keep a very close eye on cash flow. We read a case study where one business owner found out that her bookkeeper was defrauding the company with the help of the shipping personnel whom the bookkeeper had recommended for hire. The owner ended up having to fire all of them. Is quality slipping? Is cash flow becoming an issue? These may be signs that your controls are not keeping pace with growth. Make sure you have controls in place that give you the information you need to make good decisions.

Be careful about customer concentration – don’t bag the elephant

Many small businesses might think that concentrating on one large customer (bagging the elephant) is the best growth scenario, but it can actually put them at risk. I know from my own experience that large corporations often have 60 to 90 day payments terms, and as a small business entrepreneur, those terms are not the best for me. I worked with the client who found out that hard way that bagging the elephant was not good for business. When that large client decided to bring the work in-house, the client went bankrupt. To reduce risk, it is better to have a diverse set of smaller clients, then bagging the elephant.

Love your customers, not your product

Research shows that high performance companies have: Strategic FOCUS, operational excellence, constant improvement, customer centricity, and high employee engagement. Hess used the analogy of 2 inches wide by 2 miles deep – now that’s laser focus. The emphasis should be on taking care of your customer and not about your love of your product or service. Entrepreneurs who spend time defending the product and service and not actively listening to customers will not succeed in the long run. Have you run into a customer with a specific need and budget? Of course you have. Did you try to promote a BMW version of your product or service, but they only wanted (and could afford) the KIA version? Less time should be spent “defending” a specific product or service and more time on listening to what the client wants.  Of course, if you want to promote your high-end product or service, you can also find the ones that value it and have the budget for it, but that still takes listening to your customer and having laser focus. That also means saying “NO” to opportunities that don’t hit the company’s sweet spot.

The “gas pedal” approach to business growth

Businesses should use the “gas pedal” approach to growth. This approach allows for spurts of growth, and letting up on the gas pedal to let people, processes, and controls catch up. Doing so helps ensure there are no negative impacts on quality, production, distribution, customers, employees, culture, and cash flow.


Biological growth

Hess shared with us the biological certainty that many species limit their growth to increase chances of survival. He applied this to business growth calling it biological growth. At some point in the growth of a business, a once agile company can become bogged down by bureaucratic processes and controls. Growth increases complexity and the need for additional management and skills. And as a company evolves and grows it might find that the people who helped get them to that point, won’t get them to where they want to go. Employees need to be educated and trained and in some causes the solution will be to move them into another role or to part ways if the skills needed are not there. It is ironic that my logo symbolizes the biological growth concept and the key learning from the first week. If you look at my logo you will see the “roots and the leaves” of a plant. If we want the plant to grow, we need to water it, fertilize it, and make sure it gets sunlight. If we want the plant to grow faster, we might think that if we provide it with more water, fertilizer, and sunlight it might grow faster, but in fact, we can kill the plant.

Growing too fast can kill a business.

What are your thoughts? Have you experienced good and bad growth with your own company?

 

Royce & Associates provides outsourced HR support to organizations. We can help with hiring and developing the right people and making sure HR processes and controls are in place to help support “good” growth. Contact us.

Photo credits: Purchased for use on this site only.





Effective communication skills gap to widen in the workplace

Posted by Joanne on February 2, 2013 Comments Off

In the article “Is the Internet bad for us?” (The Star, Fri Dec 28 2012) Josh Tapper, the author, notes that:

  • CommunicationThe average Canadian spends more than 45 hours online each month. (ComScore, a global internet use tracker)
  • More the one-third of wired Canadians use internet-ready digital devices before getting out of bed in the morning, and nearly 50 per cent click away right before falling asleep. (Angus Reid/Vision Critical poll conducted for the Star)
  • In June 2012, Canadians sent nearly 270 million texts per day. In 2005, the monthly average was 4.1 million. (Canadian Wireless Telecommunications Association)

Research also suggests that large amounts of time spent online results in a decrease in self-esteem, increase in stress and anxiety, decrease in attention span, decrease in how efficiently we multi-task, and a decrease in communication skills. The article goes on to suggest that the skills gap is even more pronounced among teenagers and young adults of the Gen Y generation.

Gen Y is broadly defined as those born in the 1980s and 1990s. While it is never a good idea to over-generalize for any generation, Gen Y bring many new skills to the workplace. These skills include being tech-savvy, socially connected (on-line), and collaborative, all of which are great skills to have in the workplace. But as more Gen Y enter the workplace, the communication skills gap widens. It is ironic that the on-line skills that are a strength seem to result in a skills gap when it comes to face-to-face interpersonal communications skills.

In Grown Up Digital: Gen-Y Implications for Organizations, Fonda D. Na’Desh writes that “Gen Y lacks communication skills.” She shares that participants in a study described Gen Y coworker’s communication styles or communication limitations as a negative characteristic, stating that Gen Y coworkers were not diplomatic in conversations, impatient with explanations and questions, needed to practice tact, were very outspoken, and were bluntly honest. It’s easy to see why there is a communication skills gap, especially with face-to-face communications, when this generation has grown up communicating by text, and online. There is no way that online interactions and texting allow the participants to adapt their communication style based on feedback received through tone of voice, eye contact, and body language.

Gen Y will comprise more than 40% of the U.S. workforce by 2020. (U.S. Bureau of Labor Statistics) There will be a huge wave of Gen Y in the workplace and the interpersonal communication skills gap will continue to widen.

Perhaps at some point we will all work virtually and face-to-face or verbal communication skills will not be necessary, and indeed, our brains will become rewired. But in the immediate future, effective interpersonal communications skills are essential for success. Thankfully, interpersonal communication skills can be learned, and improved through practice and education.

What are you doing in your workplace to ensure your Gen Y workers have the interpersonal communications skills necessary for success? Are you investing in the development of this essential skill for all your people in your workplace regardless of generation?

Photo Credit: Istock – Purchased for use on this site only

 

Royce & Associates offers an Effective Interpersonal Communications program and Generations at Work workshops to diminish the interpersonal communication skill gap. If your workplace would benefit from our programs, please contact us for a complimentary one-hour review of your learning and development needs. At that time, we will also share with you the key characteristics of effective communicators. In the meantime, please review our blog archive series on the interpersonal communication skills of active listening and meeting personal and practical needs.

Related blog posts:

Are you a good listener? Active listening skills 1/5

Are you a good listener? Active listening skills 2/5 (Attending behaviours)

Are you a good listener? Active listening skills 3/5 (Open-ended questions)

Are you a good listener? Active listening skills 4/5 (Paraphrasing)

Are you a good listener? Active listening skills 5/5

Generational communications preferences – Gen Y and Boomers

Meeting personal needs for effective communication

Meeting practical needs for effective communication

Effective interpersonal communications workshop

 






 Joanne Royce



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