The seven stages of a growth cycle

Early struggle, fun, whitewater, predictable success, treadmill, the big rut, and death rattle. These are the seven stages of growth cycle presented in Predictable Success: Getting your organisation on the growth track and keeping it there by Les McKeown.

No matter how a new venture is launched, no matter what preparations you make or how much you think you've learned from ‘the last time,' the first stage, viz. early struggle, in every new venture is a fight to achieve liftoff, explains McKeown. For instance, were you to read the history of Apple I in Wikipedia, you would learn how, ‘using a variety of methods, including borrowing space from friends and family, selling various prized items (like calculators and a VW bus) and scrounging, Jobs managed to secure the parts needed while Wozniak and Wayne assembled them.'

Start with struggle

The book notes that ‘early struggle' is never exactly the same for each new venture, because every new business has its own unique set of variables – the skills, knowledge, and experience of the founding entrepreneurs, how established the product and market is, and how much cash there is to start with. Importantly, a key difference between early stage and the other stages is that if the business fails in this, it would die. In contrast, “If a business hits problems in any other stage of predictable success, it can always retrace its steps back to an earlier stage in development, regroup and prepare for another push.”

The author cites findings from official data in most developed countries – such as of the Internal Revenue Service in the US, and the UK taxman - that about two-thirds of all registered businesses do not survive past the first three years. He observes that the actual figure can be higher because many businesses never make it to the stage where they register with the local authorities.

A valuable insight offered in the book is that your goal should be to get out of early stage, rather than become involved with people who are addicted to early stage. Crazy it may sound, but there are people out there who are addicted to the early stage phase and are constitutionally incapable of getting themselves out of it, cautions McKeown. His angst is not directed towards the serial entrepreneurs who have a healthy respect for early struggle, but towards people who love playing the venture capital game, or get hooked on the crazy start-up vibe, or adore their patented gizmo so much that they cannot bear actually commercialising it.

The fun part

Next comes the ‘fun' chapter, about fast growth and early success, opening with a quote of Larry Page, Google cofounder, thus: “I want to run a company where we are moving too quickly and trying too much. If we don't [make] any mistakes, we're not taking enough risk.” In fun, as McKeown describes, the chief focus of the business shifts from stabilising cash flow and finding a market to selling, pure and simple.

It is not that cash flow becomes unimportant; it is simply that in fun, the business is making sales at such a rate, and has such relatively low costs, that the cash flow seems to look after itself, he adds. “Compared to the inward-looking tenseness of early struggle (‘Will we survive? Will we hold on long enough?'), in fun there is more of a feeling of outward-looking ease (‘Hey, we made it! And look at all this new business lying around!' There is positive momentum and energy, and less of a sense of pushing a large rock uphill.”

A nugget of HR wisdom is that when an organisation is in the fun stage, the pace is frantic, everyone is committed and the morale is sky-high. While there will be fraught times, as McKeown reminds, the close-knit team members – usually hired personally by the owners and selected for their loyalty and positive attitude more than their skill set – is more often pulled closer by hard work and challenges than driven apart.

Interestingly, the opposite can be true of individuals who need a lot of structure, who desire titles and clear boundaries, or who thrive on process and systemisation. For, much of the fun in the fun stage is the high degree of personal challenge resulting from the unstructured, freewheeling, almost chaotic flexibility of the organisation. “Job responsibilities are rarely defined and rarely stay the same. Initiative is valued, projects morph constantly from one thing to another, and opportunities to do new things abound. The ability to cope with ambiguity and imprecision is vital. If you have that, fun will indeed be fun.”

Enter, complexity

After fun comes the whitewater stage, when you battle complexity to become efficient. Quite instructively, the chapter on this stage begins with a one-liner from David Neeleman, former CEO of JetBlue, as follows: “You found a company, you run it, then it runs you.” The author narrates a scene from a typical whitewater stage, with paper everywhere – forms, memos, and client designs – splayed across disorganised desktops, stacked on top of file cabinets, piled on the floor.

The main work area, originally playfully designed with exercise balls as chairs and LEGO tables to encourage creative thinking and collaboration, had been replaced with drab, makeshift cubicles, he recounts. “Most striking of all, instead of the exuberant, funky, focused and energised team of people that had greeted me previously, the room was full of tired-looking, harassed multitaskers, all of whom seemed too busy to give an unknown visitor more than a cursory glance. The atmosphere was strained and brittle.”

A section titled ‘the boiling frog' alerts that whitewater does not happen overnight; the slide is subtle and gradual. The simple indicators of whitewater can be missed shipments, wrong purchases, and customer complaints. Over time, however, the organisation may end up, say, missing at least one delivery every week, purchasing returns climbing up to 11 per cent of total purchases, and customer complaints becoming frequent enough to be directed to someone other than the boss. “As whitewater builds in intensity, the organisation's time and resources are increasingly – and painfully – redirected from the care and feeding of the sales function to firefighting the growing number of errors and emergencies appearing in its operational (non-selling) activities…”

Recommended addition to the business analysts' shelf, for the numerous takeaways that can let you put an enterprise on the table and thoroughly dissect it.

Tailpiece

“Whenever our predictive analytics team hits a stone-wall…”

“They try newer simulation models to stimulate themselves?”

“No, they switch to astrology!”

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