New technological platforms and globalization have resulted in a shrinking world and created virtually unprecedented opportunities for rapid, organizational growth. However, rapid growth can be a mixed blessing, as some organizations actually “choke on their own growth.” Organizations without the required “infrastructure” are likely to experience extreme difficulties or even fail– in spite of a successful product or service. Examples of once successful organizations that declined include: Osborne Computer, Boston Markets, and Boarders. Even Uber is at the edge of potential difficulties and even failure.
Growing Pains: Symptoms of Inadequate Organizational Infrastructure
Rapidly growing organizations do not fail without warning. There are ten classic symptoms of impending organizational problems:
- People are not aware of what others are doing.
- People lack an understanding about where the organization is headed.
- There are too few good managers.
- People feel that, “I have to do it myself if I want it done correctly.”
- Most people feel that meetings are a waste of time.
- When plans are made, there is very little follow-up, so things just don’t get done.
- Some people have begun to feel insecure about their place in the organization.
- The organization has continued to grow in sales but not in profit.
These are “growing pains,” which are not only problems in themselves; they are symptoms of a deeper systemic organizational problem. The underlying problem is that the organizations growth has outstripped the ability of its infrastructure to support that growth.
Most entrepreneurs focus on the market and the product to build a company. However, our research and experience has indicated that there are actually seven key aspects required to develop a sustainably successful organization: What we term “the business foundation” and six key “strategic building blocks” that must be constructed upon that foundation. The “business foundation” consists of a “business definition,” a “strategic mission,” and a “core strategy.” The strategic building blocks are the market, products and or services, resources, operational system, management systems, and culture of an organization.
When these key seven components of an enterprise are not sufficiently developed to support the size of the enterprise (as measured in revenues), then organizations experience “growing pains.” We have developed a validated method to measure the “degree of organizational development strength” of an enterprise. We have also created a global data base of companies with different levels of “organizational development strength” and the related levels of likely organizational success (or risk).
Measuring the Degree of Risk
We have also developed a validated method of measuring growing pains and assessing the degree of risk posed by different levels of growing pains scores. We have color coded the scores in five categories (Green, Yellow, Orange, Red and Purple) with the colors ascending in terms of the degree of risk faced by the organization from “sustainably healthy” (green) to “crisis” (purple) and created a data base of with the percentage of companies at different levels.
Growing Pains and Financial Performance
We have conducted extensive empirical research on the relationship between growing pains and financial performance as well as the relationship between the degrees of organizational development strength. The studies all show statistically significant (i.e., meaningful) relationships.
What is the Bottom Line? Growth is good– except that uncontrolled growth causes growing pains, which are risky to the financial heal and sustainable success of organizations.
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