As organizations scale, the sheer mass can overwhelm leaders and I’ve found that many are unprepared for the impact of rapid scaling. Once they start to hire more employees and grow, leaders often don’t consider whether they have the right characteristics to lead the organization to success.
I generally see three phases of organizational development for companies. Let’s explore each phase and discuss the role the leader plays in each phase.
At this stage, there are no rules. Structure is low, creativity is high, and process and procedures are virtually non-existent.
Most of the time you are flying by the seat of your pants and nobody really knows what their role is, or cares, because it’s all hands on deck! Financial performance can be pretty flat and you do what’s necessary to make payroll.
The business lives and dies on the power and persuasion of the leader: the leader has a compelling vision and everyone buys into this vision and does whatever is necessary to make it a reality. Identifying the right leader is crucial if a start-up wants to get off the ground. You need a leader that others can get behind and who people will follow. The leader is single-minded, highly driven, sales focused and able to convince customers to endorse the innovative product.
You know that you are successful when you are forced to move out of this phase. As you make more money and drive more sales, the need to be less chaotic and more focused increases.
Here, we see significant processes and procedures put in place to manage the growing number of people, products/services and infrastructure while still managing the day-to-day business activities. You want to replicate the pattern of success, so processes, systems and hierarchies are put in place to support efficiency, predictability and growth. People are deployed more effectively and we may see a shift from generalists to specialists.
The reality is, that the role of leadership changes as you move into the Normative phase. The leadership style now needs to be more managerial or operational. Leaders must become an enabler, coach, mentor and strategist who recruits a team of manager-leaders who are empowered to lead others.
Assuming you are growing, and experiencing success, you’ll start to find that competitors copy you and can replicate what you do faster, cheaper and better. This can start to level-off your growth. The offering that used to be highly profitable is now feeling competitive pressure, and working harder or smarter is not likely to change that. Transformation is necessary at this stage: transforming the culture to re-inject energy, spirit and passion.
When an organization is in the Normative phase, you will see employees being promoted into leadership positions based on their administrative and managerial ability. In the Transformative phase, you need people who are built to lead: who are able to adapt to change and bring the organization with them. To do this, your organizational leaders will need to redefine existing processes and procedures and bring an entrepreneurial spirit back into the company.
Where does your company fit within these three phases of organizational development? Do you have the right leadership traits in place to succeed and grow?