A college friendship that turned into a successful business partnership had grown into an 11-million-euro manufacturing business. Founders were already planning their largest investment so far – a new production facility that would increase their production capacity by factor of 10. They were already experiencing significant growth of 30% per year, but knew that for their investment to work, they needed to transform the company and prepare for continued growth.
The founders had already started the process of transformation by hiring professional managers with industry experience, forming a senior leadership team, and developing a team of middle managers; but they knew much more needed to be done. The founders had already identified several initiatives that they wanted to pursue to support the company’s continued growth. These included:
- defining cultural values and agreeing on core principles that needed to be communicated and understood by the newly appointed managers;
- implementing more formalized goal setting, strategic planning and performance management;
- re-designing core processes to support efficient and effective operations and the company continued to grow;
- creating processes to ensure that managers at all levels would have the skills they needed.
The founders recognized that they couldn’t do everything all at once and needed support in identifying the specific sequence and approach for implementing these initiatives.
Applying our stage-based system logic and diagnostic tools, we identified that the company was already at Stage III of organizational growth – Professionalization – transitioning from entrepreneurship to systematic management. However, all of the critical system layers, needed at this stage, to absorb the planned growth and turn it into sustainable success were skipped. The founders had disagreements on key strategic issues, which led to misaligned communication and sometimes conflicting directions for the rest of the company. Some differences in “how we do things around here” were also visible and were creating a risk for the onboarding of future middle managers. It was clear that the first focus for this company needed to be on achieving alignment on strategic issues and clearly defining the company’s leading principles and core values. The second phase would focus on leadership capability enhancement and on implementing performance management process.
The first phase of strategic planning not only introduced a structured approach to the process, but also helped the founders come to an agreement on how to address key strategic issues. The output of this effort was a formal, written plan that helped managers at all levels understand where the company was headed and what they needed to do to support the achievement of the company’s goals. Company values were defined and based on them behavioral norms for management and expert personnel were created. A customized leadership capability program started with re-defining leadership roles to match the future needs of the company. Leaders were supported by formal skills training and individual coaching to make the transition into their new desired roles. The performance management process was introduced with a pilot group first, before extending to the whole company.
Two years later and couple of months before the official opening of their new production facility, the company had closed the gaps between what they had built as company infrastructure and what was needed to accommodate the planned growth and were ready to pursue it.