Mighty Midsized Companies: How Leaders Overcome 7 Silent Growth Killers by Robert Sher

Author:Robert Sher [Sher, Robert]
Language: eng
Format: mobi
ISBN: 9781629560076
Publisher: Bibliomotion, Inc.
Published: 2014-09-15T14:00:00+00:00

The Four Signs of Operational Meltdown

So, is growth bad? Of course not. Growth is good, especially if you support it with the right teams and systems. But if your operations aren’t matched to your growth, your business can turn sour rapidly, even in the midst of plenty. And unlike our start-up, the stories rarely end happily. You’ll know you’re heading for an operational meltdown if you recognize any of these four telltale signs:

1. An overbearing sales culture. A company I know was founded by a salesman. He was passionate and knew how to ring the bell. But as his company grew, he undervalued and underpaid his finance and operational executives. It’s not surprising that those managers were weak. Bungled shipments meant customers didn’t pay the balances on their invoices in a timely manner. Product had to be reshipped. Inventory grew. Turns slowed. Costs rose. The CEO, frustrated, often asked, “What’s so difficult about getting the product out?” Meanwhile, his salespeople (genetically programmed to say yes) kept on saying yes to more and more customers. Eventually, the company started delivering so late that those customers delayed payments by months. The consequent cash shortfall, combined with the deeply embedded problems in the business’s culture, ultimately caused the business to go bankrupt even as the salespeople kept ringing the bell.

2. An outdated IT or physical infrastructure. Small companies can add infrastructure in little chunks as the business grows. But the bigger a midsized organization gets, the longer it takes to build facilities and IT, and the more work it takes to teach teams to use them effectively. I hear some operations hotshots boast about “changing the wheels on the car while it’s moving,” but this is a last-resort way to do anything. Really. Would you try to change the wheels on your car while it’s moving? I don’t think so. Yes, building infrastructure takes resources away from new product development and customer services, and you don’t like doing that. And when things are running well, it’s easy to ignore infrastructure needs in favor of growing the top line. But what use is growing the top line if your infrastructure keeps draining the bottom line and putting your company at risk of a meltdown? Pretty soon, your top-line growth will stall. If you try to build a new infrastructure as you drain your resources trying to grow, you’ll get run over.

3. A skills shortage. Sadly, many high-growth companies outgrow their teams. That may not be the fault of employees swamped by the day to day. Operations is a profession. And even if you have those professionals, midsized businesses need them to interact with all the business’s functions. Team play is an art in itself. You’ll know you’re about to hit the wall when you have important initiatives and challenges and no one competent, available, or willing to lead them.

4. Too many eggs, not enough baskets. One of the reasons some CEOs hesitate to spend on infrastructure is that they are overly dependent on one or two big customers and see the diversion of resources to operations as a risk.

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