4 Dysfunctions That Will Eat Away at a Growing Business
We see four common pitfalls occur as businesses grow from small to medium and into large businesses. Left unchecked, they can do serious damage.
1. Unclear Vision
One of the most problematic dysfunctions is when the company's strategic vision and mission is unclear, or constantly changing. Oftentimes, due to high turnover and/or misaligned incentives at the executive level, organizations can become shortsighted. When executives are operating to meet short-term goals, the organization may suffer. Alternatively, the vision might be clear, but if management's actions do not line up with the stated objectives, employees are highly demotivated due to the mixed signals they are receiving.
2. Poor Leadership
Similar to having an unclear vision, a lack of strategic alignment amongst management can be highly damaging to an organization. If each executive has differing (and possibly conflicting) objectives, investments of time, money, and resources can be counterproductive. Complex strategies are not necessary to running a successful business, but efficient management is essential. Management teams need to organize, plan, align and motivate employees to lead the organization in an effective way.
3. Change-Averse Culture
Employees generally have a desire to feel as though their contributions make a difference and their opinions make a difference; however, many organizations can be viewed as change averse. This can be a result of management teams that view people who disagree with the strategy as a nuisance or not a team player. To avoid this problem, management needs to put their trust in the people they've hired and empower them through true ownership.
Many companies are structured with too many organizational layers, which makes it difficult to get things done. Time is wasted navigating the organizational layers rather than creating results. This leads to attrition of highly motivated employees and decreases productivity.
While we've seen these dysfunctions in large organizations, it is critical for growing businesses to recognize these operational warning signs as the company grows. Businesses become dysfunctional over time, so management needs to be proactive in resolving problems as they arise. Take some time to assess the health of your company and adjust accordingly. Don't let dysfunction creep into your team.
What are your challenges with keeping the organization focused as the company grows? Send us your thoughts at firstname.lastname@example.org
Avondale Associate Lindsay Comstock contributed to this article.
KARL STARK AND BILL STEWART | Columnist | Co-founders, Avondale
Karl Stark and Bill Stewart are managing directors and co-founders of Avondale, a strategic advisory firm focused on growing companies. Avondale, based in Chicago, is a high-growth company itself and is a two-time Inc. 500 honoree.