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STRATEGY

Growing Like Gangbusters? Then It's Time for Change

Tomorrow's growth won't resemble today's, especially if you're growing at a rapid pace.
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All of us who manage rapidly growing businesses are faced with the continuous problem of sustaining that growth. The problem is that, even for companies that are engineered for growth, growth going forward looks nothing like the growth we've already experienced.

Let's take the Inc. 500 companies as an example. Over the past few years, the cutoff for the 500 fastest-growing companies in the U.S. was around a 10x growth rate over a three-year period. Most companies started their three-year run as small, nimble teams, with revenues in the six figures. They were able to shift as customer opportunities surfaced and they put maximum effort into every growth opportunity that came their way.

Once a company grows at a 10x rate, however, it's in a completely different boat, and often the boat is in an entirely different ocean. The current revenues of the Inc. 500 companies range from a few million to more than $100 million. These companies have dozens or even hundreds of employees and may be building businesses in multiple markets.

We've seen a number of companies successfully sustain growth past the initial 10x push into the Inc. 500 list. In each of these cases, they were able to make three key adjustments to propel their growth into the next horizon.

1. Customer Focus: Wide to narrow

As a small entrepreneurial company, you need to adapt quickly to your customer needs across a wide spectrum. But as companies get bigger, sustaining growth often means narrowing your focus. This allows you to scale the business around a key strength that fuels your growth.

2. Organization: Unstructured to structured

A small entrepreneurial company needs to break down barriers and move the team toward the highest-value activities. But once a company gets to a certain scale, this lack of structure becomes a hindrance to growth. Larger growth companies need structure to define roles, create clear accountability for results, and ensure that they can scale the business beyond a few customers, locations, or products.

3. Leadership: Brute force to visionary and operational

Every small company needs a motivated and charismatic entrepreneur, or two, who can take personal responsibility for building the company. In contrast, a larger organization needs a visionary who can get the team on the same page--without forcing them to do so.  They need a coach, rather than a star quarterback. In other words, they need a CEO with operational skills who can engineer growth by piecing together goals and targets and holding each individual in the company accountable for their contribution to the overall value growth of the company.

We've seen a number of businesses adapt their organization in these three ways to sustain growth over the long term. We would bet that many of you have made one or more of these shifts in your business--if so, we want to hear from you.

Over the next few weeks we will be sharing more stories about each of these three adjustments. Please send us an email with your success stories, so we can include them in our upcoming columns. Or send us some examples of businesses you've seen exhibit these shifts. We can all benefit from the success stories of growing businesses.

We can be reached at karlandbill@avondalestrategicpartners.com.

Last updated: Feb 1, 2013

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.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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