Does your business need a tune-up before you put the pedal to the metal? Answering three key questions can help you to decide how aggressively you should pursue growth.
Avondale has grown quite quickly in recent years. We made the Inc. 500 list in 2011 and continue to grow at breakneck speed. Our success, of course, did not come without significant growing pains.
We are still a very "hungry" management team, but as we met last week to set our growth goals, we decided it was gut-check time. Our main issue: How aggressively do we want to pursue future growth?
To prepare for this meeting, we put a lot of work into assessing the following questions:
1. What are the personal goals of our leadership, and how does the business help us to realize those goals?
Using the Built To Last methodology, we worked as a team over the last couple of months to identify our shared values, agree on a core purpose and align on a long-term goal. In doing this, we spent a lot of time discussing our personal goals. The good news is, we discovered that we are all hungry for further professional achievement and are already very well aligned on what we want to accomplish as individuals and how Avondale can help us get there.
2. Where is our business model working well vs. "bent" vs. broken?
In any company that's growing quickly, it's likely that some parts of the business model are performing better than others. A couple of the people on our team put together an analysis of the various parts of our business, looking at profitability, our level of investment and the returns we are seeing on that investment. One important conclusion: We have been investing in people resources too far ahead of plan. In a professional services firm, it takes time for new people to get hired, integrate and get up to speed, so we always want to hire ahead of need. But by better deploying the resources we already have, we believe we can get better productivity overall, which means we slow the pace of hiring to fall more in line with revenues. Identifying places like this, where the business is bent but not broken, allows us to make minor tweaks to better meet our growth goals.
3. Is our business model scalable?
In other words, can we grow without breaking our business model--or killing ourselves? This was a key question for us. With our recent aggressive growth, a couple of our key management resources have been completely tapped out. To continue our high rate of growth going forward, we risk the wheels coming off the wagon. We concluded that, by better distributing the workload across our senior leadership, and by hiring a few mid-level managers to increase the leverage we are giving our senior leaders, we could avoid the wheels coming off and more importantly avoid driving some of our team to an early grave. Needless to say, this is a comforting outcome!
Our final conclusions from these goal-setting sessions were:
As a management team, we were still hungry and wanted to grow the business aggressively.
However, a couple of aspects of our business were bent (but not broken!) and needed to be fixed.
As we address those items over the coming six to nine months, we will take our feet slightly off the accelerator. Once this tune-up is complete, we will again put the pedal to the metal on our more scalable business model to meet our aggressive 2015 growth ambitions.
Another key takeaway from these sessions is that it is important to align on goals before even having this debate. If we as a senior leadership team are attempting to row the boat in different directions, we will get nowhere.
Also, we realized that it is important to dispassionately analyze the business. We all periodically need someone to hold up the "ugly mirror" to the business. This prevents our natural optimism and can-do attitude from turning into groupthink that allows us to ignore problems that need to be addressed.
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. @karlstark