business structure

Don’t assume that if it works for a 3G organisation – whether it be an employee, a computer system, a benefits scheme or a specific external supplier – it’ll work for your 2G company. It usually won’t. Here’s why you should avoid the over-engineering trap…

When your growing company starts to get bigger, various gaps will predictably open up. You’ll need to hire more people, and it might seem to you that you need a proper ‘big-company’ person to take your organisation into its next phase of growth. What could possibly go wrong?

Well, quite a lot actually. Let’s explore a few examples:

  • Take the medium-sized family-owned design and marketing agency, whose owner-manager, Steve, bumped into a highly qualified and apparently experienced design director at an exhibition. Steve was hugely excited by everything this man had to offer, the vision he had for strategic partnerships with other agencies and the ideas he had for offering a full end-to-end design and consultancy service to the agency’s clients, so he offered him a job. Six months later, after numerous expensive trips to France to create a working strategic partnership with a French marketing agency, not one new piece of work had been won. Additionally, the new Design Director had insisted on being included in several pitches on contracts which had already been well on the way to being won, and presenting the full range of services he believed the agency could offer. The potential clients, by now totally confused about the direction they were going in, and irritated by the hard sell, withdrew from the negotiations. The agency lost several promising new leads and high-probability new business. And the new recruit had so completely alienated the agency’s long-standing, experienced and loyal staff with his attempts to tell them to do things differently, that more than one of them was on the point of leaving by the time the owner’s son, the company MD, took control of the situation and terminated his contract.
  • Or the rapidly growing manufacturing company that was seduced by the CV of an Operations Director who seemed to say all the right things about setting targets for production and managing the factory staff to tight KPIs, deadlines and quality standards. It was some months before it became obvious that although he had made all the right noises at interview and was still saying all the same things several months on, nothing had changed. Staff who weren’t delivering still weren’t delivering, deadlines were still being missed and quality was slipping. A quick check of the objectives he was setting his staff revealed that while he was able to set high-level strategic goals, he was unable to drill down and guide his staff in the detailed actions needed to resolve the company’s operational issues.
  • The same issue happened in a professional services company who hired a salesman with an apparently exemplary record in generating sales and hitting targets. Two or three months into his probationary period, he was still well under a quarter of the way to his half-yearly target, and rarely seemed to pick up the phone. When asked what actions he was taking to generate business, he was unable to itemise the steps he had taken. He complained that the company was not supplying him with sales leads, and suggested the employment of a telesales specialist to set up meetings for him.

What’s the problem?

2G companies, unlike 3G companies, display a unique set of characteristics. They are typically run, if not owned, by people who need to walk a delicate tightrope between setting direction and driving the company towards its goals, while simultaneously operating the company themselves. There is not much slack in the system; managers have to switch between working ‘on’ the business and working ‘in’ the business on a moment-by-moment basis, depending on what comes up. And life is quite fast-moving – a lot comes up that needs handling. 3G organisations, on the other hand, have generally moved to a more stable state, not requiring fast reactions from their multi-skilled managers. And they are usually larger, with relatively more resources.

In the first example, the new Design Director might well have served the company well in a few years’ time, when it was ready for expansion into Europe, and into a broader range of services. His ideas weren’t wrong. They were just before their time, and too ambitious for this stage of the organisation’s development. They also, crucially, needed more time and resource to be invested in them, than a 2G organisation at this stage of its development could actually afford.

The Operations Director of the manufacturing company had been used to setting direction at the strategic level – he had a team of hands-on managers who implemented the strategy and did the actual coaching and management of the factory floor teams. It had been some years since he had been personally accountable for day-to-day operational standards and results, and he no longer knew how to achieve his objectives without the help of his management team. He would probably still have been effective with a mature team of managers working for him, but he wasn’t going to find that in a 2G organisation.

Likewise, the salesman with the good track record hadn’t lied about it. He just hadn’t factored in the support and assistance he was getting to generate sales in the larger organisation he had worked for before. In a smaller 2G organisation without the resources to provide him with telesales support, he was thrown back on his own resources – and he’d lost the knack, if he ever had it, of generating his sales leads himself.

The most common mistake

This is one of the most common mistakes we see in 2G organisations: assuming that because it comes from a 3G company, it must be right for the smaller organisation, whether it be a member of staff, a system, or a shiny new piece of kit. 2G organisations and their people need to home-grow their systems and their people so that they remain flexible, light of touch and fit for purpose; very few will transplant successfully from one to the other.

Kate Mercer has recently been writing about how your organisation changes as it grows, from an energetic toddler stage (first generation, or 1G), to the moody teenager stage (second generation, 2G), before it reaches (if it ever does) the relative calm and maturity of the adult stage (third generation, 3G). It’s a way of looking at your organisation that is unfamiliar to most business leaders, especially professional services experts who are hugely trained and experienced in their professional skill, but generally not experienced or trained as managers. It’s why keeping tabs on everything often seems to get harder over time as your organisation grows. Perhaps the answer is to make some simple changes to your management style? This is the fourth in the series – read the first ‘Do you assume the organisation is ‘yours’ and running it is all down to you?‘ and second ‘SME with big business aspirations? Don’t put the cart before the horse‘.

Tags: