When a company grows, everyone is upbeat: sales are growing, the market share is growing, competitors are left behind; everyone is happy in the company. By definition, that is a situation every business owners and professionals worked day-in-day-out for.
Experience, however, shows that managers and entrepreneurs tend to underestimate the fact that growth ultimately requires organizational change. In a world where strategy follows structure any effort to accelerate or maintain fast growth demands swift and decisive changes to absorb and benefit from the impact of growth.
Growth produces three different levels of impact on the organization: at a cultural structural level, and process levels.
Living, managing, working, interacting and performing in smaller companies are completely different than doing all these things in fast growing bigger companies.
The first level of difference is a matter of culture. We know organizational culture is a set of shared beliefs, views, and actions that are typically shared across the members of the organization. In a smaller company, usually, everything is informal. People can interact frequently, they can do it daily; in a bigger company, it is much less frequent, it’s much less common. The real big difference is when you start as a small company you tend to be very focused on the product; you tend to be a product-oriented company. When you start growing, you have to be more focused on the market because you have to identify growth opportunity within the market, so the culture should be more market-oriented. This implies a change at the cultural level. The issues that members of the organization give attention to, the issues that are at the top of the agenda, the most important things in the daily life, and the most important things at the strategic level are completely different.
The second important change is at the structural level, the level of the organizational structure. That is to say, how are roles defined within the organization? Who is responsible for what? What is the right match between individual competency and position? How decisions are and/or should be made?
Usually in a smaller company, we can basically say that everyone is able to do everything, more or less, and, decisions are centralised to one or two central figures. So the divisions of the roles are somewhat blurred. Some people do many tasks, some other people’s tasks overlap with others, some simply take directions and serve as executors and still some are simply there to cheer. There is a sort of creative disorganization. When the company grows, this is no longer possible, because it makes such an inefficiency that can diminish the results of the company, it can have a negative impact on those results. When the company grows and gets bigger, one very important thing to do is to clearly design an organizational structure – with the right people in the right roles and positions – which is able to support the actions and strategies of the company in the market.
Finally, there are organizational processes: procedures which regulate the activities according to which the company act in the market: communication processes, training processes, salary and compensation processes, career definition processes, all these processes are fundamental when the size of the company gets bigger. If you want to allocate responsibility in a way that competence meets performance, you need to clarify what the procedures within the company are, according to which tasks should be implemented in the company, and obviously in the market. The definition of this process is not so easy. There is a requirement for a competence, which is managing people and managing procedures that usually in a many companies is not so common.
Growth is indeed splendid, growth is fantastic, but we cannot forget that parallel to this growth outside the company, the growth into the market, there should also be growth within the company; organizational growth which requires organizational change.