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Avoiding the Stall

With the arrival of spring on the calendar, Albertans honor the tradition of waiting out Old Man Winter’s final tantrums as his dominance gives way to gentle spring rains and the rise of green chutes signalling the countdown to summer bliss. As my thoughts impatiently drift toward the pursuit of fair-weather pastimes, I was inspired to prepare a brisket for smoking just as soon as the late March snow drifts make their final retreat. Always eager to find an opportunity to leverage a metaphor into my writing, it occurred to me that my brisket project shared certain attributes with my experience managing businesses through rapid growth and change.

Our metaphor centers around a phenomenon experienced by barbeque pit bosses called “the stall.” This refers to the eight to twelve-hour mark of a low and slow smoking process when the internal temperature of the meat reaches 165 degrees Fahrenheit. At this point, no matter how long you wait, the internal temperature refuses to rise, and untended, our precious brisket would shrivel into a dried-out, inedible hunk of carbon before it reaches the target temperature of 205 degrees.

Just as our seasoned pit boss would intervene by wrapping the brisket in butcher paper to prevent evaporation and allow the cooking process to continue, a technique known as the “Texas crutch,” CEOs who are managing “the stall” within their high-growth organizations are well served to intervene before organizational inertia sets the company into a highly destructive state of equilibrium.

Organizations, particularly those experiencing rapid growth or scaling, will outgrow their founder’s ability to assert influence over the critical business aspects that drive the key outcomes. Sales conversion, service delivery, and margin efficiencies are highly vulnerable in these fast-growing companies.

Founders need to ask themselves when, not if, their business growth will outpace their ability to maintain dominion over all aspects of the firm.

Legacy managers, often promoted for their aptitude in previous non-management roles, are keen to establish relevance in the management hierarchy as the company achieves scale. Inevitably, this leads to the onset of agency issues and the development of silos within the firm. The inevitable outcome is that the system will move toward balance and its equilibrium point of productivity that resists any increase in demand on the system. In a business context, equilibrium is a terminal disease if left untreated.

At this point, the CEO, often aware of the inertia building within the firm, begins mandating the management teams to intervene with the organizational deficiencies that are beginning to show up in the firm’s KPIs. These might include reduced service delivery metrics, diminishing sales conversion rates, or directional drift from the firm’s North Star principles and mandates.

Frustrated by the management team’s inability or unwillingness to champion the cause and handicapped by their lack of bandwidth to direct the initiative personally, CEOs of these organizations, like our pit boss, are experiencing “the stall.”

Understanding any problem is the key to overcoming it. There are tangible inputs into the business growth process that will result in often unexpected but otherwise predictable crisis developments.

Understanding the business growth cycle and understanding when, not if, these emergent threats are likely to occur is key to circumventing the potential harm they represent to the business.

As anyone who has had to shift the direction of a large organization would attest, the more entrenched systemic deficiency becomes, the more difficult and expensive it is to overcome. Shifting metaphors, big ships turn slowly, and an astute boat captain will invest early and often to build their organizational structure in a form that avoids the threat altogether. Still, leaders exhibiting head-down efforts to capture the maximum benefits of their rapidly growing firms often fail to look up long enough to see the iceberg coming. Even in late-stage cases, recognizing and diagnosing the causes of organizational inertia will enable executives to develop action plans to put the business back on course.

Once a plan is developed, the impetus for success falls squarely on execution. It is here that corporations need to honestly assess their organizational structure requirements, specifically how they have changed since inception. In the next installment of the spring series, we will explore methods to remedy these naturally occurring bottlenecks and explore organizational structures designed to avoid them altogether.

Neil Schmeichel is a management consultant at Blue Monarch Management in Calgary, Alberta. He is a 30-year veteran of the oilfield service industry and has cofounded two highly technical businesses with operations in Canada and the USA. Operational expertise gained over a career puts Neil in a unique position to execute his consulting mandate: to assist high-growth and scalable businesses in achieving sustainable value as a going concern and on both sides of M&A transactions.

Tags: Entrepreneurship , Growth , Scaling ,

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