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Avoid the pitfalls of rapid growth

An effective leadership team can guide you to success    

Growth is good; everyone wants to grow their company, Joseph E. McCann, Ph.D., told a group at a succcessrecent Knowledge Is Power breakfast workshop, but rapid growth comes with inherent problems, he said. “Contrary to popular belief, rapid growth is not fun. It sounds great, but it has difficult connotations. Many successful young, rapidly growing companies die from their own success.”

Why does this happen? One of the top reasons is because of bad people choices, said McCann, who is dean of the College of Business at Jacksonville University. Another contributing reason is because although the owners work harder as they grow, they fail to rethink their organizations. “Sometimes you need to stop and evaluate and ask, ‘Do I have the right platform for sustainable growth?’” he said.

Dr. Joseph E. McCann

Dr. Joseph E. McCann

McCann said that a survey of 100 fastest-growing businesses in Florida (which he followed up with conversations with founders and owners of the companies) identified a number of specific problem areas—that can bring down a new business.

• Not investing in development. When businesses don’t invest in their people or themselves, problems start happening, he said. If you don’t keep current, at some point it will catch up to you. “You have to make those investments in people as you go. If you don’t, your bench strength will get thin.”

• Too little capital. Insufficient capital limits a company’s growth, he said. If owners seek outside capital, they then give up control. 

• Wrong product or service. This is like getting off on the wrong foot. It is costly to redesign a product or acquire another company to provide what is needed.

• People. “The ‘people thing’ keeps coming up,” said McCann. If you have the wrong people in the wrong jobs, you can’t grow the business.

Assuring success

McCann said his studies confirm that successful companies share several common traits:

• Personal qualities. Successful entrepreneurs believe in their ideas, work hard, trust others, and persist. “Many people in the survey attribute their success to faith and persistence,” said McCann.

• Supportive setting. Having family, friends, and mentors you can turn to is important, because times will get tough.

• Solid concept. Timing is everything. Companies that succeed have the right product or service at the right time.

• Operational effectiveness. These companies have the structure and resources in place to pay attention to customers and vendors. They get the business details right.

• Access to resources. Business owners are able to tap into money, advice, and help when they need it.

• A strong culture. “This shows up time and again,” said McCann. Successful companies have a culture in which the managers and employees share the same beliefs and values. This requires hiring right, and cutting loose poor performers and those who do not fit into the culture of your company.

Your leadership team

Putting a good leadership team in place is a critical step to growing your business, said McCann. “Even if you are a sole proprietor, you can have a team,” he said. “The team may not be conventional. It may be a network of entities you deal with, but it is still a team.”

Successful leadership teams are characterized by four elements: composition, process management, long-term development, and support systems.

• Composition. That team should have a well defined mission and role; be right-sized; and be comprised of individuals who understand why they are on the team and how they can and should contribute.

• Process management. “Groups are a great way to doing work,” said McCann, “but they have to work well together.” That means the leader—the CEO—has to be self-aware and the team has to be disciplined. Additionally, the culture of the company must value teams and collaboration as tools for getting work done.

• Long-term development. “This will cost you money,” McCann stated. But it is money worth spending. Long-term development means providing team member—including the boss— with frequent opportunities to develop their skills. “If someone has weak skills, they need to develop those skills. You have to invest in them if they are truly needed on the team,” he said.

• Support systems. Teams and their members need tools and support. The team must be staffed and resourced to be able to work effectively. That support includes training and technology.

Although the four components of effective leadership teams are fairly simple to state, they are hard to do, said McCann. He listed four ways to get started, reminding the group, “You create your seeds to your own destruction if you don’t attend to some things.”

1. Invite honest, open discussion. Talk about your team’s current performance in terms of the four elements.

2. Get objective input. Invite a third party to observe and analyze your team’s performance.

3. Think about future growth. How will the team function? What will be its challenges as the company grows?

4. Practice emotional strength. If you make wrong people decisions, “take the hit and move on.”

Joseph E. McCann, Ph.D., is dean of the Davis College of Business at Jacksonville University (www.ju.edu), which sponsored the Knowledge Is Power workshop.


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