The Professional Stage: 35-57 Employees: Organizational ReWilding® Rules for Business Growth (Organizational ReWilding® Rules for Business Growth: The 60-Minute Guide to Growth for Every Stage) 9798478501921

Table of contents :
Copyright
Introduction
The Stages of Growth
Gates of Focus
Builder-Protector Ratio
Modality
Leadership Style Blend
Three Faces of a Leader
Non-Negotiable Rules
Classic Challenges
The Elements of an Exceptional Business
Transition Zones
Conclusion
Further Reading
About the ReWild Group

Citation preview

Copyright © 2021 The ReWild Group All rights reserved The characters and events portrayed in this book are fictitious. Any similarity to real persons, living or dead, is coincidental and not intended by the author. No part of this book may be reproduced, or stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without express written permission of the publisher. ISBN-13: 9798478501921 Cover design by: Tehra Allen Library of Congress Control Number: 2018675309 Printed in the United States of America

Contents Copyright Introduction The Stages of Growth Gates of Focus Builder-Protector Ratio Modality Leadership Style Blend Three Faces of a Leader Non-Negotiable Rules Classic Challenges The Elements of an Exceptional Business Transition Zones Conclusion Further Reading About the ReWild Group

Introduction This series of guidebooks is written for business owners, by business owners. The concepts that are explained and illustrated are based on a methodology that has been developed across 30 years by studying more than 1,300 small and midsize businesses. Organization ReWilding is powerful, and it works … which is why we’re excited that you have this book in your hands. If you’re looking for effective solutions to help you navigate business growth, you’ll find them here. In order to help you get the most out of the book in a short amount of time, here are some basic guidelines and explanations. The book does not have to be read in order, although we do recommend beginning with Chapter 1, “The Stages of Growth,” as it lays the foundation for the rest of the content. After the first chapter, you can read straight through or skip around; the order is not critical to the understanding. Chapters 2 through 10 identify and explain the different dimensions of a healthy business. It’s helpful to think of these chapters as illuminating various facets of a diamond. Each facet is one way of looking at the diamond, but no one facet provides the full picture. In the same way, healthy businesses exhibit similar characteristics that can be viewed from different angles. When taken together, they create a complete picture of what a successful business looks like. Nearly every dimension represents an ideal for businesses to follow. For that reason, after the definition of each dimension, you’ll find a section that illustrates what happens when a business is out of alignment with the ideal. This brief example serves to cement the concepts that have been discussed and bring each dimension down to a more tangible level. To help you put the information to use immediately, there is also an application section at the end of each chapter. You’ll find three or four questions to help you reflect on the material and apply it to your

business, as well as a tip that you can carry with you. Download a free copy of the Stage 4 Workbook to record your answers (www.ReWildGroup.com/Stage-4). Every business owner’s journey is different, but that doesn’t mean you have to forge a path on your own. Glean valuable resources from this book and visit us online for even more: www.ReWildGroup.com.

The Stages of Growth Overview The Stages of Growth is a business growth methodology that has been developed over 30 years of ongoing research and observation of more than 1,300 small and midsize businesses across dozens of industries. The focus of this research is on understanding and deciphering the patterns, behavior, and characteristics of growth these businesses experienced. What we were trying to understand, and continue to investigate, is why some businesses successfully navigate growth and others don’t. At the core of this methodology is the reality that businesses are human ecosystems, comprised of complex, interrelated, dynamic components and relationships. These human ecosystems have an optimal condition in which growth can be achieved. What the research found is that complexity in an organization stems from the number of employees; not the industry or the annual revenue, but simply the number of people employed by a business. It follows, then, that as a business adds employees, it grows in complexity. A 10-person organization is different than a 200-person organization. The focus, the types of structures that need to be in place, and the opportunities for growth all look very different for these two businesses. Furthermore, the research identified seven distinct Stages businesses traverse. Each Stage spans a specific number of employees, and within each of these Stages, there are rules and ideals that must be in alignment in order to create the optimal environment for business growth. When a business fails to follow the rules of growth, it often gets stuck or regresses.

Without a clear model for understanding the growth of a company, most entrepreneurs don’t have the level of predictability necessary to survive over the long haul. There are simply too many doors to choose from to select the right ones at a high enough rate to keep the business advancing. At each new level of complexity, the changing rules make it more likely that the business will hit a wall or a dead end. The Stages of Growth provides a roadmap for the business leader. Organized by the key dimensions of a business, it offers clear guidance on the rules of growth for each Stage. Business owners benefit from the Stages of Growth by learning to diagnose where their business currently is, understanding what needs to be done to get the business where they want to go, and even predicting and proactively preparing for what comes next as the business grows. The power of the Stages of Growth is multiplied within an organization when it becomes a shared framework for the leadership and management team to communicate about growth. As team members begin communicating about key issues using the same language and understanding, the organization functions more smoothly. Following is a brief description of the characteristics of a company at each Stage of Growth. Stage 1: 1-10 Employees In Stage 1, a business is in the Start-Up stage, where things are small and agile. Making sure there is enough profitable revenue is

the name of the game, followed closely by finding the right people for the tight-knit group. Stage 2: 11-19 Employees In the Ramp-Up phase, processes become more important, and more structure needs to be introduced. Just as with Stage 1, the main focus is still on having enough profitable revenue to keep the lights on. Stage 2 is the last of the owner-centric Stages. Stage 3: 20-34 Employees As the first enterprise-centric Stage, delegation is crucial. Stage 3 represents the hardest transition for the owner due to the dramatic shift in their relationship with the business. Investing in the beginnings of an early-stage management team is critical to set up the business for future growth. Stage 4: 35-57 Employees In Stage 4, that early-stage management team needs to be professionalized, and that’s the name of this Stage – Professional. Whether an organization trains existing managers to the next level or hires outside professionals, this is a building block that cannot be missed for successful growth into further Stages. One of the most important things the professional management team does in Stage 4 is to work on the processes and systems of the organization. Leveraging their functional expertise, managers build the infrastructure that supports future growth. Stage 5: 58-95 Employees Stage 5 is all about Integration. The focused work the professionalized managers did in their respective departments in Stage 4 can often create silos. Stage 5 is where you bring those units together into an integrated management team. The management team begins to handle the heavy lifting of running the business—still with a great deal of oversight and guidance by the CEO. But this training ground is where the CEO will begin to develop their leadership team that will be needed in Stages 6 and 7. Stage 6: 96-160 Employees Stage 6 is Strategic. A business can often grow successfully up to Stage 5 with a strong team and effective operational processes, but Stage 6 requires a different level of strategic planning and thinking. The leadership team is handling more of the operational side of the business, with the CEO being less hands-on in those

areas. Maintaining company culture is critical in this stage, so a big focus is on people in Stage 6. Stage 7: 161-350 Employees Stage 7 is the Visionary stage. A visionary leader is needed throughout all the Stages of Growth, but Stage 7 is characterized by the need to recapture the innovation the company had in earlier stages to avoid becoming stagnant, stuck, or irrelevant in the marketplace. The leadership team that has been groomed and grown over the last stages is now contributing significantly to the strategic vision of the company. Each Stage of Growth has its own characteristics and priorities. Keeping in sync with each Stage’s ideals helps organizations sustainably grow and avoid becoming stuck. If an organization has missed prior Stage requirements, it must play catchup to reach the maturity of its current Stage. Failure to bring the organization into alignment with the rules of growth eventually causes an organization to stagnate, stall, or decline.

Stage 4 Stage 4 refers to an organization with between 35-57 employees. There are typically six to ten managers and two to three executives at this phase. As the Professional Stage, a Stage 4 company is at a point where a professional team of managers is needed to organize and structure strong departments. Process is a huge focus for a Stage 4 company. The leader must invest heavily into the formation and development of the management team in order for those processes and structures to function well enough to support and enable future growth. Stage 4 Anthem I am the leader of a Stage 4 company. We are in the Professional Stage, where the importance of a professional Management Team is crucial. Whether I hire professional managers from the outside or train the existing managers, the company’s increased complexity demands this team has the skills and mindset to become the driving force of the organization. Process is a key focus for me and the Management Team. My business will be most successful if I encourage independent, performance-driven departments that invest in systems and procedures to meet the increasing scale of our growing organization. I need to have department heads develop and account for an annual department budget and track

department KPIs. I must lead a quarterly interdepartmental planning meeting to ensure company priorities are aligned. Business Development needs to put in place structures that generate leads, turn leads into revenue, and keep the revenue coming. My business needs me to be a leader that empowers the team, values employees as people, and continually finds ways to improve. Stage 4 Application Before going any further, be sure to download the Stage 4 Workbook, a companion guide to this book (www.ReWildGroup.com/Stage-4). The workbook organizes your notes and answers to the application questions, helping to maximize what you get out of the book. Key Questions: Are you actively mentoring and training a management team that can lead strong departments? As the leader of a Stage 4 business, do you know how many employees you would like to eventually have? How are you planning for that growth in employees? Which lines from the Stage 4 Anthem can you relate to the most? The least? Tip: Equip and empower your management team. ➢

Although you are most likely faced with work that feels more urgent, the most important thing you can be doing for the future of your company is investing in your management team.

Gates of Focus Overview All activity in an organization falls into three fundamental areas: People, Profit, and Process. Think of each of these as a door or gate behind which lies opportunities for the organization to grow.

At any given Stage of Growth, the patterns observed in growing businesses suggest that there is an ideal order of prioritization of these three Gates. Said another way, one of these three holds the greatest opportunity for growth in your organization, based on your Stage of Growth. People The People gate covers everything that affects the human resources of an organization. When you prioritize the People Gate of Focus, energy goes to the development and well-being of your employees. If you are improperly focused on People—meaning you are focused on People when your organization needs you to be focused on Profit or Process—you may find that your organization lacks the revenue or profit to grow, or you may find that your processes are not as mature as they need to be to handle existing or future volumes of business. Key question: When you’re faced with a decision, your first thought might be, “How will this affect my employees?” Profit The Profit Gate covers everything that affects the organization’s revenue and profitability. When you prioritize the Profit Gate of Focus, your energy focuses on activities that generate revenue and increase profits. If you are improperly focused on Profit, you may have disengaged employees and poor quality due to lack of process.

Key question: When you’re faced with a decision, your first thought might be, “How will this affect the company’s profitability?” Process The Process Gate covers everything that affects the manual and automated processes and systems used by the organization. When you prioritize the Process Gate of Focus, your energy goes to developing, refining, and testing processes and systems. If Process is an improper focus, you may find that your organization lacks the revenue or profit to grow, or your people may feel overlooked. Key Question: When you’re faced with a decision, your first thought might be, “How will this affect the day-to-day processes and the scalability of my business?” Prioritizing the Gates of Focus Each of these areas is important all the time. However, their ideal priority changes based on your Stage of Growth. The Gates of Focus can be likened to having multiple children. All are important, but your focus changes based on the child’s age and needs. Just because a newborn needs a lot of attention does not mean the older children are not valued. A teenager may require more energy than a 10-year-old. All the children are equally important, but there are times where one child requires more attention and focus. Similarly, all the Gates of Focus are important, but the optimal priority changes as your business grows. Keep in mind that most business leaders have a natural focus—a personal preference for one of the Gates. This area may be the one that comes easiest to the leader or is based on fundamental beliefs of how a good business is operated. While some leaders have been gifted with a talent for operations, others are skilled at engaging their people; others find prospecting and winning work to be second nature for them. As the business leader, it’s important to recognize the need to adjust personal preferences toward People, Profit, or Process based on what the organization needs for its current Stage of Growth. Businesses that fail to adhere to the Gates of Focus eventually experience the ramifications—plateauing, receding from prior heights, or oscillating between Stages. Sustainable growth is achieved when your organization stays aligned with each Stage’s Gates of Focus.

Gates of Focus in a Stage 4 Company

Stage 4’s Gates of Focus are Process, Profit, and People. In Stage 4, getting scalable processes and systems in place is critical to facilitate future growth. Businesses that progress past Stage 4 without adequate attention to processes and systems will pay the price in later Stages. One of the most significant ways that a leader can focus on Process is by putting in place well-trained, professional managers who are capable of building strong departments. These managers should have the experience and skills to implement the building blocks necessary for their department to deliver high levels of quality in the functional area the department serves. These building blocks include scalable, trainable, and repeatable processes and systems. Systems facilitate the consistent execution of Process. Leading effective interdepartmental planning sessions, identifying the organization’s master processes, and allocating revenue to implement new processes and systems are ways that a leader can successfully focus on Process. Profit remains second priority in Stage 4 as the investment in process and systems require additional capital compared to previous Stages. Those processes and systems will support the growing volume of revenue and profit generation in the future. Profit is also important because the number of employees almost doubles from Stage 3 to Stage 4, which greatly increases expenses related to human resources. People falls to third priority during this process-heavy Stage. Again, being third on the list does not make People unimportant for a Stage 4 business; it simply means that the other two gates require more energy and focus at this point in time. A failure to prioritize Process and Profit at this Stage will end up negatively impacting the company (including its employees) down the line. Business leaders embracing these Gates of Focus should be constantly thinking about how decisions will impact the scalability of their business. Their energy should be focused on the development, refinement, and testing of processes and systems. Gates of Focus Misalignment The owner of an HVAC business has been operating for eight years and is experiencing rapid growth thanks to a boom in the housing market. The company has expanded over the past 12 months from 38 to 53 employees. As someone who is a natural salesperson and good employer, the CEO has been able to successfully win new

business and both recruit and keep quality employees. He assumes that his business will function in the same way it always has, just on a larger scale. Within a few months of scaling up, though, the business seems to be falling apart. The chaos intensifies by the week—conflicts with scheduling increase, invoices are either unsent or unpaid, and the warehouse is filling up with a growing inventory of parts and equipment. The increase in the number of crews and an expanded service area has overwhelmed the manual scheduling system. A backlog has quickly developed as they struggle to optimize crew schedules, which has led to an increasing number of customer cancellations. The Accounting Department is desperately behind in invoicing clients, causing cash flow issues. With so many people in the field, and no real way to know what inventory is on hand, everyone keeps buying and then storing excess inventory. The profitability of the business is falling, even as revenue is rising. This CEO has focused on People and Profit up to this point, resulting in a growing top line and employees who like working at the company. The business has been able to get away without welldeveloped processes since it was less complex. The recent growth spurt into Stage 4 has multiplied the complexities of the business to a point where the systems and processes that served the organization in the past are no longer sufficient. While the CEO wants to increase profit by expanding his customer base and service areas, he isn’t able to efficiently service them without updated processes. Gates of Focus Application The following questions will help you apply the information from this chapter to your company. Download the Stage 4 Workbook to record your answers. Key Questions: Of the three Gates, which are you most naturally inclined to focus on? How is your business currently prioritizing the three Gates? Has misalignment impacted your business? If so, how? Tip: Focusing on Process in Stage 4 paves the way for future growth. ➢

Both your employees and the future revenue that your business will make depend heavily on the structure and

processes that you develop during this critical Processfocused Stage.

Builder-Protector Ratio Overview The Builder-Protector Ratio measures the overall organizational mindset as it relates to the levels of confidence and caution within the company. It is captured as a mathematical expression—a ratio— of the relative confidence and caution the organization feels as a whole. Why is knowing an organization’s builder-protector ratio important? Because it provides valuable insight into a company’s health by: Measuring the company’s ability to meet and overcome its challenges Communicating the company’s willingness to perceive and take advantage of opportunities Gauging the strength of the company’s immune defense system, which acts as a barrier against low morale and poor performance Assessing the company’s willingness to embrace change Telegraphing the belief in the company’s future Conveying the company’s trust in its leaders

Builders tend to share certain characteristics. In general, builders: Are confident Say “yes” to new opportunities Are risk-tolerant and supportive of growth Like to improve the way things are done Function as the gas pedal of the organization

A Sales team often has a high concentration of Builders— individuals who quickly adapt to change and embrace growth.

In the same way, Protectors also tend to share certain characteristics. In general, Protectors: Are cautious Must be persuaded to say “yes” to new opportunities Are risk-averse and highly suspicious of growth Like to keep things the way they have always been done Function as a brake pedal and prefer to slow down the pace of change An Accounting Department may have a high concentration of Protectors—individuals who like having stable rules to follow and who double-check every action. Which mindset is better? Both the Builder and Protector mindsets have certain advantages and disadvantages. It’s useful to be aware of what those are and the possible ramifications of having too many of one or the other at any given time. If you have too many Builders, they will drive the company off the cliff with their foot still pressing the accelerator. An overly confident organization is constantly changing, moving, or chasing the next best thing. It fails to take the necessary time in critical thinking and focusing before jumping straight to execution. The organization’s offerings to the market can become unclear since they are constantly fluctuating. When an organization has too many Builders, it can sometimes grow itself out of business. If you have too many Protectors, they will eventually suffocate the company with their foot slamming the brake. An overly cautious

organization fails to adapt, evolve, and grow. The organization might miss opportunities because they are too hesitant to act. Its offerings to the market can become stale. When an organization has too many Protectors, it often stops growing and begins to retreat. Both extremes kill an organization. To thrive, an organization needs to properly balance the two mindsets at the appropriate ratios for an organization’s Stage of Growth. Determining the Builder-Protector Ratio of an Organization Developing an internal radar for the organization’s BuilderProtector ratio is important to keep the organization on the right track. One way to determine an organization’s Builder-Protector Ratio is to think about the organization’s overall mindset. A very confident organization will have a Builder-Protector Ratio of 4:1—four times the confidence as caution. An organization that has equal levels of confidence and caution will have a Builder-Protector Ratio of 1:1. A second way to determine an organization’s Builder-Protector Ratio is to look at the people in the organization. Consider how many have a Builder mindset and how many have a Protector mindset. An organization with 15 Builders and 5 Protectors converts to a 3:1 ratio—a confident organization. Another organization with 20 Builders and 10 Protectors would have a 2:1 ratio—a slightly confident organization. Individuals typically have a natural leaning towards being a Builder or a Protector. Despite having such an inclination, people are not stuck as a Builder or Protector. The leadership of the organization can help individuals adapt to what the organization needs by painting a clear picture of where the organization is going and explaining why additional confidence or caution is needed. The Builder-Protector Ratio Across the Stages of Growth It’s worth noting that, across the seven Stages, there is no time where the ideal ratio is dominated by caution—where Protectors outnumber Builders. In all but one Stage, organizations need higher levels of confidence than caution. Builders embrace change and improvement—two positive traits. But sometimes Builders don’t recognize the cost their confidence has on the organization. Their willingness to push change onto the company can create trauma that doesn’t benefit the business.

On the other side, Protectors look to protect current structures and advocate for using tried-and-true methods, which help to safeguard the company from unforeseen risks. But sometimes, Protectors don’t recognize the cost their caution has on the organization. Their reluctance to support new initiatives or embrace novel approaches can sap the strength of the organization, causing crucial market opportunities to be missed. Although different in many ways, Builders and Protectors share a desire for themselves and the company to be successful. By showing an individual how their level of confidence or caution contributes to that end goal, individuals can better align their mindset—helping the business to become better aligned with the Builder-Protector Ratio. Both Builders and Protectors can be encouraged to be more confident or more cautious through increased structure, clear language, and a shared vision. These things allow both Builders and Protectors to see the negative impact their over-confidence or overcautiousness has on the organization. If the organization has too much confidence for its Stage of Growth, increased structure, clear language, and a shared vision will slow things down and temper the confidence in the organization. For example, helping the Sales team focus on the company’s core services that already exist instead of pursuing new types of opportunities is a way to increase structure. The result is less change being forced on the organization. If the organization is overly cautious for its Stage of Growth, greater structure, clear language, and a shared vision for Protectors helps them feel assured about the company’s future. For example, providing a clear picture of what the future looks like helps Protectors at least lift their foot off the brake, allowing your organization greater forward momentum. An organization needs both Builders and Protectors. Each brings an important dynamic to the company. The objective is to have the right ratio of Builders and Protectors—the right blend of confidence and caution. Aligning your organization to the ideal Builder-Protector Ratio for your Stage creates the optimal environment for your organization to successfully navigate beyond the current Stage. Misalignment results in one of two suboptimal conditions: an organization allowing more change than it can absorb, or an organization with insufficient momentum to propel it forward.

Builder-Protector Ratio in a Stage 4 Company In Stage 4, the ideal Builder-Protector Ratio is 3:2, which means confidence is slightly higher than caution. The 3:2 ratio in Stage 4 reflects an organization that is once again ready to embrace change (after intentionally slowing down in Stage 3), but at a slower pace than in Stages 1 and 2.

This graphic shows that in Stage 4 the bar for Protectors has decreased from its highest point in Stage 3. The Builder bar is now larger than the Protector bar, which means that the organization is exhibiting a higher degree of confidence than caution. The foot is back on the gas pedal to ensure the company has the momentum to grow. This change is not a dramatic shift, however, from the balanced Builder-Protector Ratio of Stage 3. The organization’s confidence is still not as high as in Stages 1 and 2. A more moderate level of confidence is required to support the measured level of change the organization will need during Stage 4 as the management team is more formally developed and scalable systems and procedures are installed. The organization requires additional structure to ensure that the influx of new employees doesn’t create too much caution. The leader can encourage confidence throughout the organization by establishing clear roles and responsibilities, a professional management team, and scalable processes and systems. With an increase in confidence from Stage 3, the organization with a 3:2 Builder-Protector Ratio is once again confident and ready to intentionally set in place the human, procedural, and systems

infrastructure needed to scale the business through Stage 4 and beyond. One common misalignment in Stage 4 is an organization that never took its foot off the gas pedal in Stage 3. In this situation, the organization has continued to embrace constant change. When such an organization reaches Stage 4, it is often battered and worn out from the exhausting pace of change; that’s why it’s critical to focus on the infrastructure that will be needed to support its future growth, limiting change to only what is absolutely necessary. A second situation that causes misalignment in Stage 4 comes from organizations that failed to make the transition from ownercentric to enterprise-centric, which ideally should have occurred in Stage 3. This organization is commonly lacking a strong management team to which the leader can delegate responsibilities. The result is leader burnout and stalled growth, which commonly shows up in a Builder-Protector Ratio that is too heavily weighted towards caution. Finally, organizations that remain overly cautious in Stage 4 can be a result of adding a large number of new employees. If this increase in complexity is not met with clear structures, processes, and systems, the new hires can result in an increasingly protectordominated mentality. If the organization is unable to increase the confidence of new and existing staff, the company can stall or retreat to Stage 3. The key to building confidence in Stage 4 is the infusion of proper infrastructure into the organization, which provides structure, clarity, and focus. This proves to a growing team that the future for the organization is bright, and that leadership is successfully navigating the changing rules that come with growth. Builder-Protector Ratio Misalignment The CEO of a non-profit community pantry has slowly built up the organization to almost 50 workers, including volunteers. Located in a central part of the city, the pantry partners with churches and other local businesses to get regular donations and has expanded to include a soup kitchen that provides hot meals once a day. The CEO is passionate about her work and stays long hours at the facility to ensure that everything runs smoothly. In order to manage the increasingly higher volume of work, she has promoted people within the organization to management roles. They are dedicated employees whom she trusts, but she doesn’t have

confidence that they can fully maintain operations without her oversight. Opening the soup kitchen felt like a risk, but things have stabilized recently as everyone has grown to be more comfortable with the systems and procedures. However, when she is approached about adding another pantry location, she can’t bring herself to do it. As much as she wants to service another segment of the community, she is stretched too thin as it is, and knows she wouldn’t be able to keep up with three separate locations. This CEO is still trying to run an owner-centric organization. The only way for it to continue to grow and expand is if she is willing to take at least some level of risk. With an ideal BuilderProtector ratio of 3:2, she needs to be willing to train and trust her managers to take on the day-to-day operations of the business. While there may be some short-term bumps along the way, the payoff over the long run will be a larger, more resilient organization that can serve more people across the city. Builder-Protector Ratio Application The following questions will help you apply the information from this chapter to your company. Download the Stage 4 Workbook to record your answers. Key Questions: What is the Builder-Protector Ratio in your organization? Which mindset comes more naturally to you, Builder or Protector? Are any of the common misalignments of the BuilderProtector Ratio affecting your business today? Tip: Structure and process will help your business move forward with confidence. ➢

You don’t need to spend more time at work or be more charismatic to successfully lead a Stage 4 business. But you do need to promote confidence by establishing clear structure and processes.

Modality Overview The term modality is defined as “a particular mode in which something is experienced or expressed.” For example, humans have five senses and each one (touch, taste, sound, smell, and sight) represents a modality of sensation. In the Stages of Growth, Modality refers to the role that each layer of the organization plays with respect to the overall organization. While the organization is a single unit, it contains different modalities that express its full function. The three Modalities, or roles, each organizational layer can play are Dominant, Supportive, and Facilitative. For a given Stage of Growth, each layer assumes an ideal modality for the organization. Dominant means the primary influencer. The layer that employs the Dominant role is the leading force of momentum in the organization to achieve the company’s goals. It is the key layer that must buy into what the organization is doing. Supportive means to help accomplish. The layer that employs the Supportive role acts as a helper towards the other layers. Facilitative means to make easier. The layer that employs the Facilitative role makes it easier for the other layers of the organization to accomplish the company’s goals. Let’s say you visit a doctor’s office. You meet three people during your visit. The receptionist checks you in and takes payment when you are done. The nurse guides you to the room, takes your vitals and initial information, and helps wrap up the visit. The doctor meets with you to review your symptoms, discuss options, and provide you a prescription. In this scenario, the doctor plays the Dominant mode and is the leading force and primary influencer of the other layers in the medical office. The Nurse represents the Supportive mode. The nurse helps the doctor and supports that layer of the organization. Finally, the receptionist is serving in the Facilitative role. This position helps makes things easier for the other layers of the organization by taking care of administrative functions. A second characteristic of the Modality dimension is that it applies to three layers of the organization: Executive, Manager, and

Staff. The Executive layer is the top layer of the organization and traditionally includes any C-level, Vice President, or Director levels. The Manager layer is the middle layer of the organization that oversees the bulk of the employees. The Staff layer makes up the remaining employees in the company, often accounting for 80% of the company’s people. Like the other Stages of Growth dimensions, there is an ideal Modality for each Stage. The rules for this dimension identify which Modality each organizational layer needs to embrace. One unique aspect of Modality is that it is the only dimension that does not change between every Stage—essentially, it is an organizational characteristic that is less dynamic than other dimensions. While it is important for an organization to be aligned with all three modalities, it is especially critical that the Dominant Modality be embraced by the appropriate layer. As the most impactful of the three modes, the Dominant Modality has the potential to cause the most drastic consequences if taken on by the wrong layer. Misalignment with the ideal Modality can dramatically impact an organization’s ability to sustain growth. If an organization is stuck, Modality is a good place to look for misalignment.

Modality in a Stage 4 Company In Stage 4, the ideal mode for the Executive layer is Facilitative, for the Manager layer the ideal is Dominant, and for the Staff layer the ideal is Supportive.

Stage 4 is known as the Professional Stage, which is indicative of the Manager layer taking on the Dominant Modality for the first time. A professional management team must take on growing levels of responsibility and becomes the source of momentum for the organization. In Stage 4, there are ideally six to 10 managers. The Executive layer continues in a Facilitative role that encourages and makes things easier for the other layers. Meanwhile, the Staff’s Modality changes to Supportive for the first time, as they help the rest of the organization accomplish their roles. The most common misalignment in Stage 4 is with the Manager layer not taking on the Dominant Modality. This can be due to the Executive layer not being willing to let go of the Dominant Modality, which it has held onto through Stage 3. Another reason for this misalignment comes from the Manager layer not being ready to step up and take on greater responsibility. It’s also possible that the reason the Manager layer isn’t ready is that the Executive layer hasn’t given them the support, responsibility, and authority to lead their departments. Simply delegating work is not enough, especially if the managers are inexperienced; the Executive layer needs to have a mindset that is more like a mentor than a dictator. Regardless of the reason, a company can stall in Stage 4 if Modality remains out of alignment for too long. Ensuring that the Manager layer has the skills and mindset necessary to step up to the Dominant role is critical—not just for the Stage, but also in preparation for future growth. Modality Misalignment A last mile delivery company has grown to 48 employees. The recent nationwide increase in online purchasing has helped boost their numbers and allowed them to move to a larger warehouse. The CEO promotes from within to form a team of six managers. While he’s willing to delegate the work to his management team, he doesn’t like to spend time on training. That feels like a waste of time to the CEO, who has many other things he’s trying to do. He reasons that they are competent people and can simply “figure it out,” like he did. An issue comes up with one of their suppliers that the manager is unable to resolve. Many times, the product has arrived in damaged condition, but the supplier is unwilling to concede responsibility. The manager goes to the CEO for advice, but rather than offer support he simply picks up the phone and calls the supplier directly. They’ve known each other for years, so it seems like the most

expedient solution. Each time a manager comes to the CEO, this is his response. When he reflects on where he’s spending his time, he is frustrated to realize that his managers aren’t managing the work as he believes they can. This CEO needs to recognize that, as part of the Facilitative layer, his job involves more than just problem solving. Rather than take over, he needs to offer direction and support to his managers. In this example, if he had talked to the supplier and let them know that his manager had his full support, and then coached her on the best course of action, she would have grown in confidence and skill. Instead, he did the work himself and then was annoyed when she couldn’t handle similar problems that arose. Modality Application The following questions will help you apply the information from this chapter to your company. Download the Stage 4 Workbook to record your answers. Key Questions: In your organization, is it obvious who plays the Dominant role? Do the managers have the necessary authority and support they need to lead their departments? Are you surprised to know that sometimes the Executive layer is not Dominant? Tip: Mentor your managers and empower them to lead. ➢ The knowledge that you’ve gained in your role as the head of the company needs to be passed on in order to have the most impact on your growing organization.

Leadership Style Blend Overview Leadership Style is a way of categorizing the various approaches of how the leader interacts with individuals in the organization. Organizational ReWilding Stages of Growth draws its Leadership Styles from research by Daniel Goleman, as documented in his book Primal Leadership. The six Leadership Styles are Affiliative, Coaching, Commanding, Democratic, Pacesetting, and Visionary.

The Principles of Leadership Style Before getting into detail about the six styles, it’s important for business leaders to understand that there are three fundamental principles of Leadership Style. 1.

2.

3.

First, every leader has a specific Leadership Style blend that is innate to them—it comes naturally. This blend is comprised of a leader’s top three styles and is known as the natural leadership style blend. Knowing your natural leadership blend provides insight into your strengths and weaknesses, which helps you to be a more effective leader. Second, there is not a single, “right” style of leadership. In fact, the ideal Leadership Style changes as a business grows. The size and complexity of the company demands a specific kind of leader for the organization’s optimal performance. Finally, leaders often struggle to adapt their natural style to meet the needs of the organization because they are unaware of the specific styles needed. Once they understand the ideal, most leaders are able to adjust how they lead to enable the organization to reach greater success.

Leadership Style is a unique dimension within the Stages of Growth framework because it deals with human connections. These connections between the leader and the people within the

organization can add or detract value; they can be a catalyst for growth or a source of stress. That’s why it’s so important for leaders to become aware of the ideal Leadership Style for their company’s Stage, and to adapt accordingly. The Stages of Growth identifies the ideal Leadership Style Blend for the organization’s top executive. This ideal does not apply to every leader or manager in the organization—just the top executive or leader of the company. Even though the ideal Leadership Style does not apply to leaders at every level, it’s still valuable for all business leaders to know their own natural Leadership Style to boost self-awareness. Having a common language across the organization provides managers with a framework to interact with their colleagues. Furthermore, if the organization needs a particular Leadership Style that is outside the top executive’s strengths, an option to close this gap is by leaning on another leader who has the needed style as a natural strength. In each Stage of Growth, there is an ideal blend of three leadership styles. This blend includes a primary, secondary, and tertiary leadership style that is optimal for that Stage. The Primary style is used most frequently; it is the prominent style for that stage. The Secondary style supports the Primary style; it is used routinely but is not as prominent. The Tertiary style is used occasionally in specific situations. The styles that are not identified in a Stage should be generally minimized by the leader during that time, as they are not the ones that the organization needs from the leader at that point of growth.

For example, in Stage 1, the organization needs a leader with a Leadership Style Blend that exhibits Visionary as primary, Coaching as secondary, and Commanding as tertiary. The blends can change dramatically from one Stage to another; as a result, leaders’ natural styles may work well in one stage but be ineffective in other Stages. The Six Leadership Styles Affiliative “People come first.” Affiliative leaders focus on creating harmony and building emotional bonds with the team. They recognize employees as people, putting less emphasis on accomplishing tasks and goals, which builds tremendous loyalty and strengthens connectedness. Affiliative leaders openly share emotions and value people and their feelings. When driving a team to reach its goals, Affiliative is right behind Visionary and Coaching as the most effective. Used to heighten team harmony, improve communication, and repair broken trust, this style is described as collaborative competence in action. As with every style, the Affiliative style has some disadvantages. It can be difficult to drive performance because of the emphasis on feelings versus tasks. It can allow poor performance to go uncorrected, and promote the perception that mediocrity is tolerated. With little feedback from an Affiliative leader, employees are left to grow and improve on their own. Coaching “Try it this way.”

Coaching leaders develop people for the future by communicating a belief in people’s potentials and an expectation they can do their best. They give feedback and instruction regularly and are willing to put up with short-term failure if it encourages long-term learning. Coaches help people identify their strengths and weaknesses, while helping align work with their career goals. By linking people’s daily work to long-term goals, coaches keep people motivated. Coaches are good at delegating—giving employees challenging assignments that stretch them versus just giving them tasks. This style works best with employees who show initiative and are looking for professional development. However, the Coaching style isn’t the right style to use if employees lack motivation or require excessive personal direction and feedback. Commanding “Do what I tell you.” The Commanding style is best used to bring a company out of crisis, to kickstart a turn-around, or to deal with problematic employees. A fire in the building would bring out the Commanding Style. Leaders who are naturally strong in this style excel at influence, achievement, and initiative. Sometimes called the coercive approach, Commanding leaders tend to demand compliance and don’t bother explaining the reason behind their actions or decisions. A Commanding leader exerts forceful direction to get better results and seizes opportunities in an unhesitatingly commanding tone. As for disadvantages, Commanding leaders tend to provide feedback by focusing on what went wrong. The Commanding Style should be used sparingly due to its tendency to erode people’s spirits, pride, and the satisfaction they gain from their work. Democratic “What do you think?” Democratic leaders forge consensus through participation. This style is most effective when used to build buy-in or to get input from valuable employees. Listening is a key strength of a Democratic leader. They sincerely convey that they want to hear an employee’s thoughts. As true collaborators who work as team members rather than top-down leaders, Democratic leaders know how to quell

conflict and create a sense of harmony. They are good at building trust and respect. This style works best when the leader is uncertain about what direction to take and needs ideas from capable employees. Even if a leader has a strong vision, the Democratic style works well to surface ideas about how to implement the vision. Over-reliance on the Democratic style can create endless meetings, where consensus remains elusive, and decision-making is frequently delayed. Overuse of this style can create a sense of confusion and a lack of direction, leaving people feeling leaderless and frustrated. Pacesetting “Do as I do.” Pacesetting leaders hold and exemplify high standards for performance. The Pacesetting style is effective when working with hard-charging sales teams, in technical arenas, and among highly skilled professionals. In these situations, the people require little direction, are highly motivated, and highly competent. Pacesetting leaders focus on how well something is done because of their need to continually find ways to improve. They set the bar for success and focus on exemplifying high standards in the organization. When the Pacesetting style is used with individuals who require more direction, it can come across as micromanaging and highpressure, leading to an erosion of confidence. The Pacesetting leader can constrict innovative thinking, which is why it should be used sparingly and with the right team. Visionary “Come with me.” Visionary leaders focus on mobilizing their people toward a vision. Vibrant enthusiasm is a hallmark of this style; it can strongly drive the emotional climate and transform the spirit of the organization. The Visionary style articulates where the company is going but doesn’t tell them how they will get there, allowing people the opportunity to innovate, think, and apply their own ideas. Through shared goals, people’s commitment to the organization grows.

People understand that what they do matters when the collective task is framed in terms of a grander vision. Visionary leaders are good at retaining talented people. They focus on igniting the spirit of innovation and instilling pride in the organization. They understand that distributing knowledge is the secret to the company’s success. The Visionary style is not effective, however, in situations where the team may be more experienced than the leader. It is also not effective when the organization needs to focus on the work being done, rather than heavily focusing on the vision for the future.

Leadership Style in a Stage 4 Company The ideal leadership blend for Stage 4 is Coaching, Affiliative, and Pacesetting.

Primary Leadership Style: Coaching The Coaching leader communicates a belief in people’s potential and an expectation that they do their best. The coach regularly provides feedback and instruction and is willing to put up with shortterm failure if it furthers long-term learning. The Coaching style is critical in Stage 4 because it supports the development of professional managers. Stage 4 requires the leader

to personally involve themselves in the growth of their direct reports, including investing time developing the management team. In the Professional stage, developing a professional management team—or at least making progress in that direction—is the most critical requirement. Secondary Leadership Style: Affiliative Affiliative leaders build tremendous loyalty and strengthen connectedness by recognizing that employees have individual value. The Affiliative style is needed in Stage 4 to create an emotional connection between the employees and the organization because the number of employees has increased so rapidly. A leader can use the Affiliative style to affirm that no one has become “just a number.” The organization should have successfully completed the ownercentric to enterprise-centric transition in Stage 3. In this more established phase as an enterprise-centric business, the Affiliative style serves to heighten team harmony and improve communication. Creating a harmonious environment where employees feel valued is critical as the organization continues growing. Tertiary Leadership Style: Pacesetting Pacesetting leaders hold and exemplify high standards for performance. They set the bar for success and show through their actions both what it looks like and that it’s achievable. This is critical to set clear expectations for a management team that is taking on more responsibility in Stage 4 and beyond. Without a leader continually finding ways to improve and grow people in the organization, a larger organization can become stagnant. In Stage 4, a Pacesetting leader is needed to keep the organization moving forward and constantly improving. The most common misalignment in Stage 4 is a leader who fails to adopt the Affiliative style. This can be a challenging style to learn, especially for leaders who excel in the Commanding or Pacesetting style. The absence of the Affiliative style results in a team that does not feel connected or loyal to the organization or the work, which can result in high turnover and disengaged employees. The second most common misalignment is an over-reliance on the Commanding and Pacesetting styles. While Stage 4 does recognize Pacesetting as a tertiary need, leaders who employ Commanding or Pacesetting as their primary leadership styles at this Stage will be less effective. Developing a capable management team

that leads strong departments is critical, but good candidates for those management roles may choose to leave if they are being led with Commanding and Pacesetting styles. Leadership Style Blend Misalignment The CEO of a skincare company has grown the business successfully to 49 employees. She is proud of her company culture and the fact that everyone’s voice is heard, no matter their position. Despite the increasing size of the business, she wants to hold on to some of those core values that they started with. That’s why she makes it a priority that no big decisions are to be made without consensus from the entire team—especially decisions regarding the products themselves. While the staff are appreciative of the importance placed on their opinions, the managers are becoming increasingly frustrated. They don’t have clear direction on initiatives and it’s almost impossible to make decisions. Their frustration comes to a head when the rollout of a new product line is delayed. Despite months of conversations, deliberations, and compromises, production was halted at the last moment when the CEO decided there wasn’t enough unity of opinion to move forward. This CEO is still trying to lead using the Democratic style, which was necessary in Stage 3. It is no longer serving the best interest of the company, however. With nearly 50 employees, it’s simply not practical for everyone to have a say in every decision. If she continues in this direction, she risks losing her management team, which is struggling to get anything accomplished. The company cannot handle continued setbacks in getting new products to market. Leadership Style Blend Application The following questions will help you apply the information from this chapter to your company. Download the Stage 4 Workbook to record your answers. Key Questions: What is your natural Leadership Style Blend? How does the ideal Leadership Style Blend for a Stage 4 business benefit your team? If your natural style does not align with the ideal style for a Stage 4 business, are you willing to adapt? If so, how?

Tip: Make the long-term health of the company your first priority. ➢

Although your natural leadership style may not match the ideal for a Stage 4 business, keep in mind that the needs of the company will change as it grows, and your ability to adapt will play a big part in ensuring its success.

Three Faces of a Leader Overview The Three Faces of a Leader measures the proportion of time and energy a leader spends embodying the three primary leadership roles, or faces, within an organization. The Three Faces are Visionary, Manager, and Specialist.

Research tells us that for each Stage of Growth, there is an ideal allocation of energy between these three faces. Said another way, at each Stage of Growth, the organization needs the leader to spend different portions of time wearing the Visionary Face, the Manager Face, and the Specialist Face. The Visionary Face The Visionary Face understands the importance of providing a compelling vision for the organization. When leaders put on the Visionary Face, they are guiding the organization toward a vision of the future. This begins with spending time in critical thinking to intentionally architect the business. The resulting business design then informs the vision of the company—a vision the leader must spend time clearly communicating to the organization. By helping the staff see how the daily work contributes to the bigger picture, the leader ensures the organization will generate the momentum needed to make the vision a reality. In early Stages, the leader communicates the vision directly with the staff. In later Stages, the leader must impart the vision to the Leadership and Management Teams, who are responsible for connecting the staff’s daily work to the long-term vision. In general, the larger a company gets, the greater proportion of time needs to be spent wearing the Visionary Face. In these later

Stages, the leader is no longer doing the work but leading the team with a vision that is connected to the organization’s activities. The Manager Face The Manager Face understands the importance of managing the people and the work. When leaders wear the Manager Face, they are involved in the supervision of the work or the people overseeing the work. The Manager Face includes time and energy spent coaching individuals toward greater levels of effectiveness. In early Stages—with few people and less organizational complexity—this face requires less of a leader’s time. As the organization grows, the leader needs to spend considerable time wearing the Manager Face. The allocation of time to the Manager Face is especially important during Stages 3 through 6 as the leader expends energy in growing the Management Team and eventually a Leadership Team. The Specialist Face The Specialist Face understands the value of being actively involved in the work of the company. When leaders wear the Specialist Face, they are creating products and delivering services to customers. They apply their personal expertise in development of the company’s offerings to the market or play an important part in business development. The Specialist Face also encompasses the time spent formalizing, improving, and refining the processes and systems that facilitate the company’s work. In early Stages, leaders focus a great deal of time on wearing the Specialist face—they are contributing significantly to the overall output of the organization. As the organization grows, the leader spends less and less time wearing the Specialist Face as newer team members take on that role. Yet, in every Stage, it is important that the leader maintains some time wearing the Specialist Face to benefit the organization from his or her expertise and stay in touch with the day-to-day realities of the organization. Examples of the Three Faces The Restaurant – First, let’s see how the Three Faces look for the leader of a restaurant. She wears the Visionary Face when she inspires the team to achieve extraordinary customer service by painting a clear picture of what true hospitality looks like. She has clearly set the vision for the organization and communicates it regularly.

That same leader is wearing the Manager Face when she is training the front-of-house staff on how to greet guests, take customer orders, and deliver plated dishes. Here, she’s not doing the work, but is training, directing, and leveraging this work to others in her organization. Finally, this restaurant leader is wearing the Specialist Face when she is the head chef in the kitchen on a Friday night, preparing dishes and running the kitchen. As the restaurant grows, the proportion of time this leader spends wearing each of these faces should change to be in alignment with the ideals for the restaurant’s Stage of Growth. The Manufacturing Company – Next, we’ll consider the CEO of a manufacturing company. When he sets the company on a path of continuous improvement, the CEO is wearing the Visionary Face. This is a vision he ties to the day-to-day work of every level in the organization. Wearing the Manager Face, the CEO interacts daily with his direct reports about the projects in each of their departments to ensure they have sufficient direction and resources to meet agreedupon goals. The CEO wears the Specialist Face when he rolls up his sleeves and gets involved in fixing the malfunctioning equipment on the shop floor to ensure they stay on schedule with customer orders. As with the example of the restaurant leader, the CEO can expect to wear the faces differently over time as his company grows. For many leaders, misaligned allocation of time is caused by a tendency to emphasize the faces they are most comfortable wearing. When a leader aligns their energy to the ideal Three Faces of a Leader allocation, their organization is better positioned for growth.

Three Faces of a Leader in a Stage 4 Company In Stage 4, the leader ideally spends 10 percent of their time and energy wearing the Visionary Face, 70 percent wearing the Manager Face, and 20 percent wearing the Specialist Face.

Stage 4 is characterized by a leader who is actively developing a management team that leads strong departments. In earlier Stages, the leader wore the Manager Face by managing the work and the staff. The difference in Stage 4 is that the leader is managing managers, who are then managing the work and the staff. The size of the company requires an organizational structure that formalizes a management team. While this management layer is critical, it also introduces a layer between the CEO and the staff. That’s why it’s so important that the leader is training, growing, and hiring strong managers. The managers should be encouraged to lead solid departments, developing an expertise about their functional area that may even supersede the leader’s. Implementing and advancing the organization’s processes and systems is a major focus in Stage 4. Leveraging the leader’s knowledge and expertise to others in the organization comprises 20% of time spent wearing the Specialist Face. Additionally, continued involvement in business development activities is a common Specialist activity for a Stage 4 leader. Wearing the Visionary Face, the leader must stay in touch with where the organization is headed. Mindful of a clear vision of the future, the leader must then ensure that the management team understands the vision so they can share it with their departments to maintain staff buy-in.

Even though the ideal allocation of time and energy among the Three Faces in Stage 4 is similar to Stage 3, it’s still common for a leader to have grown the organization through Stage 3 into Stage 4 without having transitioned away from a Specialist focus. Leaders who fail to spend appropriate time in the Manager Face routinely face burn-out in Stage 4 with an organization that remains owner-centric. The organization is running them, rather than the other way around. Their management team is underdeveloped and docile, lacking the authority to fulfill their critical role in what should now be an enterprise-centric business. Without a strong management team, the organization’s growth potential is stunted— limited by the leader’s personal restraints of time and energy. Three Faces of a Leader Misalignment The CEO of a medical interpreting services company excels at bringing in new business. She is a natural networker who is consistently able to close deals. She’s also a talented interpreter, and even though her company has grown to 42 employees, she still loves that part of the work. She has made close connections with many of her clients and while she has managers responsible for certain hospitals, she tends to get contacted directly by the client when there is a problem. She also tends to make herself available to clients because it’s easier, in her mind, to simply take care of it herself. The CEO has ambitions of growing her business to be the primary provider of medical interpreting services in the entire metro area. She’s frustrated, though, by the consistent need to work directly with her clients. She wants her managers to take the lead with customer service and quality issues so that she can focus on sales, writing proposals, and expanding the business, but they aren’t stepping up to do the job. This CEO has overlooked the important role that she plays in developing her managers. After putting them in place, the next step she needs to take in this new stage of her business is to coach and mentor them. Rather than spending so much of her time selling, she should be developing a sales manager who can take the lead in that area. And rather than shortcutting her managers’ authority, she should equip her management team to handle issues with clients and enable them to find their own solutions. Three Faces of a Leader Application The following questions will help you apply the information from this chapter to your company. Download the Stage 4 Workbook

to record your answers. Key Questions: Which of the Three Faces do you naturally wear most often? How does that align with the needs of a Stage 4 business? Are you investing in mentoring and coaching your managers so they can carry your business forward into Stage 5? Tip: Talk to your team. ➢ If you’re not sure which of the Three Faces you wear most often, ask your team. Have individual conversations with your direct reports to find out their perspective on the amount of energy you are spending on each of the faces, and how misalignment with the ideal allocation is impacting them.

Non-Negotiable Rules Overview The Non-Negotiable Rules are a powerful dimension within the Stages of Growth. They define the laws that a business must follow in order to be successful. The fact is that every natural system, whether it is a forest or a commercial business, succeeds by aligning itself to fundamental natural laws that establish order and balance. The Non-Negotiable Rules cover six foundational areas of a business: Business Development Business Model & Plan Finance Leadership Operations Workplace Community The rules are spread across these six areas because a business needs to be growing proportionally across them. Often, a business will focus more energy on some of these areas, causing an unbalanced ecosystem. Eventually, the rules ignored create pockets of weakness that can cause the business to lose momentum or retreat. Unlike the other dimensions, the Non-Negotiable Rules dimension exhibits a cumulative effect. This means that your organization needs to pay attention to not only rules for your current Stage, but also prior Stage rules. In a sense, Non-Negotiable Rules serve as graduation requirements to successfully move from one Stage to the next. To sustain growth, an organization needs to be at least 80% complete with the rules that are relevant to your current Stage. Now, this doesn’t mean that it is impossible for an organization to grow past a Stage if the necessary rules haven’t been completed. Rather, if you don’t complete rules before moving on to the next stage, they stick around to haunt you. They weigh on the organization, creating a stronger and stronger headwind for the company. After all, they are “non-negotiable.” Adhere to the rules that are active for your Stage—which includes the current Stage’s rules and prior Stage rules that have not been superseded—or pay the price in the form of low productivity,

poor financial performance, and the possible demise of the organization. There are two ways to meet the guideline of 80% completion. The first is to complete 80% or more of the rule. For example, a rule in Stage 2 is that the leader must “develop three supervisors to be responsible, accountable, and proactive.” This can be evaluated as to whether the leader has achieved at least 80% of what this rule requires. The second way is to evaluate by frequency. For example, another Stage 2 rule is to communicate all directions in writing. The progress on this rule can be evaluated by frequency—is the leader communicating directions to the team in writing 80% or more of the time? The Non-Negotiable Rules are like gravity—they exist whether or not you acknowledge them. Failure to address these rules will negatively impact your business. Being aware of the rules required in your Stage of Growth and taking action to address them is necessary to sustain growth. For many organizations that stall or retreat from their heights of success, the loss of forward momentum can be traced directly to the failure to take care of these graduation requirements. This dimension, as mentioned earlier, is unique in that the rules accumulate across Stages. One implication of this is that organizations that are caught up on the rules for the current Stage can proactively begin to work on future Stage rules. Getting ahead of the game on Non-Negotiable Rules allows organizations to transition more gracefully into the next Stage.

The Non-Negotiable Rules at a Stage 4 Company The Non-Negotiable Rules that are relevant for Stage 4 are organized by the six areas of business. Remember, an organization should be at least 80% complete with the rules to be prepared to graduate to Stage 5. Business Development Establish Business Development structures that generate leads, turn leads into revenue, and keep the revenue coming. Ensure CRM system facilitates Business Development structures.

In the area of Business Development, a Stage 4 organization should already have identified Brand Values that establish the company’s promise to the market. Brand Values, along with Customer Segments, should guide the company’s Business Development strategy. The components of Business Development should be separated into three distinct teams of Marketing, Sales, and Customer Service. In Stage 4, the organization should focus on establishing Business Development structures that generate leads, turn leads into revenue, and keep the revenue coming. The organization also needs to have a CRM system that facilitates these structures to maximize the effectiveness of Business Development efforts. A Stage 4 business requires Business Development structures that support consistent, growing revenue that is independent of any specific individual. Business Model & Plan Lead quarterly interdepartmental planning with Management Team using the 1-Year Operational Plan. In the area of Business Model and Plan, a Stage 4 organization should be reviewing margins every quarter by Revenue Groups and Customer Segments. The Business Model should be revamped to optimize these margins, refine Revenue Groups, and adjust Customer Segments. The organization should have established a 3Year Strategic Plan and a 1-Year Operational Plan. In Stage 4, the CEO should focus on using the 1-Year Operational Plan to lead quarterly interdepartmental planning with the management team. Stage 4 is the Professional Stage in which strong departments are led by capable managers. These departments can quickly create siloed thinking. An interdepartmental planning process becomes key to ensure resources are focused on the company’s top priorities. Finance Have department heads develop and account for an annual department budget. Establish department KPIs. In the area of Finance, a Stage 4 organization should have already made sure that every employee contributes to a KPI and

knows how the company makes and keeps money. A Stage 5 financial system should be set in place; this is a system that supports the organization’s financial tracking and reporting capable of supporting a 95-employee organization. In Stage 4, as the organization grows a strong management team, the department heads should develop and account for an annual department budget and establish department-level KPIs, an expansion of company-level KPIs established in earlier Stages. Part of the responsibility of department managers is to identify the metrics that will focus the team on work outcomes that support the company’s success. Leadership Hire or train professional managers who have the skills and mindset to build strong departments supported by infrastructure and process. Leadership in Stage 4 is focused on building a strong management team. To do that, the leader should already be delegating responsibility and authority to three to five capable managers and coaching them regularly. Leadership should also be intentional about clarifying and strengthening communication with all employees. The Stage 4 leader will either need to train existing managers or hire new talent to serve as professional managers. These are individuals who have the skills and mindset to build strong departments supported by processes and systems. A Stage 4 organization has already developed common language to communicate about its operations. The level of cohesion in the management team will be determined by the shared language in place to communicate about managerial and strategic topics. Operations Identify Master Processes and implement with Management Team. Allocate 5-10% of gross revenue to identify, acquire, and implement new processes and systems. Ensure Operations is organized around the company’s 3 Revenue Groups. The Operations area in Stage 4 is focused on developing processes. In order to accomplish this, the organizational structure

should have been revamped and all employees should understand their positions and roles. In Stage 4, the organization needs to identify Master Processes and implement them with the Management Team. To support these efforts, 5-10% of gross revenue should be allocated to identify, acquire, and implement new processes and systems. The organization should also ensure operations is organized around the company’s three Revenue Groups. Process is Stage 4’s top Gate of Focus. The future success of the organization will be determined in large part by the company’s ability to implement scalable processes and systems in the area of operations. Workplace Community Create strong, performance-driven departments that compete with each other. Establish a Project Management process in each department. Ensure all supervisory positions regularly conduct One-toOne meetings with staff. Finally, Workplace Community in Stage 4 relies on Core Values that were established in earlier stages. These Core Values should be incorporated in a company-wide program that expects, supports, and rewards the demonstration of these values. An onboarding program that immerses new hires into company culture and processes should be established. In Stage 4, the company needs to develop departments that compete with each other and establish a project management process that facilitates the work in these departments. Strong departments require the ability to successfully complete change initiatives, an ability that is made possible by effective project management methods. To keep the staff engaged as the company grows, the organization must ensure all supervisory positions are regularly conducting One-to-One meetings with their direct reports. This is an important structure that must be embraced from the CEO all the way down to supervisors. To keep the culture and core values vibrant, One-to-One meetings must be taking place at all levels of the organization. Non-Negotiable Rules Misalignment

An insurance brokerage firm that serves small and midsize businesses has grown rapidly over the past two years. With over 40 employees, the company has expanded to work with a wide range of insurance companies. Up to this point, they have primarily grown by word-of-mouth. The CEO has never put much emphasis on sales or marketing due to the organic growth the company has experienced. The past few months, however, business has noticeably plateaued. The only change the CEO can identify is that one of the core team members is gone on maternity leave. Her primary responsibilities have been assigned to other people in her absence, but the drop-off in new client acquisition is sudden and obvious. For the first time, the CEO realizes that one individual has been largely responsible for bringing in new business. Now that she’s gone, there’s no systematic way to understand her process for generating and converting leads. This CEO is learning that his business cannot scale without structure in place for Business Development. While one loyal and effective employee was able to carry the company through its earlier stages, at this point they can’t rely on just one person if the organization is going to successfully scale. The CEO needs to implement a system for marketing and sales that can be executed by other employees. A CRM is critical to track and manage leads, as well as a shared sales process that is repeatable and improvable. Non-Negotiable Rules Application The following questions will help you apply the information from this chapter to your company. Download the Stage 4 Workbook to record your answers. Key Questions: Are you at least 80% complete with all Stage 4 NonNegotiable Rules? Are there any rules that you’ve completely neglected? What can you do in the next 3-6 months to make progress in all six foundational areas of business? Do you think your business is being held back because you missed some of the rules of a previous Stage? Tip: Don’t worry about perfecting any one rule at the expense of making progress on other rules. ➢ Keep in mind that you need to be at least 80% proficient in all six areas before moving to Stage 5 to ensure a smooth

transition and avoid the headwinds created by incomplete rules.

Classic Challenges Overview Classic Challenges are the top five challenges businesses typically face in each Stage of Growth. The research has identified 24 unique Classic Challenges, some of which appear during more than one Stage.

Awareness of the Classic Challenges doesn’t mean that the business can avoid them altogether; many are an inevitable factor of growth. There are several advantages, however, to knowing what they are and when to expect them. Advantages to Being Aware of the Classic Challenges 1. 2. 3. 4.

When the challenges are more quickly recognizable, they can be dealt with more efficiently. A common language and understanding of the challenges facilitate alignment within the leadership and management teams. Future challenges can be prepared for in advance rather than reacted to in the moment. It’s better to face an enemy you know than one you don’t. Simply placing a name on the challenge goes a long way toward knowing the enemy.

Unlike other dimensions, the Classic Challenges dimension does not reflect an ideal but rather lists the challenges most frequently experienced during a specific Stage. As such, the organization is not

expected to align itself with the challenges listed for a Stage but can reasonably expect to face them. Classic Challenges and the Elements The Classic Challenges often represent surface symptoms of deeper, underlying issues. Recognizing the challenges is an important first step to determining which of the Elements need to be infused into an organization to facilitate growth. For example, say your team is struggling with employee retention, which they identify as the Classic Challenge of Employee Turnover. The Stages of Growth methodology links this challenge to the underlying Elements that most commonly resolve it, which are: clear Brand & Core Values, intentional Organizational Structure, a consistent One-to-One Process, and a Strong Management Team. With the link between Classic Challenges and Elements, the team can take specific actions to resolve the challenge in such a way that addresses the underlying issue, achieving greater long-term health for the organization.

Classic Challenges in a Stage 4 Business In Stage 4, businesses are typically struggling with these five Classic Challenges: Difficulty Diagnosing Problems Employee Turnover Not Getting Systems Into Place Organization Uninformed about Company Growth Weak Project Management In this section, we’ll look at each of these challenges in more detail. Difficulty Diagnosing Problems An organization that has difficulty diagnosing problems typically shows these symptoms: there are recurring quality issues, operational challenges remain unresolved, or employee frustrations are not addressed. In Stage 4, the size of the organization necessitates specialization, most notably in the form of departments. The separation of the organization in this way makes it increasingly

difficult to get to the root cause of problems. There are more moving parts, more hand-offs, and more cross-functional dependencies. To help mitigate the difficulty of diagnosing problems, a Stage 4 business should look at these key business elements: Establishing Key Performance Indicators for the major functions of the company to provide the necessary metrics to identify and diagnose problem areas. Ensuring its Master Processes are trainable, repeatable, and scalable so that the organization can handle an everincreasing volume of work without a loss of quality. Practicing consistent, two-way communication between employee and supervisor through a One-to-One Process to ensure any potential problems are raised by employees early. Developing a Strong Management Team equips leaders with the skills, tools, and mindset to effectively lead each functional area of the business. Employee Turnover An organization that experiences employee turnover typically shows these symptoms: key positions remain unfilled, good employees are leaving, or new hires do not stay long. In Stage 4, it becomes difficult to keep employees when the organization lacks clear organizational structure and suffers from ineffective processes and systems. To help mitigate employee turnover, a Stage 4 business should look at these key business elements: Establishing a clear promise to the team through Brand & Core Values will create unity and comradery. Setting in place Organizational Structure helps people know what work needs to be done and by whom, reducing operational chaos and improving the onboarding of new hires. Practicing consistent, two-way communication between employee and supervisor through a One-to-One Process ensures an avenue for concerns to be raised and addressed.

Developing a Strong Management Team equips leaders with the skills, tools, and mindset to increase employee engagement. Not Getting Systems Into Place An organization that struggles getting systems into place typically shows these symptoms: the company can’t handle additional volume with existing processes and systems, work is inconsistently executed, or high labor costs affect the bottom line. In Stage 4, the priority is on process. The failure to get scalable processes and systems into place inflicts organizational trauma. To help mitigate the failure to get systems into place, a Stage 4 business should look at these key business elements: Identifying and improving Master Processes to have the necessary organizational will and means to reduce variation and increase quality. Establishing Organizational Structure so that the work is organized independent of the people and can absorb the addition of new team members. Developing a Strong Management Team that leverages its expertise and invests its resources to establish departmentlevel processes and systems. Organization Uninformed About Company Growth An organization that is uninformed about company growth typically shows these symptoms: the organization’s focus is inconsistent with what’s needed to grow, employees are confused and concerned about the company’s future, or employees are satisfied with the current size of the company. A Stage 4 business can have a significant number of its employees whose individual success is not tied to the organization’s growth. This disconnect means that a large portion of the team’s

energy is being directed to initiatives that are not helping the company reach its goals. To help mitigate the effect of employees being uninformed about how the company grows, a Stage 4 business should look at these key business elements: Sharing a Business Growth Framework that provides the team with a common language to understand what is necessary to keep the company growing. Critically thinking about the company’s Business Model helps create clarity around what the company does, for whom, and why. This understanding becomes the basis of creating a clear picture that connects individual success to company growth. Establishing Key Performance Indicators—of which every employee is contributing to at least one of the metrics— allows everyone to measure and evaluate their work outcomes and how those impact company growth. Practicing consistent, two-way communication between employee and supervisor through a One-to-One Process keeps employees informed about the role they play in company growth. Weak Project Management An organization that struggles with weak project management typically shows these symptoms: the company is missing deadlines, resources are not utilized well, or project statuses are unclear. Every company has projects that must be effectively managed, whether they are for internal or external initiatives. Weak internal project management means that the organization is unable to successfully initiate and complete important projects that help an organization mature and scale. Since Stage 4 requires a focus on implementing scalable processes and systems, it is in this Stage that a weakness in this area is revealed. For client-related projects, the lack of strong project management methods means that customers experience varied results that reduce customer satisfaction. To help mitigate weak project management, a Stage 4 business should look at these key business elements:

Identifying the Master Processes that impact project management and look to instill common methods and tools. Implementing Meeting Structures that encourage effective, project-related team meetings. Establishing Organizational Structure to help bring clarity to roles and responsibilities throughout the organization. Developing a Strong Management Team that employs a common project management system to ensure successful completion of projects. Connecting the classic challenges and their surface symptoms to a root cause helps a business leader be less reactive and instead be proactive at addressing the source of the challenges. As a company looks at the challenges that are impacting their organization, it’s important to understand that a single business element can help mitigate several challenges. A Strong Management Team, for example, can mitigate four of the five classic challenges in Stage 4: Difficulty Diagnosing Problems, Employee Turnover, Not Getting Systems Into Place, and Weak Project Management. Unlike other dimensions of the Stages of Growth, the Classic Challenges do not represent an ideal, but rather the challenges that are most typical for a company of that size. Businesses that have stayed at the same Stage for many years often have resolved the underlying causes of that Stage’s typical challenges. Therefore, they may experience challenges that are classically seen in later Stages. Other organizations find that their most impactful challenges are primarily from earlier Stages. This is indicative of an organization that has functions that have not kept pace as the organization grows in size and complexity. Classic Challenges Example A specialty logistics and delivery company is nearing 50 employees and has expanded to new locations. The CEO has formed departments in order to handle the higher volume of work. Whereas a Project Manager used to be responsible for nearly every aspect of a transaction (including scheduling, confirming details, reserving the necessary equipment, and following up with the customer after the service was completed), the company now has separate departments to handle each task. One of the company’s long-term clients has put in an order for the transport of 40 medical devices. Each one is fragile and weighs over 600 pounds. They have handled similar projects for that client

in the past, so the CEO is shocked when there are major issues. The order wasn’t processed correctly or in time, resulting in thousands of dollars of lost time and wasted manpower. Sales is blaming Transportation for mishandling the order, who is blaming Customer Service for not communicating all of the details, who is blaming Sales for over-promising. Frustrated, the CEO faces losing one of the company’s best clients. The Classic Challenge facing this CEO is Difficulty Diagnosing Problems. Whereas he used to know exactly what went wrong on a botched project, now it’s much harder to tell. The newly formed departments are blaming one another and it’s unclear exactly where the communication breakdown occurred. The people he used to depend on are no longer privy to every detail of an order, so he is left trying to piece things together in order to prevent it from happening again. An increase in specialization and siloed departments make it much more difficult to diagnose problems. A robust, clear, and well-established project management process and system would address these difficulties. Classic Challenges Application The following questions will help you apply the information from this chapter to your company. Download the Stage 4 Workbook to record your answers. Key Questions: Are you facing any of the Classic Challenges of a Stage 4 business? If you were to implement it today, which of the 11 Elements would make the biggest impact on your organization? (For a full list of the 11 Elements, see Chapter 9.) Looking ahead, how can you prepare for the challenges that come with a Stage 5 business? Tip: Don’t be afraid that the challenges you are facing today as a business leader will simply multiply as your business grows. ➢

The Classic Challenges change according to the Stage of your business. Take heart in the fact that the ones you overcome today will not be twice as difficult in the next Stage.

The Elements of an Exceptional Business Overview Elements are the principles, methods, and tools that form key structures within an organization. Many organizations are either missing an Element or it’s not strong enough to support the organization’s current Stage or desired growth. As a result, these organizations experience a host of challenges and surface symptoms. Surprisingly, though, the connection between the surface symptoms and the missing element is not always obvious. Infusing Elements into a business’ ecosystem is the essence of ReWilding. Similar to the rewilding process in nature, whereby a missing element is reintroduced in order to restore balance to an ecosystem, Organizational ReWilding finds the missing elements in a business and infuses them. When an Element is infused into the organization, it sets off a ripple effect that begins to reduce or eliminate the challenges for which the Element addresses the root cause. The result is an organization that is more resilient, capable of navigating growth, and more exceptional.

The Elements are organized into four categories: Culture, Infrastructure, Leadership, and Strategy. Culture includes Elements that impact an organization’s values, behaviors, and relationships. Culture Elements: Brand & Core Values One-to-One Process Infrastructure includes Elements that create foundational structures throughout the organization.

enduring,

Infrastructure Elements: Business Development Structure Key Performance Indicators Master Processes Meeting Structure Organizational Structure Leadership includes Elements that focus on developing a cohesive Leadership and Management Team and creating an organization less dependent on the CEO. Leadership Elements: Interdepartmental Planning Strong Management Team Strategy includes Elements that facilitate the necessary critical thinking to consciously design a resilient organization and provide shared strategic language. Strategy Elements: Business Growth Framework Business Model Each of the elements supports a critical function of a growing organization. Brand & Core Values are about keeping promises to the market and the team. When an organization defines these sets of values, it’s positioned to consistently deliver on its promises.

Business Development Structure is how an organization generates consistent and growing revenue. The starting point is understanding that Business Development encompasses the three revenue generating functions—marketing (generates leads), sales (turns leads into revenue), and customer service (keeps the revenue coming). A Business Growth Framework unites a company’s management team with a comprehensive business growth methodology. Instead of a CEO carrying the burden of growth alone, the common framework allows the entire management team to work with the CEO on important business strategies and initiatives. A Business Model is the architecture of a resilient, profitable business. It includes the fundamental strategic areas of a business: value, customer, revenue/profit, and structure. It also provides a framework to periodically assess the business’s design and adjust to new realities as the business grows. A Strong Management Team is how an organization leads with a shared vision and common language. All too often, organizational growth is stunted because the team doesn’t know where they are headed. Strong leadership can unify team members and accelerate growth. Interdepartmental Planning is how an organization focuses resources beyond department silos. It consists of a structured method of categorizing priorities across all departments so that the organization is working together towards common goals, not competing internally for resources. Key Performance Indicators are how an organization measures and evaluates work outcomes. Identifying and tracking the right metrics is the difference between an organization knowing exactly where they are at and flying blind. Master Processes are the key processes and systems that make an organization more efficient and effective. Rather than relying on specific individuals to run, the organization creates processes that enhance quality by reducing variance. Meeting Structure achieves greater effectiveness in an organization’s meetings by identifying the different types of meetings that are held and applying the appropriate degree of structure. A One-to-One Process provides a regular feedback loop between a supervisor and employee that promotes proactive inquiry, creates

personal accountability, and builds a bond of trust. It is one of the foundational structures needed to create a high functioning company. Organizational Structure is how an organization builds resilience by employing a simple principle: organize the work before you organize the people doing the work. The lack of structure within a business is a major contributor to organizational chaos, disengaged employees, high turnover, and a culture that is resistant to change. The Elements and the Stages of Growth The importance and impact of each Element varies based on the Stage of Growth. Some Elements are important immediately, beginning in Stage 1, while others don’t become priorities until the organization reaches higher levels of complexity.

This image shows the Elements across the seven Stages of Growth. The importance of the Elements is depicted by dots and checkmarks. Green dots highlight Elements that are a Stage’s highest priority to get in place and be adopted by the organization. Yellow dots indicate the Element should be considered, but it is not the top priority at that Stage. The Red dot denotes Elements that are not necessary at a particular Stage because the organizational complexity is not enough to benefit from its implementation. Finally, a checkmark identifies Elements that should already be in place and fully integrated into the organization.

The Elements in a Stage 4 Business

In Stage 4 there are three elements with a checkmark—Brand and Core Values, One-to-One Process, and Organizational Structure —indicating that these Elements should have already been adopted by the organization. If the company has not fully implemented these Elements, they become the highest priority (even more so than the Elements with green dots). There are five Elements with green dots, indicating top priority. These are Business Development Structure, Key Performance Indicators, Master Processes, Strong Management Team, and Business Growth Framework. The remaining three elements are second in priority, as indicated by the yellow dots: Meeting Structure, Interdepartmental Planning, and Business Model. Missing Elements Example Despite the competitive nature of the industry, a cannabis company has grown quickly into a Stage 4 business. With just over 50 employees and three locations (two retail stores and one

manufacturing site), the executive team’s ability to keep up with daily operations is wearing thin. One problematic aspect of the industry is the high rate of employee turnover. The workforce is very transient and as a relatively new industry, it’s difficult to find experienced help. Because of this, the CEO has had a hard time getting strong leadership into place. When employees show promise and are reliable, he is quick to promote them; however, as young people without a lot of experience, they lack management skills. As a result, the company is constantly training new people. There is a lack of consistency in customer experience from one store to another, and the CEO is personally involved in putting out a lot of fires. Not only is he on the brink of burnout, but the newly appointed managers are too, who find themselves covering shifts for no-show staff and working long, unpredictable hours. The missing Element that would have the biggest impact on the organization is the Strong Management Team. Even though the staff is young and it’s not possible to hire someone with management experience in this pioneering industry, developing a capable management team should be a top priority for the CEO and other executives. Training the employees who show promise and equipping them with a common language and set of tools to handle problems would pave the way for more consistency and structure. It would also allow for the managers to take on more responsibility and grow in confidence as they apply their new knowledge to the daily oversight of the business. The Elements Application The following questions will help you apply the information from this chapter to your company. Download the Stage 4 Workbook to record your answers. Key Questions: Key Performance Indicators (KPIs) are a high priority in Stage 4. Does every department have KPIs to which all employees are contributing? Are they effective at indicating future financial health? How well defined and developed are Master Processes in your organization? Have you captured them in writing, or are they dependent on individual knowledge? Based on the challenges your organization is experiencing, how would you rank the secondary priority Elements

(yellow dots) in order of importance for being infused in your organization? Tip: Your challenges help to identify the Elements missing in your organization. ➢

The Classic Challenges are symptoms that point to underlying issues related to the Elements. Start with the symptoms and work backwards to identify the Elements that are missing (for more information on Classic Challenges, see Chapter 8).

Transition Zones Overview Transition zones are periods of change a business goes through as it exits one Stage of Growth and enters the next. Transition Zones happen to every business as they move from one Stage into another. During this period of change, businesses commonly experience a period of chaos where things feel disconcerting and overwhelming. Transition Zone are like rough waters. These periods can be especially perplexing because the organization is often experiencing positive advancement and growth right up to the point the transition begins. Flood Zones and Wind Tunnels There are two types of Transition Zones: Flood Zones and Wind Tunnels. In a Flood Zone the organization is flooded by work and the complexity suddenly becomes overwhelming. Often, the reaction of the leader is to throw more people at the problem. That is rarely the right answer, however, because adding more people just means adding more complexity. In a Wind Tunnel, the organization finds that what has worked up to this point—processes, methods, tools, structures, etc.—no longer works. Those past approaches need to be blown out and replaced with new approaches that fit the new Stage. This can be unsettling since it can require significant change for the organization. Think of a Wind Tunnel as a period of “Out with the old, in with the new.” Transition Zones often feel chaotic to an organization because it is a time of transformation, or growth, from one Stage to another. Knowing to expect them can help an organization get through without panicking or retreating. Transition Zones across the Stages of Growth

Each Transition Zone starts at the end of one Stage and continues through the beginning of the next. For example, in Stage 1, which is 1-10 employees, the organization will enter a Flood Zone around the time they reach eight employees. It will remain in a Flood Zone as the company transitions into Stage 2 until they reach around 12 employees. At around the 13th employee, the business will have completed the transition and will enter a Functional Zone. A Functional Zone is the period where a business is solidly within a Stage and can have its priorities dictated by the Gates of Focus. For example, in Stage 2 the Functional Zone is from 13 to 17 employees, which is the range of employees between the incoming and outgoing transitions. Leadership in a Transition Zone When in a Transition Zone, the organization needs the leader to emphasize Structure, Clarity, and Focus. These three things will help maintain the confidence of the organization through the inevitable turbulent times, allowing it to navigate the chaos as gracefully as possible. Picture a group white water rafting: when they encounter rapids, the rafting guide barks out warnings and gives clear directions on what everyone needs to do, all the way until calm waters are once again reached. A leader can provide Structure by ensuring the team understands their role, setting clear expectations, and demonstrating how to effectively accomplish the work. One way a leader can provide Clarity is to forewarn the organization of upcoming Transition Zones. Armed with this knowledge, the rough waters experienced by the organization will

not cause so much anxiety; the Transition Zone won’t feel as unexpected or shocking as it otherwise would. An example of how a leader can provide Focus is by narrowing responsibilities, reducing the number of new initiatives undertaken, and painting a clear picture of what success looks like for each team member.

Transition Zones in a Stage 4 Company The transition from Stage 4 to 5 marks a shift in mindset from establishing departments and the managers leading those departments to integrating these departments into a cohesive leadership team. Organizations typically experience a Wind Tunnel during this transition. The systems and processes that had been working well are no longer sufficient or applicable as the number of employees grows. A Wind Tunnel is when the systems, processes, and structure that worked in the past may need to be blown out to be replaced with new, more scalable solutions. This is part of the “out with the old, in with the new” transition. The most common mistake that business leaders make at this point is to assume that growth itself is the problem. Rather than question the scalability of the systems they’ve been using so far, they question everything else about the business. Are the new employees at fault? Is the new vendor the issue? Is it even possible to scale up their services to this new, higher-capacity level? If things are hard now, won’t they be even harder if they grow more? The organization would be better served by focusing on how to adapt or replace its systems, structure, and processes to manage the new workload. Processes that worked fine with lower volumes or fewer people will need to be reevaluated and refined to be more efficient and scalable. This is just a growing pain that, once addressed, will allow the organization to reach the next Functional Zone in Stage 5. Transition Zones Example A popular restaurant has made its mark by serving locally grown and raised food, with a direct connection from farm to table. Since its founding, it has operated from one location, about 90 minutes from a major metropolitan area. Due to an increase in demand, the owner and CEO has decided to add a second location downtown. The new location has increased the company size to 55 employees.

The sudden influx in new employees, along with the second location, brings about a lot of changes. The systems the company had in place for managing inventory, scheduling, accounting, and transporting items from the farm to the restaurant are no longer sufficient. Challenges include building an adequate food supply, now that their volume has increased; scheduling deliveries at two locations that are 90 minutes apart; communication between the two restaurants; and training new employees on company culture and expectations amidst all of the chaos. The CEO is wondering why the managers can no longer “make things work,” and the staff are overwhelmed by the many changes and lack of direction. The company is caught in a Wind Tunnel. Instead of being able to train new employees on the existing systems, the CEO and leadership team need to focus on creating processes and systems that will support the organization at this new level of complexity. The structure will bring clarity to the staff and allow employees to focus on the tasks at hand. Once appropriate processes and systems have been developed and are in place, the company will be able to take on the new Stage with minimal disruption. Transition Zones Application The following questions will help you apply the information from this chapter to your company. Download the Stage 4 Workbook to record your answers. Key Questions: How would dealing with a Wind Tunnel challenge you personally as a leader? What initiatives can be delayed until after you exit the Transition Zone so the team can maintain focus? What are some concrete steps you can take today to help prepare for the next Transition Zone? Tip: Remember that the growth you experience during this time may feel overwhelming but there is no shortcut to building scalable processes and systems. ➢ If you are in a Transition Zone, post the words “Structure, Clarity, & Focus” in your office or write them on a white board as a reminder of what the team needs more of from you at this moment.

Conclusion A Stage 4 business is at a critical point where the management team needs to be professionalized. Whether an organization trains existing managers to the next level or hires outside professionals, this is a building block that cannot be missed for successful growth into further Stages. Process is a top priority and should be the focus for managers to implement in each functional area they oversee. The organization should be slightly more confident than cautious, once again ready to embrace change but at a slower pace than in Stages 1 and 2. The leader needs to primarily act as a coach to the management team, keep morale high through affiliative leadership, and exemplify high standards for performance. As with every Stage of Growth, there are Non-Negotiable Rules for the Stage 4 business to follow in six foundational areas (business development, business model and plan, finance, leadership, operations, and workplace community). Abiding by these rules can help the business avoid many of the Classic Challenges associated with a Stage 4 company. While there are 11 Elements to every exceptional business, a Stage 4 business should prioritize implementing Business Development Structure, Key Performance Indicators, Master Processes, Strong Management Team, and Business Growth Framework. This assumes that Brand and Core Values, One-to-One Process, and Organizational Structure have already been fully implemented. Lastly, a Stage 4 business can expect to a hit a transition zone as it reaches 54 employees. This Wind Tunnel is characterized by a failure of the existing systems, structures, and processes and a need to implement new ways of doing things. A leader who brings structure, clarity, and focus will help the organization navigate the transition zone and move into the calmer waters of the Functional Zone of a Stage 5 company. The Stages of Growth methodology serves as a roadmap for leaders of a Stage 4 company. Rather than react to every new change as it happens, leaders can proactively plan ahead and make adjustments based on the experiences of hundreds of other business owners who have dealt with many of the same challenges. Regardless of the industry, all Stage 4 companies share a great deal in common. Learning from one another is the most efficient and effective way to navigate growth.

Further Reading Burlingham, Bo: Small Giants Fischer, James: Navigating the Growth Curve Fritz, Robert: Corporate Tides Goleman, Daniel: Primal Leadership

About the ReWild Group Founded in 2017, the ReWild Group is based in Colorado at the foot of the Rocky Mountains. We are dedicated to furthering the research that was originally presented in the book, Navigating the Growth Curve (published in 2006). As we expand our network of Advisers, our goal is to deliver the benefits of this research into the hands of as many business owners and leaders as possible. Our Advisers are trained on delivering impactful engagements that bring the principles garnered from our research into practical, every-day solutions to common problems faced by businesses. We’re on a mission to multiply the number of exceptional businesses around the globe. We believe that work is a fundamental part of human existence. When a person is part of an exceptional workplace, they can apply their natural talents, grow as an individual, and develop new skills. This person returns to the home and society as the best version of themselves. As we grow exceptional businesses, the impact reverberates throughout our homes, our communities, and our nations. This is how we change the world. Join the movement. Whether you are a business adviser or a business owner, you’ll find resources to help you on your journey. www.ReWildGroup.com