Apr 032014

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Dr. Earl R. Smith II

A while back I was having drinks with a friend who had, with her team, built a very nice mid-market government contractor. Like some new companies, the group had left a larger company after a divide developed in the management team. They were part of the losing side. So they spun out and started a new company. The team was still mostly made up of people who were part of the founding team. But things were changing. With growth came stress and new challenges. Some of the team had become uncomfortable with the increasing pressure and regimentation.

Our session occurred about three years after the new company was launched. They had managed to generate solid growth and were now generating something over twenty million dollars annually. The early years were a heady time for them. “It was wonderful,” she told me. “We felt free of the regimentation that had been stifling us. Now, we were masters of our own fate again.”

But, lately, things had started to become more challanging for the team. The pressures to grow had pushed them to open new sources of revenue. They tried two approaches. The first was to offer a wider range of services to their existing customer base. The second was to broaden that base and develop new relationships that would allow them to bring in new clients. Neither effort had gone very well.

By the time we met for drinks, the stresses within the team had begun to surface in ways that threatened the stability of the company. Part of her team was making noise about going out on their own and escaping the ‘regimented culture that was developing’.

Déjà vu: “I feel like I am back in the old company but this time I am in the role of the CEO we had vilified,” she said. “It is almost as if we have recreated the culture that drove all of us mad.”

“You have,” I observed. “It is the normal result of success. Your company has grown to the point that is needs to mature organizationally to get to the next level.”

She clearly did not like my message. “You’re telling me that it is our fault that things have come to this crisis.”

“Yep, you did it and now you have a second bite at the apple; a second chance to solve the dilemmas that come from being successful.”

Quo vadis? The challenge that my friend and her team was facing was one that occurs over and over in growing companies. Some years back I had written an article – Battle at the Cottage Gate. In it, I describe the divisions that evolve within a growing company; divisions that can threaten its very existence. The battle lines had been drawn between the ‘traditionalists’ and the ‘futurists’. My friend’s core team occupied the ‘traditionalist’ position within the company. As far as they were concerned, things were fine; except for the increasing pressures and new difficulties, which they tended to blame on the newcomers. On the other side were the ‘futurists’. Most of them were people who had been brought in as the company grew. These new professionals were not wedded to the ‘village atmosphere’ that the core team had sought and when they founded their new company. They had a new and more expansive vision for the company.

The question on the table as we tried to enjoy our drinks was “which way forward”. It was clear to her that she could not maintain the existing culture and grow the company. The practical challenges were just too great and the pressures within her team did not seem resolvable if she choose that road. On the other hand, she felt a great obligation to her founding team. She wanted to keep them happy. I decided to wax poetic.

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