Business growth increases complexity: More customers, more locations, more employees, more suppliers, more money, more inventory and….more risk.
Where does risk come from?
- You start to doubt whether you have the skills to run a complex business. That seed of doubt can fester and become self-fulfilling
- The business you loved becomes demanding, a nightmare, all the excitement you felt when you started it – goes away. And you think that you do not want growth as it’s too hard, But if you aren’t growing… you’re dying.
Is there an analogy we could use to understand it better?
Listen to Pavlo discuss a couple of analogies in this episode of The Money Show:
Pavlo argues that using the idea of the chassis of a car – the framework that bears the weight of the vehicle, is a strong analogy for building the framework of your business to support increasing complexity.
In a business, the chassis is everything that is needed to consistently deliver to their customers, to solve their problems. It is all of the systems and processes that you need to fulfil your promises to customers. Your business chassis needs to be strengthened to prepare for the growth that is coming so fulfilment is not compromised as you get more and more customers and orders.
Another way to think of it is how human beings grow: When you’re born, until 20 or so, you grow in spurts. A baby is born, then it grows in height, then there’s a filling out phase, then more growth, and so on. As we grow in height, all the energy in our bodies is going into making our bones taller. Then there’s a lull but during this time the muscles and tissues are building to hold up the next spurt of bone mass. It’s preparing the body for the next phase of growth.
When we find our business in chaos, we need to pause growth to build the muscle to support the growth. Get your systems in order.
How do you get it right to grow without the risk spoiling it all?
Choose a sport that you want to excel in – let’s take shotputter and a long jumper.
The two will be very different to look at. The shotputter will be solid and heavy and strong. The long jumper will be lean and long and flexible.
Figuring out which sport you’re in is the same as positioning your business… it determines every decision from then on.
What they both have the same is internal organs: lungs, kidneys, liver etc. In business these are your business systems. Procurement, finance, HR, operations etc – they are consistent across all businesses.
To take these athletes to Olympic heights, you have to ensure the organs are healthy and functioning optimally. Regardless of their particular sport. And then build the muscles needed to be a shotputter.
Finally – measure that performance to check constantly what is responding well, what is working and what needs work.
This data, both in terms of what is coming down the pipe, and the capacity of the business to deliver on it, will be critical to maintain your growth rate.