Scaling businesses: One challenge, two paths

gre
iStock_GeorgeClerk
Share this content

This article looks at companies with more than 50 people but can equally apply to much larger ones. This is when you have left the start-up phase and established your business. We refer to this stage as ‘blue’.

We explore how key elements like strategy development, roles and responsibilities, conflict management, leadership and decision-making styles can support or hinder your performance and growth.

With approximately 55% of businesses falling into this category, it remains the largest group and we use its services most days, one way or the other.

One of the hardest things for me to learn was to let go. At times, you need to step back and let things sort themselves out.

This article is the second in a four-part series. For each article, I interview a key business person – here Simon Cooke from Swagelok Bristol. He took over as MD in 2010 and clearly has his heart in the right place.

I saw evidence that the company was continuously developing and will focus on describing its healthy ‘blue’ parts. Simon has clear aspirations for the company and we will read more about those in the next article (to give you a clue, we will turn ‘orange’).

As I have spent enough years in the corporate circus, I will happily use my own experiences to illustrate the more destructive and unhealthy ‘blue’ side of management.

After growing a business to over 50 people, there is a need for more formality and structure. As mentioned before, this development stage can be referred to as the ‘blue’ level. It is a natural progression from ‘red’ (start-up phase) and necessary when scaling your business. The reason we find so many companies with a strong ‘blue’ influence is because they are rather large entities with over 150 employees. There is a very healthy aspect to this but it is also easy to lose yourself in it - to become too inward-looking, produce too many formal structures and processes, and hinder rather than support your people. This accounts for disengagement levels of 60-85% in many corporations.

It might not come as a surprise that we identified the relatively small company Swagelok Bristol as a good example of a healthy, mostly ‘blue’ business. It not only provides a high level of stability and certainty but also an environment for constant personal and professional improvement.

The Impact of Structure and Strategy Development

A few words about the structural set-up, which has a clear impact on the company’s business culture. Based in Ohio, Swagelok is a private international company focusing on the manufacture and sale of gas and fluid system components. Swagelok products and services are delivered globally through a network of over 200 authorised Sales and Service Centres supporting customers in 70 countries over six continents. The UK is divided into six territories and Swagelok Bristol covers the South-West.

The company decided to increase its turnover by 10% over the next five years. The strategic horizon is five years and the strategic plan three years. The latter is translated into four programmes. Swagelok is trying to achieve ambitious goals in a saturated market by offering more highly skilled services, which means moving up the value chain. This is still a classical example of ‘blue’ strategy execution because the figures were set top-down and don’t necessarily reflect market insight or research intelligence.

However, Simon has a very positive outlook:

“If you do the right things and take healthy actions, the numbers will follow.”

Things usually go wrong when companies focus on numbers because people will do whatever it takes to achieve them, even if that means doing more damage overall. 

Leadership

For a relatively small company Swagelok Bristol has a rather traditional, hierarchical set-up comprising a leadership team, a management team, supervisors and employees. Everyone has defined roles and clear tasks which form a vital part of the strategy execution.

The company not only provides staff with personal development plans but also the opportunity to use professional coaching. This is very effective when individuals are trying to find their feet in a new role, a special project or to further strengthen their skills.

“One of the hardest things for me to learn was to let go. At times, you need to step back and let things sort themselves out,” says Swagelok's Simon. 

Before embarking on a ‘blue’ transformation, do take the time to confirm that you really want to scale your business.

There is a healthy level of engagement. The leadership team consults small focus groups when needed to gain insight into certain areas. The company invests in traditional personality profiling tools like MBTI to ensure a level of diversity in the groups.

It seems that the leadership style has come a long way in the last six years. According to Simon, trust has increased and leaders especially are encouraged to ask for help. This gives all employees the opportunity to acknowledge mistakes, review the situation and learn from it - a good starting point for improvement.

Swagelok’s past reminded me of my time at Daimler Chrysler. Overly formalised organisational set-ups often place the emphasis on planning. Things need to run as efficiently as possible and mistakes are seen as failures or weaknesses. Combine this with leaders looking out for their own areas of responsibility and department-focused metrics, and you end up with a lack of transparency and a defensive silo culture. Managers may also play political games to defend their chiefdoms.

The leadership style in ‘blue’ organisations is nicely captured by two of Torbert’s “Seven Transformations of Leadership”. You would typically deal with Diplomats or Experts.

gjf

From the above table, you can easily pick out healthy and unhealthy environments.

R&R

When scaling a start-up, it is vital to clarify who does what. You could refer to formal job descriptions to avoid duplication and increase efficiency. As expected, everyone at Swagelok has a written overview of their roles and responsibilities which are linked to performance reviews and a bonus scheme. This highlights the link between the company and individual performance.

The challenge here is to find ways of giving people influence beyond their area of responsibility; allowing them to step out of their defined roles and take matters into their own hands.

Furthermore, in most larger organisations job descriptions are written by HR, are often outdated and many are so specific that people tend to stick to their remit to avoid causing conflict.

Decision-making

Decision-making is vital in any organisation, but particularly in a formal one. A growing organisation needs to make more decisions, so you are well advised to scale this skill. 

“At times I try to reason with people by asking them to look at it from the customer’s perspective or to take a more long-term view.” - Simon Cooke, MD at Swagelok Bristol  

A healthy ‘blue’ opts for transparency and documents processes. People have clear roles and with that comes decision-making power. This usually goes hand in hand with more rational thinking, expert advice and more educated guesses.

At this point, you might want to introduce tools such as the RACI matrix or a linear responsibility chart (LRC). These track how various roles complete tasks or deliverables for a project or business process.

An open and transparent culture is important when growing. When you have specialised functions, it is easy to make decisions without informing others of the rationale. People need to trust that they can get constructive feedback, that they can review their decisions and even admit to errors if they learn from them.  

Conflict Management

It is natural to have divergent interests and viewpoints in a growing business, especially with different functions. With specialisation comes a certain level of intolerance which can lead to conflict.

“Different opinions handled effectively can lead to an even better solution because you tap into the creativity of two or more people.” - Kerstin van Eckert, Business Mediator  

Simon tries to encourage constructive conflict because he believes it generates better solutions. “The personality profiling of individuals has helped us understand where people are coming from.” Formalising conflict management helps separate facts and emotions through clear processes. That is why more and more companies use mediation specialists like Kerstin when there seems to be a deadlock.

In ‘blue’ environments people stick to their remit and avoid confrontation. I don’t know how many times I have got into trouble because people felt I had overstepped the line. Well, I had, but only because I wanted to understand or improve something as part of the bigger picture.

What to Do

Before embarking on a ‘blue’ transformation, do take the time to confirm that you really want to scale your business. Let me use a simple analogy. If you are a passionate chef who loves food, you can be authentically happy and successfully creating and cooking. If you decide to replicate your success and open four restaurants, you will spend most of your time organising, planning, and managing individual businesses.

If you really intend to grow your business to 50+ people, consider the following:

  • People have a natural tendency to stick to the status quo and accept the organisational set-up. After all, they don’t own the business. Find ways to develop a culture of accountability and continuous improvement;
  • Try not to take on any ideas or advice from the corporate world. Stay what we call ‘lean blue’ unless you want to sell to ‘blue’ corporates;
  • Focus on your employees and put people before processes, as Swagelok does;
  • Give people space, autonomy and power to adjust structures and processes to work more effectively. Learn from the work done by the Japanese around kaizen - implement a long-term approach to work focussing on small, incremental process improvements towards efficiency and quality.

Swagelok’s spirit will ensure it continues to get better at what it does and finds people to support its growth. I am happy to have met Simon. I now know there are firms in traditional industries that do care and actively contribute to the greater good.

In the next article, we will explore what it means to run a dynamic, performance-oriented and client-centric business hungry for profit. We will look at what is needed to achieve ambitious goals, but not at all costs. 

About Rhys Marc Photis

Rhys

Rhys is best known as a passionate advocate of people-driven business growth that is future proof. He is an entrepreneur and acclaimed leadership trainer; co-founded GPi and developed the Pathfinder method to enable business leaders to unlock their business potential in this way.

Coming from a dynamic entrepreneurial background he understood early on the ups and downs of successful family businesses. He was an intrapreneur within large organisations, setting up businesses in emerging markets and seen first-hand the dynamics of team growth as a result. Then went on to lead international internet-based projects that rolled out across over 50 countries, which inspired him to do an MBA International. He has been the founder and entrepreneur of his own businesses since 2004. 

Replies

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.