Business Growth Stage 3: Rapid Growth

This is the fourth post in a five part series introducing the four stages of business growth.

The Rapid Growth stage is where the organization’s past and future collide. On the surface, the only apparent difference between a start-up and a large company is the amount of revenue and market share.

But it’s not that simple.

As a result of its early growth, the organization is now much larger and becoming much more complex. Demand for the company’s product or service is dramatically increasing. There are more people, more customers, more products, more layers, and more complexity. And the company is beginning to experience more frequent and severe organizational problems. Just as teenagers pass through a period of pain and awkwardness, so must rapidly growing businesses on their way to becoming big companies.

The company’s very success has created the need for a fundamentally different way of managing and operating.

The focus in the Rapid Growth stage is on scaling operations and building the organizational infrastructure necessary to support growth and complexity. It’s no longer enough to simply add more people, money, technology, and space to cope with growth. This means that the organization needs to bring its people, systems, and management capabilities in line with the new demands of the much larger business it has become.

Balance Flexibility and Formality

There is a natural tension that exists between the need to grow rapidly versus the need to build structure, plans, processes and systems. When a company is young, it needs flexibility and little control in order to grow. As organizations grow, complexity increases and the need for additional control increases. For the company to scale a more formal approach to managing the organization is necessary. The proper kinds of systems, introduced in the right amount, at the right time, actually help the organization grow faster. Companies that resist the need to make these changes will remain relatively small, stumble, or even fall.

To scale the company, you must strengthen your company’s infrastructure and develop the organizational capabilities needed to handle rapid growth. This means you need to:

• Hire, train, and manage many new people.
• Build a strong and cohesive management team that can scale and grow the company.
• Fill the gaps in the company’s functional expertise and experience.
• More fully develop basic operational systems.
• Deploy a variety of management systems needed to coordinate activity, provide direction, make better decisions, eliminate confusion, assure goals are being met, and so on.
• Prioritize the development of the people that will be needed to run the company as it grows.

Companies that are successful in this stage learn to manage the dynamic tension that exists between yesterday and tomorrow, between small and big, and between loose and tight systems. They introduce new processes, new language, and modified structures as supplements to, rather than replacements for, existing approaches.

In essence, this stage is the transition from an entrepreneurial firm to an entrepreneurial enterprise. The organization must balance the informality and flexibility it had as a smaller company with the formality and control required to effectively manage a much larger company. Only if the organization makes this critical transition will it be able to succeed on a large scale.

Are you and your organization prepared for the challenges of rapid growth?

Up next: the Sustainable Growth Stage. If you want to determine the current stage of growth of your organization, take our online assessment here.