As a business grows, it becomes increasingly complex. Business functions that one or two people once managed now require additional staff. Automation replaces legacy systems and processes, both administrative and those that directly impact production and service delivery. Cross-functional communication and coordination, which used to be informal and direct, is soon flowing through layers of people and departments. The company’s management team, some of whom may have limited supervisory experience, can find it difficult to keep non-management employees all on the same page. Goals and priorities shift rapidly as the company works to keep up with increasing internal and external demands. These changes can have very real consequences for the company’s culture as well.
Cultural Alignment
The most common, and potentially serious, challenge facing any growing small business is cultural (or leadership) alignment. As a business expands, members of its leadership and management teams may find themselves disagreeing over issues of company direction, strategy and process. Company leaders, who once shared the same vision of the business’s future, may no longer see eye-to-eye. They could have differing priorities, such as how to expand the company’s workforce or invest in new equipment and exactly how to implement those things. The more difficult it is for company leaders to reach consensus, the more disconnected, ineffective and inefficient the whole operation can become.
Communication may falter if decisions coming from the company leadership team are unclear, inconsistent or misdirected due to misalignment. Cross-functional coordination and collaboration become increasingly problematic as employees grapple with conflicting leadership priorities.
The Growth Conundrum
The operational, strategic and other changes described here pose a real conundrum for maintaining a strong, well-aligned culture in any growing business. On the one hand, the business’s expanding staff means that newer employees must work side-by-side with more experienced ones to achieve the company’s vision and goals. Leadership therefore must not only reach consensus on major decisions, including how to lead and manage growth, they must also communicate a clear vision to all employees to maintain cohesion and direction.
On the other hand, the company must be prepared to change how it operates to fuel growth, sometimes fundamentally. This change process can mean modifying or completely altering the company’s strategic focus, values and culture. As a result of these two competing challenges, a business may struggle to maintain its culture even as it considers how to change that culture to accommodate new ways of thinking, leading and operating as the business grows.
Growth and Change by Business Type
Any growing business undergoes significant changes in its strategic leadership, operations and culture. However, growth and change affect different types of organizations and their cultures differently.
Manufacturing
Leaders in manufacturing most likely turn to some form of automation to take the company to scale. Automation and other changes required to scale operations can cause the company culture to shift, as production employees come to view the company and their jobs much differently. Production employees, who are used to legacy production methods, may put up significant resistance to these changes. These internal tensions can hamper the kind of culture change required to support a company’s growth.
Services
These days service-sector businesses are just as likely as manufacturing companies to automate systems and processes. However, services, which are less concrete than physical products, often depend even more heavily on clear, creative communications for marketing and delivery.
A service-sector business may need to streamline or even productize service offerings as it goes to scale. The company may ultimately need to modify its brand and culture to better align with its scaled services model. Laying the foundation for the right culture from the start can help the service business adapt and shift more readily to meet its scale-up needs.
Nonprofits
Like any growing service business, nonprofit organizations are often challenged to adapt their business model as they scale upward. Growing nonprofits also need a strong, consistent ethical framework, which is central to its identity and culture. This framework translates into establishing a set of operating principles, policies and practices for the organization that include cultural norms to guide employee decision-making and behavior. A growing nonprofit organization must therefore re-examine its mission, vision and values frequently during periods of growth and change to maintain clear and consistent cultural norms for all its activities.
Sole Proprietorships
Ceding some leadership roles to other people as the company grows can be hard for the founder of a business. It may seem at times that the company, which is often intensely personal to a founder, is losing the ideals and principles that got the business started. Attending to quality issues, customer relationships and other tasks that used to occupy much of the founder’s time are now someone else’s responsibility. It is critical that the founder communicate a clear vision to all employees at the outset. The company’s culture can then develop the resiliency and cohesion needed to handle strong growth in the future.
Partnerships
Perhaps the most important decisions a company’s founding partners make is how to divide leadership responsibilities. At the same time, founding partners may discover that their leadership styles and approaches to business operations change as the company grows. Differences of opinion can arise as the pressures of substantial growth start to take hold. Focusing on the company’s operational needs rather than more personal issues can help keep the business, partnership and culture flourishing.
Preparing for Growth
Building the right culture from the moment the business is established allows a company to develop the level of cohesion and resiliency needed to successfully navigate growth when the time comes. Communicating the company’s vision before, during and after periods of significant growth and change is especially important to maintain cohesiveness and a strong, well-aligned culture. The company’s vision and values guide decision-making, support clear and effective communication and support the strong, unified culture a growing organization needs to be successful.
Employees who share a common understanding of the company, its vision and what it stands for are more likely to perform well, despite the many challenges that growth can bring. Establishing and reinforcing the organization’s values is part of this expectations-setting process. Consulting with employees to determine how the company’s values apply in day-to-day operations, such as in standards of employee performance and conduct, can be useful as the business goes to scale.
Again, values play an especially critical role in guiding decision- making, including both strategic and operational decisions that guide the company’s growth. Monitoring and reviewing key decisions with team members is a good way to ensure that employees at all levels are making decisions that are consistent with the company’s values.
Communicating and reinforcing the company’s vision and values helps to instill a shared sense of purpose and maintains a strong, well-aligned culture during stages of growth. It also sets the right tone for the culture to adapt and change as the company continues to grow and evolve.
By Mark A. Hamilton; originally published in SBAM’s July/August 2024 issue of FOCUS magazine
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