Congratulations to Stage 6
of your Organization Growth Journey
You have become a Stage 6 company! During Stage 1 (Startup), you developed a business model that works. In Stage 2 (Ramp Up), you ramped up your sales, production/capacity, and staff using your proven business model. During Stage 3 (Delegation), you transformed your business from CEO-centric to Enterprise-centric to allow the business to grow. In Stage 4 (Professional), you became more focused on the operational aspects of your company, overseeing a team of executives who transitioned the company into a professionally run organization. During Stage 5, you integrated your organization to operate as a single unit, instead of as several independent departments.
Now in Stage 6, it is time for you to become focused on the strategic future and begin to take advantage of opportunities that are now available because of your size.
This information is based on our proprietary and highly effective EGOS – Stages of Growth business model, initially developed by James Fischer. Fischer created the 7 Stages of Growth business model based on extensive research of entrepreneurial companies.
His research demonstrates that as companies add more people, the complexity level of the organization increases.
You are reading critical information from the research that will help you:
Predict how growth will impact you.
Adapt your leadership skills, knowledge, and insights to your specific stage of growth.
Focus on the right things at the right time
Every business is unique, and these insights may have some information that may not suit you and your business, but most of them it will. We hope you find the takeaways helpful. VRT Management Group, LLC aims to help you “navigate the growth curve” as you move forward, offer you an infusion of hope (what you are experiencing is not unusual), and give you some pointers on what you can do to move to the next level of success.
After you read this information, feel free to set up a complimentary call with our advisor to discuss your unique situation. Our advisors have over 30+ years of experience and have worked with over 110+ small and medium businesses in the past few years.
What does a Stage 6 company look like?
A Stage 6 company has 90-160 employees.
There is a rhythm now. Patterns of behavior have been established, processes are in place, and the morning walk through the company has an air of familiarity that feels good. It feels comfortable. The CEO’s confidence in his/her staff is secure. If the CEO has captured the imagination of the managers, they now provide the stability of making the right decisions, connecting with their direct reports, and providing sound input that keeps the leader updated on critical issues.
This level of engagement is critical in Stage 6 because it’s time for the leader to, once again,shift his/her view, attention, and energy. The company must pay keen attention to its strategic orientation in the marketplace. With 96 – 160 employees, it’s time to look beyond the arena the leader has built and prepare to take the company into a more challenging competitive environment.
The leader must set in motion the longer view, move from an annual planning perspective into a multi-year strategic perspective, and drive the organizational culture as a visible leader.
Emphasis is once again on people as the top gate with profit second. A leader of Stage 6 company must engage a unique blend of Manager and Visionary modalities. Orchestrating a company’s move into Stage 6 requires a leader who believes strongly in the power of effective and consistent communication. His/her leadership style must help create synergy by connecting people, be able to heal rifts in a team, and motivate during stressful times.
It’s also time to revisit some areas that he/she might assume are okay:
How is the vision? Is it still clear? The leader should revisit this with the management team to make sure there has not been any erosion. This doesn’t happen because people don’t believe in the stated vision; it happens because the leader has trained and developed a strong-minded staff — they will be testing and questioning the direction of the company.
Are values still driving behavior? Again, the leader should check in frequently with how these are being adhered to in the company. Are the values still a part of determining who gets hired? Are people making decisions based on those values?
If the vision and values have survived the complexity level the business has grown to, then the culture should be well defined. Any erosion of the culture the leader wanted to create will manifest itself clearly at this stage of the company’s growth.
Is there a great strategic plan in place? More critical than ever is the leader’s ability to put a strategic plan in place that focuses the company’s resources on opening up new markets, refreshing products and services, and directing the company’s future growth. At this stage of growth, there can be an overwhelming feeling that a shift was needed in the CEO’s thinking, in his/her planning, and the ability to look ahead and plan for the future. This is a perfect time to bring on a board of directors, perhaps additional outside resources to help evaluate and challenge current thinking.
As leaders navigate through Stage 6, their primary goal is to transform a senior operational executive into a senior strategic executive. Leaders must broaden their focus from a one-year horizon to a two-to-five-year horizon. The primary focus is no longer driving the business (as a day-to-day operational executive); instead, it is navigating for the future (as a future-oriented strategic executive). How do leaders do this?
Develop a compelling strategic plan of how the company will capture opportunities in the future.
Help staff understand, embrace, and move toward the envisioned future.
In Stage 6, it’s critical to rethink the company’s positioning in the market strategically. It is no longer a big fish in a small pond, but a small fish in the ocean and its ability to survive just took on a different focus. But, there are also new opportunities available because of the size of the business. Challenging all assumptions as they relate to the vision, mission, customer needs, and products/services are crucial. Don’t allow managers to rehash old issues simply.
On the market front, the company is becoming more and more visible to the outside world. The competition is now very aware of the business and is increasing its attempts to steal market share. It’s a whole new business environment.
The CEO must become strategic about the future – strategizing and planning out two to five years. Consider how to keep and expand the company’s competitive advantage and opportunities.
The Leader Should be Considering:
Where is the market headed?
Where are the customers headed?
What technological changes can be expected?
In Stage 6, the CEO will want to move from an annual planning perspective to a multi-year strategic perspective. One of the key objectives will be to bring on a board of directors to help identify new market opportunities and provide accountability to help the business stay on target. Without some outside objective perspective, leaders risk not seeing the larger strategic picture, which is called the ‘too little, too late’ syndrome. During Stage 6, leaders need to work especially hard at helping their management team see the bigger picture and how they fit into it. A strategic focus will not work without the buy-in of the leadership team and the entire staff.
Required Leadership Skill Base:
The awareness to set into motion the bigger picture.
The ability to personally develop a strategic orientation.
The willingness to discover the vision of the company.
The ability to see the large picture in the marketplace.
The ability to help others find their place in an organization.
Seize the opportunity to tune into the perspectives of the management team. An emotionally connected leader who will listen and learn will be rewarded with steady growth, targeted planning, and engaged employees. It is also about improving the quality of the staff from hiring to assimilating, unifying them by making them an essential part of the company’s success.
The top five challenges in Stage 6
New Staff Orientation
Weak Profit Design
Hiring Quality Staff
Businesses enter Stage 6 in a Flood Zone as the level of activity is exceeding its systems capacity. Leaders will be tempted to throw more employees at the activity. Resist that temptation by focusing on making systems more effective and efficient.
The challenge of the leader is to become the senior strategic executive while still maintaining the teamwork and collaboration that are crucial to lead the team into the future. As leaders evolve into strategic executives, the leadership modality (how to lead the whole company) should be Dominant.
This is important as the CEO develops a strategic plan and begins to help his/her team understand and embrace the strategy. Having spent the time and energy to build a great team, look to them for guidance and advice in their areas of expertise.
( 45% of the time)
( 5% of the time)
( 50% of the time )
While managing this dynamic organization is the CEO’s number one priority (50% of the time), there should be a shift toward a significant Visionary role (45% of the time). Managers should be running the day-to-day operations, while the leader focuses his/her attention on developing strategies to maintain and capture new opportunities.The Specialist role is diminished to insignificance (5% of the time). Still, the leader must continue to understand how well the product/ service is meeting the needs of the ever-changing market and customers.
Builder / Protector Ratio
The Builder/Protector Ratio (BPR) is a measurement of “confidence vs. caution.” It is critical tool to gauge the business’ ability to accept change, respond with confidence to change, and successfully navigate the change.
Thrive on risk
Are always looking for new opportunities
Don’t back down from the everyday challenges
Thrive on caution
Prefer to apply the brakes (and should be encouraged to do so when appropriate)
However, there needs to be some caution to avoid overconfidence or carelessness, which could give competitors an opening to attack.
The CEO’s role as the company moves into this stage of growth has to be on creating a strategic vision that moves business farther into the future.
The distribution of authority and accountability also becomes a significant challenge, and the leader needs to establish:
A very clear vision for the organization.
A strong set of core values.
A clearly defined, dominant company culture.
A robust strategic plan that reaches out over two to five years.
Foundation Building Blocks for Stage 6
BOARD OF DIRECTORS
Develop a board of directors that can help develop the strategy and grow the business.
Utilize a performance management system that addresses objectives, goals, measurement, feedback, evaluation, and rewards. There should also be a project management system and templates.
The financial system should include a three-year profit plan, financial modeling, cash flow forecast and dashboard.
Implement a hiring system that helps identify the skills that are needed and that finds, recruits, selects and hires great employees. Have a plan for each employee describing expectations, performance measurements, and actions that will be taken to help him/her succeed.
Utilize a well-defined sales and marketing system that salespeople are using. Use a customer intelligence system to stay abreast of customers and market data.
The Non-Negotiable Leadership Rules
Without fail, establish a two-to-three day new staff orientation program.
Generate a three-year living business plan (should address strategic, operational, and people considerations) with detailed budgets for each department and revenue group.
Implement an organizational health survey once a year and establish two company-wide one-day unifying events a year.
Push financial reporting to another level throughout the company
Without fail, secure regular one-on-one manager/employee meetings.
VRT Management Group LLC created a custom program called Entrepreneur Growth Operating System™ (EGOS™) to help companies just like yours navigate the challenges that are typical for a Stage 6 organization. We have designed programs, services, and tools that are directly tied to the issues faced by Stage 6 leaders and their businesses.
We always welcome an opportunity to have a 45-minute conversation with CEOs, Entrepreneurs, and Business owners to understand their current challenges and share a couple of best practices to help them navigate through their challenges.
We strongly encourage you to avail of this complimentary opportunity. Over 151 of your peers have received tremendous value through these Zoom sessions.