Every company comes to at least one business or economic Inflection Point during its lifecycle. Inflection points are when a company’s size is straining its people, processes and technologies. This typically happens at revenue ranges of $10, $25, 50, $125m $250 and $500 million in annual revenues, i.e., when they double in size, but it can also happen at an economic inflection point where a downturn in the economy has caused the company to downsize and it struggles to handle the growth from an economic upturn.
The challenge of an inflection point is that it takes time for leadership teams to see that they are at one. The symptoms can consist of:
- Weakening financial performance
- Lack of strategic alignment on moving forward
- Worsening customer service
- Skill set gaps
- Operational issues
- Technology gaps
- Cultural and communication issues
These issues creep up on leadership teams slowly or are thrust upon them by an economic disruption such as the recent pandemic. Because of the strains, the company needs to understand where the issues are (operating gaps) and redefine its business model to position itself to double in size again. Redefining a company’s business model requires that it have a strategic plan and a full understanding of its strategic gaps.
I have defined inflection points as revenue levels which are a rule of thumb that closely fits with every company we have worked with. When a company hits an inflection point, the leadership team needs to reevaluate their strategies for the business. If the company has doubling in size as its Most Important Goal, it then needs to properly evaluate and make decisions about the organization structure and the ability of the organization and the people in it to make doubling in size happen. The same evaluation and decision making process needs to be made for its value proposition, products and services, distribution channels, technology backbone and business processes.
The focus needs to be at the intersection of people, process and technology.
When we work with companies who are at an inflection point, we utilize our Strategic Planning 5.0™ methodology, define strategic and operating gaps in the business and work with senior leadership to create a new strategy focused on fixing strategic gaps and operating gaps. The roadmap to doubling in size is typically transformation of the business that will insure its’ strategic success.
Each leadership team needs to ask itself the following questions:
- Is our company at an inflection Point?
- If so, what are we doing to address it?
More insight to the concept of an inflection point can be found on the following links:
- Navigating Growth Through an Inflection Point
- Podcast with Jim Gitney, CEO of Group50 discussing inflection points for companies of all sizes
- A collection of articles on inflection points
If you want to find out about closing strategic gaps and operating gaps when you hit an inflection point, or if you think you are at one, drop us a line at firstname.lastname@example.org, call us at +1 (909) 949-9083, or request more information here.
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