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Navigating Growth Through an Inflection Point

Navigating Growth Through an Inflection Point

By: Admin   |     September 14, 2020
Preparing for a Downturn

We recently worked on a project that required the integration of two $30M companies. Both had grown to this size in a short period of time and had systems that supported their individual sizes relatively well. When the two were combined, they pushed across an inflection point. An inflections point is when a company’s systems, business processes and organization structure are struggling to support the size of the company and are incapable of supporting future growth to the next inflection point. These typically happen every time a company doubles in size. As companies grow, their needs and operating style change as shown in the table below:

Annual Sales Volume

Typical Structure

 

Organization

Systems

Business Processes

$10M

  • Run by one person
  • A few workers who wear many hats
  • Outsourced professional services
  • Few outside advisors
  • No job descriptions
  • Standalone software packages
  • Spreadsheets
  • Notepads
  • Few documented processes
  • Word of mouth
  • Tribal knowledge
  • KPI’s- One or two

$25M

  • Run by one or two people
  • Marginally defined roles
  • Fractional professional resources
  • Loosely defined job descriptions
  • Standalone software packages
  • Spreadsheets
  • Marginal execution
  • Data starved
  • Some defined processes – on as-needed basis
  • Tribal knowledge
  • Few trusted vendors
  • No document management systems
  • KPI’s- defined on as-needed basis

$50M

  • Nascent organization structure
  • More skilled functional leaders
  • Ad-hoc incentive comp programs
  • Job descriptions for critical roles
  • Functional systems in accounting, manufacturing, engineering, marketing/sales/CRM
  • Some integration
  • Marginal reporting capabilities
  • Few cloud-based systems
  • More defined processes
  • Fewer pockets of tribal knowledge
  • Early stage vendor management
  • Minimal strategic planning and execution processes
  • KPI’s being developed
  • Rudimentary document management systems
  • Few formal supply chain systems

$100M

  • Defined organization structure
  • Change in Leadership skill set requirements
  • More defined incentive comp programs
  • Defined job descriptions
  • Narrowing job responsibility and focus
  • Thinking about succession planning
  • Defined recruitment processes
  • Little succession planning
  • Board of Advisors
  • Ad-hoc strategic planning and execution tools
  • Starting enterprise focus
  • Moving toward more integrated systems
  • More sophisticated reporting systems
  • Some business process automation
  • Many shadow systems that make-up for system shortcomings
  • CRM and other market facing tools maturing
  • Small IT department with contract help/3rd party systems
  • Process management strategies in functional areas
  • Critical people in every function
  • Starting functional automation
  • Developing OMNI channel processes
  • Developing Supply Chain programs

$250M

  • Human Capital focus
  • Maturing functional organizations
  • Developing accountability systems
  • Addition of Human Resource Information System (HRIS)
  • Succession planning
  • Full in-house HR function
  • Developing succession planning processes
  • Maturing compensation systems
  • Developing diversity programs
  • Some performance feedback loops
  • Developing diversity programs
  • Operating Board of Directors
  • Integrated ERP systems
  • Maturing market facing systems
  • Maturing IT teams
  • Improving reporting systems through data layers
  • Initial planning for IoT and AI systems
  • Moving to cloud-based systems
  • Disaster recovery programs
  • Some cybersecurity programs
  • Disaster recovery plans being developed
  • Immature strategic planning and execution processes
  • Fully integrated systems across all functions
  • OMNI channel focused
  • Maturing Market Effectiveness programs
  • Maturing supply chain strategies and programs
  • Quality certifications
  • Developing Voice of the Customer programs
  • Functional automation programs
  • Functional KPI dashboards
  • Developing Continuous Improvement programs

$500M+

  • Integrated ERP systems
  • Sophisticated market facing systems
  • Taking more control of business technology
  • Robust reporting systems through data layers
  • IoT and AI systems strategies
  • Integration with customer and vendor systems
  • Formalized disaster recovery programs across the entire business
  • Integrated cybersecurity programs
  • Formal strategic planning and execution processes
  • Mature OMNI Channel systems with integrated Voice of the customer strategies
  • Business process automation strategies
  • Formal Market Effectiveness Programs
  • Formal supply chain resiliency strategies
  • Fully developed functional automation strategies
  • Integrated balanced scorecard
  • Mature continuous improvement programs

 

The challenge of inflection points is that it takes time for leadership teams to see that they are at one. The symptoms can consist of:

  1. Weakening financial performance
  2. Lack of strategic alignment on moving toward the next inflection point
  3. Skill set gaps
  4. Operational issues
  5. Technology gaps

These issues creep up on leadership teams slowly. Leadership teams need to understand the basic premise that when they reach an inflection point, they need to decide if they are going to transform themselves into a structure that will allow them to double again.

I have defined inflection points as revenue levels which are a rule of thumb and 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 a goal to double in size, it then needs to 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 decisions need to be made for technology 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 start with the strategic plan and then define strategic and operating gaps in the business that will need to be remedied. The roadmap to doubling in size is a transformation of the business that will insure its’ strategic success.

If you want to find out more about what to do when you hit an inflection point wall, or if you think you are at one, drop us a line at info@group50.com, call us at +1 (909) 949-9083, or request more information here.


 

 

About the Author: Jim Gitney is the founder and CEO of Group50 Consulting: Strategy, operations and supply chain subject matter experts. Group50’s business is primarily in middle market manufacturing and distribution, where hitting an inflection point can be a tough experience. Group50 has worked with many companies that have hit an inflection point wall.

This entry was posted in Uncategorized, on September 14, 2020
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