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Navigating Growth Through an Inflection Point

September 14, 2020

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/3^rd 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+	Detailed Human Capital programs Mature functional organizations Fully developed accountability systems Mature HRIS Formal succession planning process Mature compensation systems Divisional structure Centralized functional activities Mature diversity programs Mature performance management systems Fiduciary Board of Directors	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:

Weakening financial performance
Lack of strategic alignment on moving toward the next inflection point
Skill set gaps
Operational issues
Technology gaps
Cultural and communication issues

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 Strategy 5.0 requires optimizing a business at the intersection of people, process, information technology and cobotics along with a robust organizational development program following the Group50 change management framework called the Business Hierarchy of Needs 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 and following a disciplined change management plan through Group50’s Business Hierarchy of Needs ^® will ensure its’ strategic success.

You can listen to a WBSROCKS podcast on Inflection Points with Jim Gitney, Founder and CEO of Group50 here.

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, helping them identify strategic and operating gaps in people, process and technology that are inhibiting their growth and profitability and creating transformational roadmaps that will propel them to the next inflection point..

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