We all see those stories in the business publications: once-promising enterprises, whose dynamic leader was the subject of profiles in success just a few months back, suddenly going belly up and closing their doors. Oftentimes there’s a kind of witch hunt mentality in these stories. Whose fault was it? Where can the blame be laid? That same formerly celebrated business leader suddenly looks like a fraud and a failure – but even the smartest business leader can be sidelined by the Business Storm Cycle if he or she isn’t savvy to what its phases look like.
The five most common ways leaders lose their way are:
- They didn’t understand the Business Storm Cycle. No business in history has ever had a straight-up trajectory throughout its existence; that’s just not how it works. Rather, all businesses, no matter their size or what they make or sell, will repeatedly go through the phases of what I call the Business Storm Cycle: the hypergrowth Tornado, the Avalanche of shrinking margins and the consolidation phase of picking up the pieces.
- They let their business triangle get knocked out of balance and neglect to repair it. The three critical parts of any functioning enterprise are people, process and technology. If one or more of these supporting legs gets knocked out of balance, the whole triangle collapses.
- They didn’t keep operations nimble and scalable. No matter where you are in the storm cycle, you need to make sure that operations during each phase are scalable. When you’re laying the groundwork for a Tornado, you don’t want to just make everything larger; you need to be able to ratchet down in case sales predictions are wrong.
- They failed to keep their people pulling in the same direction. Employee engagement is crucial. When the Avalanche devastates your business, your people see all the hard work they’ve done seemingly sink before their eyes. They’re exhausted, demoralized and scared. This is the moment when the executive leadership needs to step in and explain what’s going on. You can’t bring back the Tornado you just experienced—but you can get your company ready for the next one. Gather up all that energy that was going into the Tornado and use it now to build a new version of your company that will be better, faster and smarter for the consolidation phase of your business’s cycle. How can I fix them? What still works that I need to be careful not to break?
- They tried to DIY their company’s consolidation phase, when they should have called an expert help. When your processes and technology are out of whack, you know they’ve got to be reinvented and back in sync with your people – but where do you start? If you’re smart, you call in an expert who’s been through this consolidation phase with other companies like yours and can shepherd you through it expeditiously and smoothly. People just normally want to keep doing things the same way they’ve always done them, whether those ways still work or not. That’s why you need to bring in someone who can see more clearly and objectively to help you work through the process of rebuilding your processes to scale to your company’s new size.