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Is Your Business in a “Valley of Death?”

Posted by Douglas Wick on Mon, Dec 4, 2017

Valley of Death.pngIs your business experiencing a growth plateau? 

Is it in a valley?  

Most business and especially Gazelles companies(DEFINITION of 'Gazelle Company' A high-growth company that is increasing its revenues by at least 20% annually for four years or more, starting from a revenue base of at least $1 million. This growth pace means that the company has effectively doubled its revenues over a four-year period.) experience plateaus and valleys as they scale.

The Valley of Death

Scott Tannas, the Founder and Vice Chairman of Western Financial Group (acquired by the Desjardins Group) frequently shares with growth company leaders his experience from start up to sale to the Desjardins Group for $440M in 2013. Some of his key observations (in accord with Verne Harnish’s) over 20 years leading Western Financial Group include:

  • When a company reaches 10 employees it arrives at the first “Valley of Death”: Processes have to change, the Founder needs to hire a second in command, and the business needs a fundamental change in how the Founder runs it.
  • When reaching 25 employees the company arrives at the second “Valley of Death”: The company needs a Controller (CFO); middle management becomes more critical, and Intentionality in building culture becomes more important.
  • When passing through 100 employees, the company reaches yet another “Valley of Death”: a whole new internal communication plan is vital for alignment, company politics and egos come into play, and continued focus on strategy and culture are important as you attract more competitors.

In order to successfully scale growth, the company and its leaders must breakthrough each “Valley of Death” to a new way to succeed, scale, while making money and maintaining culture.

The visual image at the beginning of this blog is Scott and Verne’s description of the Plateaus and Valleys of Death. Please take Note:  there is an ever decreasing number of successful companies who breakthrough the successive valley’s and move into the next level of both success and challenge.

If you believe this is a phenomena specific to mid-size business, Christine Comaford in, Smart Tribes, shares a similar Valley of Death/Plateau for businesses as they escalate beyond $250M range. SMART TRIBES VALLEY OF DEATH inflection-steps.jpg

Why is this?

As you can see by Tannas smaller examples, businesses need to change.  What you are presently doing, what got you to this success level, is not conducive to achieving the next level of success.  

Are You Approaching an Inflection Point?

Smart Tribes Inflection PT.jpgComaford calls these inflection points.  In Smart Tribes, “When companies grow, they come to certain places where the things that used to work, the things that created a level of success, don’t work anymore. We call these inflection points. And these crucial points are tied to revenue and company growth.”

She continues, “Here’s the trouble with inflection points: at each one you have a whole new company. At each inflection point, a company must reinvent itself in order to reach it and move through it. If a company doesn’t adapt, it will become stuck and ultimately decline into a parabolic upside-down curve, rather than an undulation back into growth mode.”

Question: How do you navigate between inflection points? How do you maintain and increase your momentum to avoid organizational stuck spots—the spots of stasis usually found between inflection points where the company stops growing and swirls around at approximately the same level of annual revenue before sliding precipitously backward? How do you get into the Smart State—the safe, secure, intelligent state of teamwork that will get you to the next inflection point, when the game reaches the next level?

STI-Three-Step-Path-495x400.pngTo reach that next inflection point, you will need to intentionally map out a plan to get there, and then execute that plan with determination. Either you keep doing what you’re doing, barely maintaining the same revenue year after year, or you slide back down to the previous inflection point, or you move forward with tremendous intentionality. The world is full of “living dead” companies that reached an inflection point and couldn’t grow to the next one. You’re either moving forward or moving back.

Stasis is not sustainable.

Is your business at one of these Inflection Points/Valley of Deaths?

In the Verne Harnish’s Mastering the Rockefeller Habits, he noted that until a company gets to $10M the focus should be primarily internal. Once you reach $10M other competitors begin to notice you, this is when you’re awareness of competitors, marketing dynamics take on greater attention in order for your business to continue to grow.  The challenge is, if you don’t already have the internal execution in place, you will quickly slide back or fail to exceed the $10M mark.

In Smart Tribes Comaford describes the scenarios for a $10 and $25M company

Inflection Points $10 $25 $50 M.jpgComaford offers similar examples for $50M, $100M, $250M, and $500M.

“To continue to grow,” Comaford asserts, “to undulate upward at an inflection point, an organization needs to make changes in one or more of the following areas: people, money, and model.”

As a Gazelles Coach, Positioning Systems’ Strategic Discipline make us experts helping mid-sized($5M - $250M) business Scale-UP. Are you avoiding a conversation with yourself on how you can grow your business? Contact dwick@positioningsystems.com for expert help to Scale Up your business!  Or take our Four Decisions Needs Assessment to discover how your business measures against other Scaled Up companies. We’ll contact you.

YOUR ONE THING

Everything Matters Equally - The One Thing.jpgClarity on what you want is critical to success.  Do you know your One Thing for 2018.  As I prepare my customers for 2018 I’ve been re-reading/listening to The ONE Thing: The Surprisingly Simple Truth Behind Extraordinary Results by Gary Keller and Jay Papasan. There are THE SIX LIES BETWEEN YOU AND SUCCESS. In my next three blogs, I’ll be sharing more on the first four lies: Everything Matters Equally,  Multitasking, A Disciplined Life, Willpower Is Always on Will-Call, to ensure you choose a One Thing for you and your business in 2018.

Topics: Scale Up, Inflection Point, Valley of Death, Growth Plateau

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Certified Gazelles Coach

Doug Wick, President

Positioning Systems

 

The Strategic Discipline Blog focuses on small to midsize business owners with a ravenous appetite to improve his or her leadership skills and business results.

Our 3 disciplines include:

- Priorities
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- Meeting Rhythms

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