Dear Alan

There are times in the life of your business when it changes direction. It can be easy to miss the moment and find yourself looking back later thinking, "what happened?" It's almost as if you were driving the train, when suddenly it hit the points and half the train went to the left, while you went straight on! We call these the 'switch points' in the life of your business, and today we examine how to spot them and what to do about them.

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Best wishes, Kate and Gil

The First Switch Point

The first switch point is when the business you set up grows up to become an 'organisation', with a life of its own. (You probably have around 10 or more employees, and are turning over somewhere around £1-5m). This 'organisation' needs to be managed and consolidated consciously to grow in a healthy direction, and it's a healthy 'organisation' that will attract customers, reassure investors, and ultimately make your company a saleable proposition.

How Will You Know You've Missed the Switch Point?

Here are some of the things you'll notice when you look up and realise your business switched points:

·         You're working harder just to stand still

·         Trusted people are demotivated and may leave

·         Differences over direction among the business leaders

·         Frustration and fingerpointing

·         You're losing customers

·         You try rapid changes in policy - one week focusing on costs, the next margins, the next profitability!

·         Waste - processes, money, time, repeated mistakes

You'll suddenly realise you've put up with all the above for several weeks or months. It's time to shift your focus, from working 'in' your business to working 'on' its development as an organisation.

What Should be Happening at This Stage?

Your business has moved from the first, start-up, stage of its development, to a second stage of implementing consistent management systems and structures. This is the era of management, and your job is to develop:

·         A second tier of management (who will in turn become leaders of the business)

·         A clear business vision and values

·         Effective planning and systematic goals

·         Durable processes and systems

·         Effective management and leadership skills

·         Great relationships between the leadership group and teams at the next level down

·         Team effectiveness - communication, role clarity and accountability

·         Motivation and 'buzz'

·         Clear performance and behaviour standards

Your organisation has developed a life of its own, and it needs you to work on it, so that it goes in the right direction! An effective organisation culture doesn't happen by accident. All the great, leading-edge companies out there have leaders who consciously decide where they are taking the organisation, and who manage this with as much rigour as they manage the financials.

The Second Switch Point

At the second switch point, at around the £5-10m+ turnover and 40+ employee mark, your business moves out of the consolidation phase. The leadership group's focus needs to move away completely from day to day operations. They become Directors, with their focus on strategic, financial and legal issues, and the second tier of management takes over the day-to-day running of the organisation.

How Will You Know?

·         Your second tier of management get frustrated if you remain too 'hands-on'; they are itching to get on with managing the organisation

·         There is little or no business planning, or resistance to the process, and no accountability

·         The Directors still do most business development, trouble shooting and conflict resolution

·         There are no obvious future leaders in place

·         'Silos' develop, and there is fingerpointing and blame

·         There's a narrow focus on one or two areas of the business 'scorecard'

·         People 'go through the motions' with performance appraisal

·         People talk about 'the old days' and complain about bureaucracy

What Should be Happening Instead?

This is the time in the life of your business when you must become a Director, transferring ownership and accountability for the development of the organisation to your second-tier management, and letting them get on with it! Too often organisation leaders stifle the life, initiative and motivation out of the people below them. Now's the time to focus on delegating day-to-day work and instead providing:

·         Clarity of purpose

·         A clear organisation structure, with clearly accountable departments and roles

·         A unified culture, based on effectively communicated values

·         Rigorous measurement and management of performance

·         Effective business planning across the full breadth of a balanced 'scorecard'

·         Continuous improvement

·         Succession planning, developing top performers and future leaders

·         Recognition and reward for great performance and effort

In phase 1, 'start up', everything is about 'doing'. In the next phase, 'consolidation', you and your teams need to learn to 'manage' and 'do'. In phase 3, you leave the 'doing'. Now you must both manage and learn how to direct managers in your business. You must get to grips with the 'corporate' bits - roles, responsibilities, departments, specialist functions and specialist people - some of which you might not immediately know how to organise and manage.

Take an Objective Look at Your Business

Being very close to the business, it's quite easy for you to miss the switch points, and only notice looking back months or years later that something has changed: issues to do with the 'organisation' - people issues, underperformance, conflict - are impacting your 'business'. There are 'cracks' in the organisation which will ultimately compromise the effectiveness of the business and reduce its value.

But, if you spot the switch points in good time, there's a lot that can be done to avert the problems they can cause. Click here to download a chart showing the two key 'switch points' in the life of a small- to medium-sized business, with some hints on how to spot them in good time! And give us a call - we can talk you through the lifecycle of your business, help you identify what's happening and coach and train you in the skills you need to handle it. Call us on 01865 881056, or email us on info@shineconsulting.co.uk - we'd love to help!

From the Shine Blog:

What is it about 'Change' that has some people react like rabbits in a headlight? ...more

Acknowledgement:

For the ideas in this month's article on Switch Points, to Derek Allen of The CMC Partnership - many thanks.

The Shine Website:

You can find out more about us and the work we do on our website where you can also find previous issues of this newsletter.