How to Overcome The Growth Trap

Signs You’re in The Growth Trap

Running your business feels like a frustrating vicious cycle – you take 3 steps forward and then 2-3 steps right back again. It may also feel like you’re spinning too many plates at once, and it’s only a matter of time before they start to fall when you’re too exhausted to keep them all going. You know there is a way to make it all work, but you haven’t found it yet. And wouldn’t it be great if you could?

What is the Growth Trap?

 You are stuck in the Growth Trap when you cannot fully leverage your organization to generate the results you want. Instead, growth and the accompanying increases in organizational complexity demand more of your energy and time when your would rather operate in a way that gives you more freedom and a significantly greater return that isn’t directly tied to your own, individual efforts.

Root Causes of the Growth Trap

There are five root causes of the Growth Trap, each of which must be addressed to create sustainable, profitable growth.

1. Increasing Complexity, Decreasing Alignment

As your organization grows more complex, it becomes increasingly difficult to put knowledge and understanding into practice. It’s not about “what” to do (in most cases the leadership knows this) – it’s about executing to get it done. Many talk about this; few actually pull it off – because they don’t know how to neutralize the complexity that inevitably creeps into a growing business. An inability to instill discipline, accountability, and alignment – all requirements for consistent execution – condemns many organizations to mediocrity (or worse).

2. Lousy People Decisions

Getting people decisions wrong creates massive headaches for you and stifles virtually every element that should be generating growth in your organization. People decisions including hiring, advancement, role assignment, and who to invest in and develop are best guesses, not data driven. The absence of a process and tools to accurately measure “soft” skills and capabilities prevents optimal leverage of your #1 (or in some cases #2) expense item. Getting people decisions correct dramatically improves staff quality, engagement, accomplishment, and retention – not to mention your own happiness! Consider – How many of your employees would you enthusiastically rehire if you could do it all over again?

3. Increasing Competition, Decreasing Margins

Growth and success is a double-edged sword. The competition is taking more notice of you and putting you on their radar, which means that you might not be as comfortably differentiated as you once were. At the same time, some of your long-standing clients are beginning to pressure you to offer some combination of better pricing and more features / services. Both of these inevitable trends – not to mention your increased overhead due to Lousy People Decisions and Increased Complexity – lead to decreasing margins.

4. Cash Flow Pressure, Decreasing Profit

Growth consumes cash. Pressure on your margins decreases profit, making matters even worse. Your Cash Conversion Cycle (CCC) is the elapsed time between when your business spends a dollar and when it gets that dollar back (hopefully with some profit) in the form of collected revenue. Inattention to the CCC can starve your business of what it needs most to grow! Even worse, insufficient cash flow severely limits your options and provides little cushion for the inevitable “bad news” events that befall even the most successful enterprises. Many things in and around your business have changed; now it’s time to change how you think about your CCC to break free and accelerate to the next level.

5. Leadership Stagnation

Because of root causes 1-4, it is virtually impossible for you and your executive team to spend enough meaningful time thinking about and focusing on the future. Rather, your time and energy are consumed “fighting fires” from the past and in the present. You and your team must grow for your business to grow. Failing to acknowledge and act on this condemns you to insular thinking, less innovation, and an inability to react to competitive and environmental threats. As a result, your team spends most of its time stuck in the past at the expense of your future. All strengths and weaknesses in your organization can be traced directly back to the leadership team and your levels of trust, competence, discipline, alignment, and respect – each of which requires continual care, planning, and development.

How to Overcome the Growth Trap

First, realize that you are absolutely impacted by one or more of these elements regardless of the current level of performance of your business. There is always something you can do to improve and/or accelerate your path to the outcomes you seek.

Begin by identifying which of the five root causes is having the most impact on your ability to grow the business and identify resources - books, seminars, friends, or a coach - to help you permanently overcome it. If you’re unsure where to start, ALWAYS begin with Leadership Stagnation. Your growth and the growth of your team MUST precede sustainable growth in the business.

One final note from my 16+ years in the trenches: I’ve met tons of CEOs who began a change initiative on their own, only to engage an outside expert later on. In each of these situations, the universal reaction after the fact is a wistful acknowledgement that they should have hired a professional from the start. Though engaging an expert was certainly more expensive than the do-it-yourself approach, these CEOs more than made up the difference via saved time, less frustration, and better, more rapid results.