Frequently Asked Questions
FAQs for the 7 Stages of Growth
1.
Why does the employee count only go up to 500 employees?
James Fischer wanted to understand the dynamics that affected the success or failure of
smaller entrepreneurial companies, companies still small enough to change quickly. Also, the
U.S. Small Business Administration defines small companies as those with fewer than 500
employees. In addition, there are many models and books written on corporate growth, but
few on small to mid-sized companies as those highlighted in the 7 Stages of Growth. Finally,
the challenges of a Stage 7 company fundamentally change when you reach beyond 500
employees, because of the size and complexity of a multi-layered bureaucracy.
2.
Can I apply any of this information if I have more than 500
employees?
You can. In fact, as a company moves to Stage 7, it’s effective for a manager of a division to
apply the Stages of Growth concepts to their own division. A manager with 25 employees
can apply the same fundamentals as a Stage 3 company would apply, based on employee
count. Companies with thousands of employees would be wise to introduce the stages of
growth concepts to their managers early on and utilize the growth concepts to each division.
There is always a need to apply a language of growth to an organization. There is always
value in helping a leader understand how growth is impacting their employees — no matter
how big or how small the company. Communicating critical growth concepts is applicable to
divisions and departments as well as companies.
3.
I have to believe there are more than 27 business challenges out
there — how did you come up with 27?
In the research compiled, there were many more challenges -- but in many cases the basic
issues behind those challenges were the same and could be condensed. Over the last 14
years, these 27 challenges have encompassed all of the issues business owners experience.
So far, there has not been a need to add more.
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FAQs for the 7 Stages of Growth
4. What’s it mean to be destabilized by chaos?
Basically, the CEO, the business owner, is being bombarded by decisions, opportunities,
threats and obligations as a start-up. Even armed with a strong profit design, a wellarticulated business plan, there is very little a business owner can do to manage this chaos.
This chaos rears its head by not allowing a business owner to stay focused long enough to
get and maintain traction. They get pulled in many different directions, lose sight of the end
goal and get in over their heads financially trying to chase too many opportunities. In Stage
1, the chaos can’t be controlled, it can only be managed. If it goes unaddressed, however, a
Stage 1 company can be taken under by the chaos.
This is one of the 27 challenges to strike a company in Stage 1. (A company in Stage 1 for
over five years is not as impacted by the chaos). This chaos rears its head again in Stages
3 and 4, but isn’t as difficult to address because by this time the company has weathered
many storms and can address the chaos quickly and effectively.
5.
How do I figure out if I have a weak business/profit design?
There are several warning signs, including:
•
You can’t maintain profitability.
•
You don’t have a solid understanding of where you make the most money.
•
At the first signs of trouble, such as a weakening economy, clients begin migrating away
from your products/services, employee turnover becomes rampant, processes begin
hindering your ability to do business.
•
If your company takes a sharp nose dive.
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FAQs for the 7 Stages of Growth
6. What do you mean by Leadership/Staff gap?
This usually begins to be a problem in Stage 2, is a huge issue in Stage 3, and lingers into
Stage 4 and 5 if not taken care of. This is a critical issue that can burn out business owners
quicker than almost any other. It simply means that the communication between the
leadership in a company and the people they are trying to lead has broken down. The gap
is the difference between what the leadership THINKS the staff knows or should know and
the REALITY of what the staff actually knows. Perception, as they say, is reality. If there is
a breakdown in communication, the staff has no problem in filling in the blanks. And they
aren’t filling in that void with positive thinking. Overnight what they have made up becomes
their reality. If the leadership of the company allows this gap to grow, it lowers the voltage in
a company and reduces productivity.
7.
How do I make any of the stages of growth material make sense
to my staff?
One of the biggest questions you’ll be asked by your employees is: “How big are we going
to get?” They really don’t want to know the size of the company, they want to know what
you are doing to manage the growth and what impact that growth is having on them. Talk to
them. Explain the overall view of the 7 Stages of Growth by discussing the complexity issue
that drives companies into different stages and what that means. You don’t have to give
them everything, but do let them know this model exists and hundreds of other companies
have used it to help them predict how growth will impact their company. So start talking.
Give them the 27 Challenges exercise. Talk to them about the Three Gates of Focus. A little
information goes a long way.
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FAQs for the 7 Stages of Growth
8.
Why is the Builder/Protector Ratio 1:1 in Stage 3?
The reason the Builder/Protector is 1:1 in Stage 3 has everything to do with all that is going
on. Several things are happening in Stage 3, which makes this a very tenuous stage of
growth for a business owner. It’s the first time the company becomes Enterprise-centric,
not CEO-centric as was the case in Stage 1 and Stage 2. The shift occurs because of the
number of employees, the CEO can no longer keep tabs on everything that’s going on. They
have to start delegating authority, responsibility and decision-making to key people in the
company. In many cases, the CEO is new at managing people and up to now, not a lot of
management was required because the company was small enough that everyone took on a
more generalist approach and did what it took to get things done. With up to 30 employees,
that is no longer possible. People are moving into more specialist roles and requiring a lot
more management. Letting go of control is tough for a CEO, and stepping up and managing
people is a lot to handle. Too much Builder, and the CEO comes on too strong while the staff,
who may have started to step up, may pull back—the staff is vulnerable and aren’t extremely
confident in their new roles. Too much Protector and the staff gets way too cautious,
creating concern on the part of the CEO that they can’t do their jobs. The B/P Ratio in Stage
3 has to be very balanced to counter everything else going on.
9. How can this model make sense for a service company as well as a
manufacturing company?
To really understand the 7 Stages of Growth model, you must accept this basic premise. The
premise is this: Your people are your business. The most common challenge in companies
from ALL industries is people. So it really doesn’t matter if you run an accounting firm with
hundreds of people, a steel fabrication company with 30 people or a landscaping business
with five people, your people are your business. Therefore, the model, which based on
numbers of employees, easily relates to all environments.
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FAQs for the 7 Stages of Growth
10. I’m a Stage 3 company based on the number of employees but I
feel like we are in Stage 4 — why?
Two pieces of information are critical to forming a response to this question. First, if you are
a Stage 3 company based on the number of employees you have, consider: how close you
are to being in Stage 4 and how long you have been a Stage 3 company, months or years? If
you have just moved into Stage 3 and feel you are a Stage 4 company, it’s possible you are
ahead of your growth curve. You have been focused and intentional with your growth and
tackled your challenges as they appeared, not ignoring them. It also could be that the CEO
has been down this road before and understands the issues, plans for them and addresses
them as the company grows. Experience can negate chaos.
11. How can I not keep Profit as my priority in every stage of growth?
Simply put, profit is not always your most important area of focus. The qualifier most
important is key. Of course Profit is critical and everything a business does has to drive
profitability. However, if you only focus on driving Profit, other areas of the company will
suffer. And money is not the answer to everything.
The Gates of Focus simply help a CEO understand that as you move through the stages of
growth, the priorities shift based on what the company needs. By listening to what your
company is telling you, you will be more prepared to handle ALL the issues that confront
you, not just a few related to the financials. People and Processes, depending upon your
stage of growth are just as critical to focus on as Profit.
12. I have a business plan, isn’t that the same as a business/profit
design?
No. A business plan is a static description, a snapshot in time of the current market
conditions, the opportunities at hand and how you plan to move the business forward.
Before you create a business plan you should create the businesses profit design. A profit
design is the operative DNA of the venture, the interconnected heart of the enterprise.
A profit design is a clear view of the core business, the adjacent business and the edge
business of your company. It’s the Customer Intelligence, the Pricing, the Volume and
Costing Formula, the precise analysis of how you make and keep money, the recurring
revenue, the weighting and impact of critical alliances and much more. Over 90 percent of
the entrepreneurs in Fischer’s research never consciously created the heart of their business.
And a more sobering statistic—only 13 percent of all companies are consistently profitable.
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FAQs for the 7 Stages of Growth
13. What does CEO Modality mean?
The manner or mode in which a person reacts to situations can directly or indirectly affect
and/or influence outcomes. In the 7 Stages of Growth model, this response is known as
Modality or Mode. There are three characteristics of Modality or Mode, which are Dominant,
Supportive and Facilitative. Modality is a presence in the company. It’s the degree of direct
or indirect influence a leader applies to manifest the company’s goals. It is measured by
the leader’s Mode of involvement expressed as either Dominant, Facilitative or Supportive.
In different stages of growth, the entire company is called upon to respond to different
situations regularly. In most cases, the response to those situations can determine how
issues get resolved. If the CEO understands all aspects of his/her company have a Mode
or Modality that they assert. If the CEO helps his/her staff understand how these Modes or
Modality can help influence how the company interacts, there can be a better understanding
of what’s required of people as the company grows.
14. Do I have to grow?
Yes. However, you can choose how you grow. Growth doesn’t have to mean the addition of
employees. Growth can manifest itself in developing new products or services to replace
outdated or non-competitive offerings. Growth can be created by opening up new markets,
expanding a customer base or going global.
15. Do I count the independent contractors that work for me in the
employee count?
The Stages of Growth model is based on the number of full-time or part-time employees.
The reason independent contractors (ICs) aren’t included in the employee count for the
stages of growth is because ICs are interested in growing THEIR company, not yours. And
you have no real control over independent contractors as you do over employees. By IRS
rules, ICs must set their own work hours, use their own equipment and be able to show they
run a legitimate business and offer their services to more than one buyer. The Stages of
Growth includes employees who were hired to help you grow your business and fall under
performance reviews.
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FAQs for the 7 Stages of Growth
16. Do I consider part time employees into the employee count?
Yes. Many businesses are seasonal and expand and contract their employee count based on
seasonality. Because those employees are hired to help you grow your business, they should
be included in your employee count. This can have a company moving between stages of
growth every year. Awareness of the impact on this expansion and contraction is another
challenge for any employer.
17. Do the stages of growth work with my divisions and departments?
Yes, with some exceptions and adjustments. A manager, who runs a division with 36
people, can look at their division as having some of the same characteristics of a Stage 4
company. Divisions don’t always grow as rapidly as companies, which allows that division
to concentrate on their challenges in a more balanced atmosphere. A division that’s been
around awhile may want to look ahead to the Stage 5 or even Stage 6 challenges to continue
to keep them motivated to improve. A division will experience transition zones as it moves
from one stage to another and the issues a CEO of a company faces in Stage 4 hold true
for a division manager. A division manager won’t tend to have bottom line profit/revenue
responsibilities as a CEO would, but they do have budget responsibilities.
18. How can I get my managers to be more involved in understanding
this model?
Take small steps. Your managers are looking for the same things you are: answers to their
People, Profit and Process issues. By sharing the Stages of Growth model and letting them
come to their own conclusions about the stages of grow value, you will get quicker buyin. If you are comfortable presenting the information, do so. Or bring in a qualified growth
curve specialist to make the presentation. You could also have them read the book by James
Fischer, Navigating the Growth Curve or listen to the audio CD, which gives an overview of all
the stages, the hidden agents, transition zones and the three gates of focus.
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FAQs for the 7 Stages of Growth
19. Did the research address what happens if a company gets venture
capital and blows through Stages 1, 2 and 3 in a matter of months?
The reality of the growth curve research was clear: what you don’t get done in one stage of
growth doesn’t go away. So in a way, the answer is yes.
No matter what causes a company to grow rapidly (outside money, fast track product rollout, a booming economy), a company must pay attention to the challenges and leadership
issues in each stage of growth and address them before moving on to another set of
challenges and issues. A CEO who starts the company with eight employees, knows he must
be Visionary (as in the three faces of a leader). Yet, nine months later, he finds himself in
Stage 3, spending 60 percent of his time as a Manager, reducing his amount of time spent as
a Specialist along the way. Yet, his role as a Specialist is just as important. Therefore, the CEO
must pay attention to his/her role and adjust as the timing accelerates him/her through the
different stages.
20. What is the Growth Curve and why do I, as a business owner, care
about it?
In his research, Fischer uncovered a unique phenomenon in the companies he interviewed.
That unique phenomenon was a force of nature that pushed a company forward to either
succeed or fail. To those experienced entrepreneurs, this Growth Curve is a path between
utter chaos and organizational equilibrium. Organizations walk this path, seeking balance.
When we talk about navigating the growth curve, we’re saying we want to navigate our
organization along an imaginary line through both chaos and equilibrium. Being in alignment
with your own growth curve means you are shifting and adjusting to the various rules and
regulations that come along as you grow your company.
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