| Modes of ManagementAdjusting Your | | | | organize this infinite spectrum into useful stages. |
| Management Style To Your Company's StageBy | | | | Then we can probe along the required dimensions |
| Bob NortonFrom the moment a new company is | | | | for key issues.Only experience at executive levels |
| founded to its appearance on the Fortune 500 list, | | | | in large, medium and small companies can help to |
| executives must be able to transform the way | | | | identify the pivotal developmental stages that |
| they manage a company - shifting gears, often | | | | dramatically affect the context of a given |
| dramatically to a different management style - to | | | | company's decisions. Success comes from |
| ensure the company's optimum development. I | | | | implementing a management mode that is a direct |
| am not referring to individual executive style here. | | | | function of the company's current stage, industry |
| What I am talking about is the total adjustment | | | | and market conditions. The risk is that a company |
| and evolution of the context in which major | | | | will be run in the same way as its VPs, managers |
| management decisions are made. I call this the | | | | and/or CEO have always run their past |
| "Mode of Management", which is very dependent | | | | companies or departments, irrespective of the |
| on the company's current developmental | | | | important and differing macro variables created |
| stage.Would you make the same product | | | | by this stage of development.What is Different |
| development decisions in an identical way with one | | | | about This Philosophy? |
| hundred dollars in the bank and no customers as | | | | Conduct a search via or the Internet on the |
| you would with $50 million in the bank and 1,000 | | | | term "management" and you will literally find tens |
| customers? Of course not! So why do many | | | | of thousands of books on the subject. From |
| managers often run an organization in the same | | | | project management to company management, |
| way despite the many gradual and often sudden | | | | lots of authors push their particular methods and |
| changes that happen between these two | | | | styles. These range from micromanagement and |
| extremes? It is human nature to continue to do | | | | the One-Minute Manager to how to transform |
| what we have always done; to simplify and | | | | "good" into "great" behavior. What you will not find |
| repeat what worked in the past, despite vastly | | | | is much discussion in any of these books about an |
| differing circumstances. We need a system or | | | | approach that helps you define and implement a |
| context for adjusting and teaching the different | | | | management mode that clearly correlates to your |
| "modes of management" as companies evolve. | | | | company's current status and position in the |
| Some of these changes come naturally, but most | | | | market. Yes, there are a few good books and |
| are very subtle and linger far longer than they | | | | some successful startups, but, in general, there is |
| should. A failure to change can do substantial | | | | little on this topic available in the millions of books |
| damage to a company before adjustments are | | | | in print! I don't know if the lack of discourse is |
| made, or even doom the company to flat sales in | | | | just because authors want to appeal to the |
| the long term.A key to ensuring corporate | | | | broadest possible audience, or if they are actually |
| success is to let the various stages of a | | | | naive as to how one must manage differently |
| company's development determine it's overall | | | | according to the different stages of a company. I |
| management "mode". It is a given that we must | | | | am certainly not the first person to recognize this |
| use the appropriate management mode for each | | | | natural phenomenon. I suspect that authors are |
| and every decision and action we take in a | | | | addressing the stage of company they are most |
| company. The company's existing condition and/or | | | | familiar with without much thought to the others. |
| stage of development is always the major | | | | Unfortunately, for the bulk of their readers, this |
| determining factor or context for almost every | | | | can make the majority of their recommendations |
| significant decision.Companies can reap enormous | | | | and advice wrong, which is of little help. When |
| benefits when the style by which they are | | | | making a major decision, too little credence is |
| managed is adjusted quickly to accommodate the | | | | given to the enormous number of variables that |
| company's shifting complexities, stages and | | | | make every corporate situation unique.Actually, I |
| sensitivities. In fact, quickly adjusting this mode of | | | | have seen very successful executives with |
| management can be a huge competitive | | | | significant experience in large company |
| advantage since most companies fail to adjust | | | | environments give perfectly good talks on |
| quickly enough. Just about every company | | | | management that are 100 percent true for large |
| exhibits often-overlooked, but critical, stress points | | | | companies - and almost 100 percent wrong and |
| that signal the need for decisive action or gradual | | | | potentially fatal if followed by smaller companies. |
| reorganization. Recognizing these signs during a | | | | They are talking about steering an oil tanker when |
| company's gradual metamorphosis, and responding | | | | their audience consists of nothing but little |
| to them appropriately, may mean the difference | | | | speedboat captains. These executives must have |
| between bankruptcy and survival, or at least will | | | | little experience and perspective beyond that large |
| help avoid stagnation.Any good manager knows | | | | company perch, and they often wind up preaching |
| an adjustment in style and tone is warranted for | | | | to a crowd of entrepreneurs about things they |
| different individuals and situations. People have | | | | must do, when in fact, following that advice could |
| different motivations and often respond | | | | kill their companies. The problem is that there was |
| differently to the exact same circumstance. This | | | | no context defined for the lecture and no |
| is natural; people react to other people's tone and | | | | language or thinking in the advice about a |
| body language in very individual ways. We receive | | | | company's current stage. If it had been qualified |
| immediate feedback in the form of facial | | | | as advice for companies over $70 million in sales, |
| expression, body language and actions, and adjust | | | | for example, it would not have been a potentially |
| our reactions accordingly. However, a company, | | | | lethal lecture for the many startups and |
| which is a much more complex organism that | | | | entrepreneurs in attendance that day. It seems |
| consists of many individuals interacting with | | | | we pay little heed to the simple fact that what |
| complex outside market conditions, provides little | | | | can be right for a small company can be totally |
| immediate feedback. Therefore, it is very difficult | | | | disastrous for a larger company and vice versa.Of |
| to use direct feedback to fine-tune your | | | | course, the opposite situation can also be true, |
| management mode. Only years of experience can | | | | wherein entrepreneurs, more often than not, fail |
| build enough data to form theories and adjust | | | | to change their company's and personal |
| management modes.Why We Simplify Too | | | | management styles from raw startup mode to |
| MuchMillions of years of evolution have taught us | | | | the next level. They cannot "let go" and delegate |
| to run from danger and created a mind that | | | | to others. This is why entrepreneurs are often |
| adheres to simple "rules" that have worked for us | | | | replaced by "professional management" or people |
| in the past. Our mind wants basic rules we can | | | | with specific experience in that stage of company |
| reuse and has been designed to use these learned | | | | development. It is also a major reason why most |
| shortcuts again and again. For example, we all | | | | companies stagnate at a certain level, which is |
| know that fire is hot, don't touch it. The more | | | | ultimately the maximum level or size at which a |
| pain (failure) or pleasure (success) that results | | | | controlling entrepreneur can be effective or |
| from a lesson, the deeper these rules are | | | | remain in their comfort zone. A Board of |
| ingrained. This is why people who experience a | | | | Directors of any company with more than a |
| single, huge success often have a tougher time | | | | single shareholder has a fiduciary responsibility to |
| changing or accepting input from outside sources. | | | | replace such a CEO as soon as there are signs |
| They take this success as proof that they are | | | | the entrepreneur is not evolving with the |
| "always" right and begin to repeat what has | | | | company so as to ensure that stockholder value |
| worked for them before. If they use their one | | | | continues to grow. I believe a solid, well |
| learned mode in a different context then they are | | | | thought-out system can allow many |
| very likely to fail.Unfortunately, the world is much | | | | entrepreneurs to make this evolutionary transition |
| more complex, and changes much more rapidly, | | | | as their company grows.Adjusting to the Best |
| than ever before. In fact, this trend is accelerating | | | | Management ModeMy goal is to shine a light on |
| because human knowledge is now doubling every | | | | this failure to preach in context and to create a |
| few years. One hundred years ago, most people | | | | methodology to qualify these recommendations |
| still used horses to get around and technology of | | | | and comments and adjust our mode of |
| any kind was primitive by today's standards. | | | | management. This needs a system of definitions, |
| Because life is currently so much more complex, | | | | models and language. To be successful, we must |
| we need these mental simplifications more than | | | | also have some guidelines for management |
| ever. Yet now, we must overcome these past | | | | modes that are appropriate for certain stages and |
| evolutionary behaviors and discipline ourselves to | | | | situations in a company's life. This would allow us |
| take hundreds of variables into account for | | | | to benchmark our management mode and |
| complex and unique decisions we may never again | | | | proactively evolve it as a company |
| make under the same circumstances.Overcoming | | | | grows.Unfortunately, there are not many people |
| evolution can be difficult, but it is simply an | | | | who have experience and perspective in various |
| exercise in conscious thinking that can be | | | | different size companies and can speak to these |
| facilitated by some simple methodologies that | | | | vast differences. Academia cannot properly |
| force us to review important circumstances. The | | | | recognize and study this problem without first |
| challenge as an executive is to force ourselves to | | | | establishing a framework by someone with |
| think through all the variables of a given situation | | | | experience across most stages of a company's |
| and make a decision in the proper, current | | | | development. After all, this is not so much a |
| context, not simply by referring to past | | | | theoretical problem as a real world experiential |
| experiences or rules of thumb.Cognitive | | | | learning issue and therefore it is hard to define |
| dissonance, the mind's tendency to see only those | | | | and bound properly.Each decision we make is |
| factors that reinforce what we are expecting to | | | | highly context-sensitive to many macro factors. |
| see, greatly aggravates this problem. We tend to | | | | Sometimes, these macro factors are developed |
| distinguish only those things that reinforce our | | | | or institutionalized over time. For example, IBM |
| beliefs and actively avoid or explain away those | | | | would never go after a very small market |
| things that disprove these beliefs. At the | | | | because doing so would distract management and |
| extreme, this can become the proverbial ostrich | | | | resources from bigger market opportunities that |
| with its head in the sand - the "What I don't know | | | | would better serve its corporate size, overhead |
| can't hurt me" pose. Of course, this statement | | | | and growth needs. Everyone at IBM knows this |
| couldn't be further from the truth. Any company | | | | and, accordingly, would not present a plan to the |
| that fails to adjust to rapidly changing world, | | | | IBM corporate machinery for a product with a |
| economic, and market conditions is doomed. Even | | | | very small market opportunity. However at the |
| great Fortune 500 companies are rarely still there | | | | other extreme, younger companies have not had |
| 25 years later. As managers we have to | | | | the time or experience to develop such rules or |
| overcome human nature and cognitive dissonance | | | | systems, forcing executives of small and |
| in order to make the proper contextual decisions | | | | medium-sized firms to make them up as they go |
| for the benefit of our company.Cognitive | | | | along based on the specific circumstances of the |
| Dissonance - The strong tendency to see and | | | | day. People may attempt to adopt their own |
| acknowledge only that which reinforces what you | | | | "rules of thumb" from their former companies, |
| already know and ignore or easily explain away | | | | but the odds that these are also appropriate for |
| data that conflicts with your beliefs. The desire to | | | | their new company are slim indeed. I have seen |
| avoid dissonance, or inconsistency, that would | | | | many young companies enter markets that were |
| make you rethink things you already believe to be | | | | way too big for them to be successful in because |
| true.The 5 Stages of a Company's Development1) | | | | larger companies will replicate what they do |
| Raw Startup No revenue (by definition) 0-50 | | | | quickly and because they have not already |
| a) Innovation as a priority | | | | secured a beachhead they can protect before |
| b) Always in flux, high risk | | | | evolving into the larger market. This classic |
| c) More unknowns than knowns | | | | startup without a market entry strategy is |
| d) Product or service looking to prove its market | | | | common in technology where technologists do not |
| exists | | | | have enough experience in building businesses and |
| e) Everything is fragile2) Early Revenue $100 to | | | | attaching markets. I cannot possibly count the |
| $5MM, 5 to 100 employees, Product delivered | | | | number of companies with a superior product that |
| proving some value proposition, but still no proven | | | | ultimately failed because they did not adjust their |
| sustainable or profitable business model. | | | | market entry strategy to the size of their |
| Most companies slow or stop growing here due | | | | company's resources or because they managed |
| to organizational and people limits. This is often the | | | | the company like a large one when it was just in |
| hardest leap to make which requires the most | | | | its infancy.An executive's ability to shift gears in |
| changes in the smallest period of time.3) | | | | the face of a situation that appears familiar, but is |
| Established Customer Base $500,000 to $20MM in | | | | actually ALMOST ALWAYS a different context |
| sales, 20 to 200 employees | | | | compared to what they have seen in the past, |
| a) Profitable or clear path to profits based on | | | | can make or break a company. When a decision's |
| scaling business. | | | | context is very different due to the corporation's |
| b) A proven market and value or price formula, | | | | current stage, it must be recognized immediately |
| with profits clearly available in a steady state | | | | to produce a vibrant, growing company.So what |
| world when scaled.4) Expansion/Growth Phase | | | | do you do differently along the spectrum from a |
| $1MM to $1 billion in sales, 100 to 1,000 employees | | | | raw startup to a mature company? There is |
| Market opportunity is many times larger than the | | | | enough information for an entire book or at least |
| company and there is a desire and ability for | | | | a long series of articles. It requires many |
| significant market share and/or revenue growth.5) | | | | examples and structural models to aid the |
| Mature (or large) $2MM to $100+ billion in sales, | | | | decision-context management. The first step |
| 100 to ∞ employees | | | | toward success is acknowledging the need for a |
| a) Slow growth, stagnation of market or | | | | decision-context management framework and an |
| company, or focused on harvesting past | | | | understanding that the biggest factor in almost |
| investments. | | | | any corporate decision is this framework. |
| b) Slow/little change in market and/or company | | | | Upcoming articles will compare and contrast |
| or commoditization of products forcing a focus on | | | | management modes for a wide range of |
| costs above innovation. | | | | companies, from small through large.Bob Norton is |
| c) Consolidation of competitors and focus on | | | | the author of four books on starting and growing |
| finding new distribution and/or leverage.Companies | | | | companies and entrepreneurship. He runs the |
| come in many types, styles and sizes, and an | | | | exclusive Advanced Entrepreneurship CEO Boot |
| approach that works tremendously well at one | | | | Camp to help CEOs and senior executives cut |
| company can be a miserable failure at a different | | | | years off their learning curve and coaches CEOs |
| place and time. Every company and situation is | | | | at growth technology companies from startup to |
| different, so there are literally hundreds of | | | | $150MM in sales. He has been part of eight |
| possible "styles" or "management modes." For | | | | startup companies and grown two of those to |
| practical purposes, it is necessary to create a | | | | over $100MM in sales. He can be contacted at: |
| simpler, more workable model, which can be used | | | | See: and for his training products for CEOs and |
| to illustrate a company's major plateaus and | | | | entrepreneurs. |