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