Stage 4’s Gates of Focus are Process, Profit, and People.
In Stage 4, getting scalable processes and systems in place is critical to facilitate future growth. Businesses that progress past Stage 4 without adequate attention to processes and systems will pay the price in later Stages. One of the most significant ways that a leader can focus on Process is by putting in place well-trained, professional managers who are capable of building strong departments. These managers should have the experience and skills to implement the building blocks necessary for their department to deliver high levels of quality in the functional area the department serves. These building blocks include scalable, trainable, and repeatable processes and systems.
Systems facilitate the consistent execution of Process. Leading effective interdepartmental planning sessions, identifying the organization’s master processes, and allocating revenue to implement new processes and systems are ways that a leader can successfully focus on Process.
Profit remains second priority in Stage 4 as the investment in process and systems require additional capital compared to previous Stages. Those processes and systems will support the growing volume of revenue and profit generation in the future. Profit is also important because the number of employees almost doubles from Stage 3 to Stage 4, which greatly increases expenses related to human resources.
People falls to third priority during this process-heavy Stage. Again, being third on the list does not make People unimportant for a Stage 4 business; it simply means that the other two gates require more energy and focus at this point in time. A failure to prioritize Process and Profit at this Stage will end up negatively impacting the company (including its employees) down the line.
Business leaders embracing these Gates of Focus should be constantly thinking about how decisions will impact the scalability of their business. Their energy should be focused on the development, refinement, and testing of processes and systems.
Gates of Focus Misalignment
The owner of an HVAC business has been operating for eight years and is experiencing rapid growth thanks to a boom in the housing market. The company has expanded over the past 12 months from 38 to 53 employees. As someone who is a natural salesperson and good employer, the CEO has been able to successfully win new business and both recruit and keep quality employees. He assumes that his business will function in the same way it always has, just on a larger scale.
Within a few months of scaling up, though, the business seems to be falling apart. The chaos intensifies by the week—conflicts with scheduling increase, invoices are either unsent or unpaid, and the warehouse is filling up with a growing inventory of parts and equipment. The increase in the number of crews and an expanded service area has overwhelmed the manual scheduling system. A backlog has quickly developed as they struggle to optimize crew schedules, which has led to an increasing number of customer cancellations. The Accounting Department is desperately behind in invoicing clients, causing cash flow issues. With so many people in the field, and no real way to know what inventory is on hand, everyone keeps buying and then storing excess inventory. The profitability of the business is falling, even as revenue is rising.
This CEO has focused on People and Profit up to this point, resulting in a growing top line and employees who like working at the company. The business has been able to get away without well-developed processes since it was less complex. The recent growth spurt into Stage 4 has multiplied the complexities of the business to a point where the systems and processes that served the organization in the past are no longer sufficient. While the CEO wants to increase profit by expanding his customer base and service areas, he isn’t able to efficiently service them without updated processes.
The concepts from this article were taken from The Professional Stage: Organizational ReWilding Rules for Business Growth. Available through The ReWild Group and Amazon, the book explores this and other concepts in-depth while providing illustrations to help business leaders incorporate the ideas into their organizations. Get your copy today to learn the rules for growth for companies with 35-57 employees.