If you are in business and you are growing, you will hit inflection points. So it’s not whether they will happen, it’s how you will deal with them when they do happen.

Andrew Grove describes inflection points very well in his book Only the Paranoid Survive”

An inflection point occurs where the old strategic order dissolves and gives way to the new, allowing the business to ascend to newheights. However, if you don’t navigate your way through an inflection point, you go through a peak and after the peak business declines. It’s around the inflection points that managers puzzle and observe ”Things are different. Something has changed. “

For many, the following will be a familiar scenario. You start your business, you get some customers, probably in the “family and friends” category, provide good service, and you start to grow. As you grow, you find yourself with less and less time to find new customers, serve current customers and retain customers. You are likely not to have a growth plan and not much of a support structure for your business. A moment of truth has arrived – you have just hit an inflection point. And how you deal with it will determine if your business continues to grow or it begins a slow and painful decline.

The euphoria of early business success is inescapable, but it can also be a mental fogging machine. Early success blinds you to the realities of building your business. We have heard: we don’t need to brand ourselves we’ve done OK so far without it. Or, my accountant takes care of my books, why do I need financial statements that’s a waste of time and money – we’re doing OK. Or, the tendency to chase after every new market segment without realizing each one represents a different approach and may require different resources. You may have heard these stories; you may have experienced them yourself.

Identifying and managing through an inflection point is important for the health and welfare of your business. And if you are new to business or new to running a company, do realize that inflection points exist and they are to be taken very seriously. To loosely paraphrase Marshall Goldsmith, what got your business to where it is now will not get you to the next level of business success.

Copyright 2011 Kubica and LaForest

In Monday’s Blog we discussed rightsizing as matching the workforce with the workload, and insuring that the proper infrastructure is in place to support growth: people, processes and technology.

We also said that all growing companies, hit “inflection points”, the point on the growth curve where the company is at a real risk of stopping to grow and starting to shrink (or fail). It is anticipating the “inflection points” and putting in place growth support initiatives that is a part of your job as a leadership.

When we talk about the right infrastructure, we are referring to:

• Leadership Roles and Responsibilities
• Strategy Identification and Execution
• Financial Controls and Reporting Systems
• Human Resources Management
• Information Technology
• Marketing and Sales
• Branding
• (Organizational) Culture Development
• Customer Fulfillment

As you start your business, it’s like an embryo with some of initiatives in place – but not well developed. And like an embryo – your business starts to outgrow its current environment. As it continues to grow, it reaches a point where change is dramatic and needs to be supported differently.

Recognize that your business is no different. You need to have a process in place to identify growth (inflection point) changes yourself or have someone help you with it.

To do so, we suggest you to do the following:

• Twice a year assess your company’s current state
  • Are you growing, if so how fast?
  • What did you say you would do but didn’t – and why?
  • What are things about your business that you don’t know?
    • Examples include:
      • Current financial condition
      • Who are your key customers
      • Customer satisfaction
  • Is your strategy and approach to the market still right?
  • Have an independent third party challenge your assumptions
  • Identify what you are not doing and should be doing to support growth

Early success can distort your view of the business; it can lead to complacency and over-confidence in your skills. In this case, success can be your greatest enemy. Unfortunately some business owners find out too late that their early success cannot be sustained with introducing business principles and business management skills.

Don’t be one of those business owners. Understand that inflection points do exist for all businesses (and yes, that does mean yours also). And with the appropriate approach, you can identify them, anticipate them and create solutions to successfully transition through them to the next level of business.

Copyright 2011 Kubica and LaForest

Whether you are a start-up, have been in business for a few years, or are looking for ways to re-ignite growth, you need to “rightsize” your company.

Our definition for rightsizing is literal—perhaps better said, it would be “bestsizing” for your market goals. It’s certainly not the euphemistic drivel we hear from executives and consultants who would rather not say they are firing people and choose words like: reengineer or downsize. This distorts the meaning of the word rightsize.

Rightsizing, done right– is matching the workforce with the workload; it is also insuring that the proper infrastructure is in place to support growth: people, processes and technology.

Company growth curves hit a point where the company can continue to grow, or it can (and likely will if not attended to), stop growing. We refer to these points as “inflection points” on the business growth curve. For example, a first inflection point we often find is the need to have internal controls such as financial reporting so that real numbers drive business decisions for growth. (That includes a Balance Sheet, Income and Cash Flow statements as a minimum.) Inflection points also commonly include refinement of the sales, marketing and branding initiatives, and customer fulfillment to support sales. There are other “inflection points” as the business continues to grow. Inflection points can also include a re-examination and a refashioning of the company culture from where it started (perhaps as an informal lifestyle company) to the need for a refined culture to ensure alignment for delivery of a new and greater continuum of services.

One thing is certain about your business – it will always be in a state of change. It will either be growing, or it will be shrinking, as status quo only lasts for so long. You can either wash up or rise with the tide.

Copyright 2011 Kubica and LaForest