How does a successful entrepreneurial organisation deal with operational growth pains without losing its ‘soul?’
I have been working with an Asia-based family owned business that markets health products through retail outlets. The business has grown considerably since starting 15 years ago (revenue of $2bn), and has ambitions to grow further. However, certain aspects of the operation are failing to keep pace with the market opportunities and the ‘rapid and flexible’ decision making processes of senior management.
Application of the Cynefin framework in concert with the Kirton Adaptor Innovator (KAI)Theory provides useful insight into the possible contributors of the conundrum, and some possible practical choices about its resolution.
It is my observation that entrepreneurs thrive in the complex and chaos domains, and the complex/complicated interface. Entrepreneurs are typically innovators (Kirton 1994) with a general disregard for bureaucracy and structure unless is provides immediate benefit for their preferred activities.
As their business grows, innovator entrepreneurs manage every problem-type domain, and the more successful introduce necessary structure to cope with Simple and Complicated problems. Beyond a certain size, the span of control is such that the leader has to delegate activities if further growth is to occur.
The alternative to delegation is to maintain full control, but the members of the species capable of being both heavily involved in the market place while developing, implementing and concomitantly monitoring business process reengineering projects in a manufacturing plant are few in number. I have never seen a successful exhibit.
Thus, in Kirton terms, the successful growing companies need to build the adaptive capability in order to deliver the innovator promise. In Cynefin terms, we need to deliver the Simple in order to better manage the Complex.
This can be done in either of two ways.
Firstly, we could recruit. That is, bring in adaptors to manage the operation and bureaucracy. This has the benefit of bringing more problem-solving diversity into the group, but the downside of bringing in potential conflict. For this to work, the benefits of the diversity have to be obvious and motivational.
Secondly, we could delegate. The adaptive Simple activities could be delegated to a third party. This has the benefits of allowing the organisation to continue to operate in preferred mode. In consequence, one may inadvertently construct a highly specialised innovation organisation yet likely insular and narrow in its thinking. The companies always outpace the ability of its suppliers to deliver the customer promise.
The Asian company has chosen a hybrid route. They have begun to recruit a number of more adaptive managers to oversee the sub-contracting of key operational activities to local specialists. These appointments are at the most senior level, so the leadership team has a significant shift in problem-solving diversity. But the broadening of approach is a gentle evolution builds on the ‘Qi’ or soul of the organisation rather than a radical re-shifting of the cultural landscape.
1. Map on the Cynefin framework the corporate journey and use this evolving shape to generate a discussion on the corporate ‘genotype.’
2. Agree on the genes within the genotype the client wish to see expressed and, if done so successfully, what consequences (of growth) need to be managed.
3. Agree on the best way that these growth pains can be resolved in a way that recognises the genotype, but prepares the organisation to take the widest array of paths forward
Finally, a plug. This will be my penultimate blog on the CE website. For those interested, I have been installed as guest blogger at the Riot Point.