Greiner's curve: 5 crisis points that all start-ups should know (Part 2)
Updated: Apr 22, 2021
Previously on Scaling Start-Ups...
Founders Chen and Olga strove through the trials and tribulations of Phase 1 of Greiner’s Curve, gained a foothold in the left-handed mug market and received their Series A funding. As they set their sights on expanding to EMEA markets, they found themselves smack in the middle of the first crisis point (Leadership Crisis) on their growth journey.
In this episode, we will find out what challenges await them in Phase 2, 3 and 4 of their journey.
Greiner’s Curve captures organisational life-cycle growth in 6 phases. Each growth phase is made up of an evolution and stable growth, followed by a crisis when revolutionary changes are needed for the company to carry on growing.
Greiner's Curve: Organisational life-cycle and growth journey
In Phase 1 (Growth through Creativity), Chen and Olga found the market niche for their product and got their start-up off the ground. At the end of Phase 1, they hit a crisis point (Leadership Crisis) in which the Olga, the co-founder learned to let go of responsibilities when experts are hired into the team. Now Mug ‘L’ Us is making a step change into Phase 2 of their journey.
📈 PHASE 2: Growth through Direction
With a range of new hires under their belt, including Matt (Head of Manufacturing), Engineering, Business Development and Customer Success, our friends at Mugs ‘L’ us now had specialised teams in place to lead best practice, rather than everyone taking responsibility for everything. New systems had been introduced to support the teams too, including a brand new Customer Management System - Excel, who?!
Matt joined as Head of Manufacturing
Things were booming for Mugs ‘L’ Us - they had increased sales by 800% in the UK and Matt had reduced the cost of production by a whopping 30%. Olga was happy to admit that he really was the best hire for the job and since she’d taken a step back, he had the space to step up and do what he does best without being held back.
The founders, team and investors were all happy. So happy, in fact, the investors offered another round of funding! This time to launch Mugs ‘L’ Us into the EMEA market and directly into Phase 3 of Greiner’s Curve.
💥 END OF PHASE 2: Autonomy Crisis
Before that, they’d need a new layer of management to share the increasing workload that had become too much for the heads of departments. Business Development Managers (BDM) for EMEA were hired, and Manufacturing headcount rapidly expanded to meet demand. Matt was promoted to VP of Manufacturing in recognition of his incredible work and a Manufacturing Manager was introduced to run European operations.
New layer of management added in the Business Development and Manufacturing team
Soon, the BDM team was in a bit of turmoil. Truth be told, the new EMEA BDMs were a bit too opinionated for Bhav’s liking. They told him (the Head of Business Development!) he needed to delegate centralised decision making and his successful UK go-to-market strategy wasn’t working in their regional markets. They wanted the responsibility to make decisions in the area they were in charge of.
Bhav thought “What do they know? The founding team has already built a highly successful go-to-market strategy!” Not long after Bhav dug his heels in did Mugs ‘L’ Us have its first resignation. BDMs left, were replaced and left again - they were harder to keep than hot tea in a cracked mug! In exit interviews, the reason became clear: the EMEA BDMs were tired of not being trusted to make decisions.
Bhav came to recognise that something had to give before the EMEA expansion halted altogether. After some conversations with Chen and Olga, he realised that he needed to delegate and develop two-way trust with his team. He started working with a mentor who had experienced similar challenges in their own start-up and helped him unpick his behaviour and find ways to change his approach sustainably.
How to overcome Autonomy Crisis?
“Leadership is not a static skill; it is a dynamic art. The leadership role that Bhav needed to play earlier has evolved and so he needs to evolve too. Finding a new way to lead is one of the most challenging and character-defining parts of leadership. And, because what Bhav has been doing so far has been successful, it comes with an element of personal risk: ‘What if I am not successful as a leader in this next phase?
A way for Bhav is to anchor his change in his belief of the potential in the team. He needs to be brutally honest in reflecting what he does that may prevent the team from exercising more agency, able to be more independent and achieving results together. He needs to identify which areas he could be less involved in even if these are the areas he enjoys the most.
Next, Bhav needs to delegate ‘intentionally.’ He needs to provide clarity around priorities and develop a shared vision of what success looks like. Ideally, it should be measurable. Outcome focussed delegation is key to avoid ‘telling’ someone how you want it to be done. Instead, establish a foundation to enable delegation; agree the purpose, focus, boundaries and ways of collaboration. For example, a boundary could be: what Bhav will do to get out of the way of his team.
Once these are established, consistency is key. It sounds, and in reality is, a little boring and repetitive. It takes a lot of self-discipline and focus for a leader to be consistent but the rewards are empowerment of the team, clarity of focus on strategy and the psychological safety to go fast, making strong decisions.”
Polly Barnes, founder of The Talent Stack
📈 PHASE 3: Growth through delegation
Bhav started setting expectations for success instead of dictating regional strategy, adopted a collaborative approach and reviewed results with his team regularly to ensure they were meeting regional targets. He realised that although he wasn’t doing hands-on business development anymore, the natural evolution of his role was to empower others to do it well.
With more control over their regional market strategies, the leavers in BDMs reduced and performance skyrocketed. Similar change was happening across the business where department leaders were empowering their managers, including the EMEA Manufacturing Manager who successfully shortened production time and increased profit margins.
Having shown their ability to be successful in the EMEA markets and meet all investor goals, the next round of funding was secured to launch another two manufacturing plants, one to service the growing US market and the other APAC regions.
💥 END OF PHASE 3: Control Crisis
Mugs ‘L’ Us was seeing 50% QoQ growth. Before steaming straight into Phase 4 of Greiner’s Curve, they hit another crisis point! While the demand for their bespoke mugs was booming in US and APAC regions, products were late to ship, the coordination with delivery partners was slow and disorganised, ultimately resulting in higher costs and a disgruntled customer base.
How could things be going so well in the EMEA regions, but so wrong in the US and APAC?!
After visits to the plants, it became evident to Chen and Matt that the different plants weren’t communicating and there was a lack of coordinated effort, sharing of learnings and best practices. The business was diversifying into new markets, all with their own nuances but having taken a step back to enable growth, Chen and Matt had lost visibility of what was happening at a local level. Mistakes that the EMEA plants made in the early days hadn’t been shared with the US and APAC. Similarly, strides they’d made in production and delivery efficiencies hadn’t been conveyed, so not only were they falling into every pothole possible, they were also failing to get a leg up early. Something had to be done!
Matt and the founding team needed a new plan of action. Their first step was to introduce processes (and systems) to coordinate across the company to achieve efficiency. To get everyone aligned, they created a weekly All Hands meeting, where team leads would share their biggest learnings and wins of the week.
QA team bringing consistent practices across manufacturing plants in EMEA, US and APAC
The team in HQ also had a spate of growth, including establishing a brand new Quality Assurance (QA) team, which implemented consistent processes across all plants and carried out regular compliance spot-checks. They worked with the HR team to create consistent people processes and foster a consistent global culture, so the company felt connected with a shared mission.
How to overcome Control Crisis?
“In this situation, Mug ‘L’ Us needs to bring together different pieces of the equation to synchronise the entire business. What Chen and Olga need to keep in mind before putting policies, procedures or systems in place is the outcome they are trying to achieve: clarity, connectivity and efficiency.
To achieve clarity, everyone needs to be on the same page on the goal Mug ‘L’ Us are striving towards. Many start-ups adopt OKRs to set focus, the key is to select a method that suits them best. Key success metrics are helpful to define standards across the business. For example establishing quality measures, customer experience ratings, vendor SLAs, etc. Company wide communication such as monthly Town Hall ensures progress, updates and wins/fails are shared widely.
To create connectivity, regular touchpoints are crucial - within and between departments. In Mug ‘L’ Us, manufacturing managers in different geographies could adopt weekly stand-ups and quarterly away days that help them align, share learnings and best practices within their departments. And for between departments, we could bring the wider business together through shared culture. Many start-ups actively create shared experiences such as recognition initiatives, social events, employee exchange programmes or global volunteering collaboration.
Finally, to ensure efficiency, coordinating knowledge, resources, systems and process brings consistency to broader business. In the case of Mugs ‘L’ Us, do they; leverage global distributors, have common ordering or invoicing systems, have common procedures for customer support or knowledge management?
With these 3 outcomes and a feedback loop in place, start-ups can implement the policies, procedures and systems that are most suited for their needs.”
Ilhan Mehmet, Head of HR at MADE.com
📈 PHASE 4: Growth through coordination
After implementing the new initiatives to bring isolated teams together, they saw global production become more frictionless and their people more motivated and connected. This increased efficiency led to higher profitability and Return on Investment (ROI) on shared centralised functions such as QA and HR, which they expanded to other functions such as Finance, Legal and Marketing.
In the next episode...
Now that our founders faced the Control Crisis head on and implemented processes, team structure and systems to embed checks and balances for this problem, crisis averted, right?
Stay tuned to find out!