Growing Pains and Entrepreneurs

To many entrepreneurs, growth is the ultimate success that compensates for their effort and money. It is also a key indicator that goods or services delivered are accepted by the market. Besides, growth simultaneously creates new challenges that the venture has to face. When growth becomes painful, it is a signal of malfunctions in the process of organizational development (Flamholtz, 1990). It is the time when human resources and/or operational structure cannot catch up with the organization’s expansion, and the downfall occurs. At this point, the entrepreneur has three choices: Learn to deal with business growth effectively, sell out, or ignore the problems until the business is forced to close down (Denalli, 1993). The latter two options would most unlikely be selected, the entrepreneur is left with the need to recognize growing pains and manage the growth.

The organizational growing pains mentioned in the article “Growing pains: How to make the transition from an entrepreneurship to a professionally managed firm” (Flamholtz, 1990) are very common and easily experienced by most working people. I would like to introduce an example from my previous experience at an IT company called First Consulting Group (FCG). A web-application project had been estimated to be completed with a team of ten in six months. After three months, it was concluded to need seven more months before the product delivery. Because of underestimation and lack of planning correctly, people were often pushed very hard with heavy workload. Those who worked twelve hours per day began to complain about “overload” and had the feeling that “there is not enough time in the day”. That problem resulted in excessive pressure on employees. To deliver the product on time, the company was forced to hire new people who had to work immediately without adequate training. After the rush, members hired hastily and under pressure would become idle resources. That company spent too much time dealing with short-term crises – “putting out fires”. In late 2007, there was a rumour about the merger of FCG and another company. While senior management had not officially informed, employees experienced a considerable amount of anxiety. They did not understand where the firm was headed and felt insecure about their place in the firm after the merger.

To avoid the problems accompanying rapid growth, organizations must have an infrastructure that will absorb the growth. “Anticipation of bigness” is the term that best describes the effective solution in this case (Hambrick & Crozier, 1985). Those firms must envision themselves as larger; acquire the needed skills and processes before they are actually necessary (Hambrick & Crozier, 1985).

Flamholtz (1990) points out the ten most common organizational growing pains which are only the symptoms of breakdown in the process of organizational development. It is imperative to identify the causes of the malfunction and the solutions, which help entrepreneurs to avoid and deal with growing pains. In highly recommended article “Stumbles and stars in the management of rapid growth”, Hambrick and Crozier (1985) do mention fundamental challenges facing the managers of rapid-growth firms (Instant size, a sense of infallibility, internal turmoil and frenzy, extraordinary resource needs) and how successful firms solve the problems.

Gerber, author of the best-selling The E-Myth: Why Most Businesses Don't Work and What To Do About It (Ballinger Publishing Co.), says: "Business development is crucial, and businesses that don't do it are doomed to fail. High-growth businesses simply fail with a flourish." (Denalli, 1993). A steady rate of growth is necessary to keep everything at a highly stable level. Equipped themselves with theory and reality-based experience, the organizations should stop surviving and start growing with the awareness of the growing pains ahead.


References:

Denalli, J. (1993). Keeping growth under control - managing company growth. Retrieved 2008-10-04 from http://findarticles.com/p/articles/mi_m1154/is_n7_v81/ai_14009418

Flamholtz, E. G. (1990). Growing pains: How to make the transition from an entrepreneurship to a professionally managed firm (pp. 53-72). San Francisco: Jossey-Bass Inc.

Hambrick, D. C., & Crozier, L. M. (1985). Stumblers and stars in the management of rapid growth. Journal of Business Venturing, 1(1), 31-45