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Sales are continuing to increase but profits do not follow the same steep upward trend. The organisation is slowly outgrowing your capabilities. Time is wasted on meetings: same issues are discussed and no definite solutions agreed. You are finding it difficult to delegate. You are impatient and hungry for success: you want to continue to grow and restructure at the same time. No time for structure and processes. You hire a replacement, a ‘Professional’ Manager. How successful has this been?
The team starts rumours and you waste a lot of energy on this. The team agrees that the new person does not fit in. They do not follow his lead and the new structures he/she has put in place. Everybody continues to report to you. Reward systems are ad-hoc. You are concerned about employee morale so you offer stock options to most trusted employees. If they leave they will take the ‘company memory’ with them. This makes them indispensable and gives them a lot of political power.
You implement new technology but still do not have access to relevant information for quality decisions making. At this point you will:
(i) either hire another person, but this time someone who is more “like you” or
(ii) abdicate and let the directors run the company.
If you have gone for (i), you ultimately realise that the newly hired professional manager is not organising and engaging the team, as they are too busy doing what you would do! This is because you need someone who complements your leadership style.
If you have opted for (ii), you eventually find out that they are spending too much in the name of controls and systems. This happens due the absence of systematised decision-making due to the lack of task-based structures and institutionalised systems of governance.
In scenario (i), timing is crucial. Ideally, excessive pressures force the wrong style of leadership for a newly hired professional. If you have not created an effective administrative system and institutionalised the management leadership, the company will remain stuck and unable to move to the next level.
If like in scenario (ii) you abdicate or are squeezed out. Talented employees leave the company as the company has now become too inflexible or political. Ultimately, this will drive the business to a premature aging as it loses its vision and driving force. Profit might go up for some time, but sales will eventually start declining.
If the key conflicts are not resolved, your organisation might find itself in a pre-mature aging, led by a lack of entrepreneurial spirit and reduced effectiveness.
Why is the transition from Sparks to Flame so difficult? Because of 3 key challenges:
1. Decentralisation of authority
2. Change in leadership from Entrepreneurship to Professional Management
3. Fundamental shift in the goals that drive performance.
To solve these challenges, the optimal solution is to resolve the differences and work together. Intervention by an external party is often needed.