Monthly Archives: September 2012

[video] The Top Nine Causes of The Plateau Pattern™: Existing Strategy Has Been Played Out

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The Top Nine Causes of The Plateau Pattern™: Existing Strategy Has Been Played Out

Ted is the majority owner of the third largest business in their niche. The company has had steady growth and consistently strong net profit across its 20 year history. Tom, the minority partner, is the company’s President. Recently, other members of the management team have become impatient with Ted and Tom.  Although they are proud of the company’s accomplishments, the managers see the need for upgraded technology and expansion of services.  A few members of the management team have even considered leaving to start a business of their own that would embrace new trends more quickly.

What do you think?  Is the company positioned for growth? A plateau? Freefall?

Although a vignette cannot possibly convey the whole story, there IS enough information here to prompt some relevant questions.

Are Ted and Tom too focused on the past?  Are the other members of the management team ready to become executives? Is Ted ready to retire?  Would he consider selling his shares of the business to members of the management team?  It certainly could be disruptive if he just sells his shares to an outsider without giving the managers a chance to buy the business.  Are the managers irritated at Ted and Tom or do they just need an updated strategic plan?  Why should key managers have to leave the company to embrace trends, utilize upgraded technology, expand services…and go to the next level?

Bright people get itchy and even bored if they are merely following through on yesterday’s strategies.  Ambitious people will be much more excited if they have a compelling future oriented strategic plan that makes them think, requires learning new skills, and presents a challenge.  Real growth is driven from equal doses of fear and excitement.  Succession will need to be part of the process as the managers replace Ted’s and Tom’s “safe” existing strategy with something new and exciting.

So, this company is headed for a plateau (or freefall?) if Ted and Tom can’t let go.  But the business is positioned well for growth if succession and new strategy replace “maintenance thinking.”

The 8th top cause of The Plateau Pattern™ is “the existing strategy has been played out.”

 

[video] The Top Causes of The Plateau Pattern™: Tolerance of a Significant Problem

The Top Causes of The Plateau Pattern™ – #6 – Martyr Behavior

The Top Nine Causes of The Plateau Pattern™: Tolerance of a Significant Problem

Jeff is president of a customer focused midsized company. They improve their products and services based on current buying patterns, preferences, and needs.  Despite the fact that they consistently earn close to 100% customer satisfaction ratings, repeat business, and referrals; for some reason they often don’t have enough money to invest in upgraded technology, marketing, or expansion.  They grow for a while and then have to catch up.  Jeff is wondering if he should look for outside investors.

What do you think?  Is the company positioned for growth? A plateau? Freefall?

Although a vignette cannot possibly convey the whole story, there IS enough information here to prompt some relevant questions.

What makes Jeff think that an infusion of capital will change their grow-then-slow pattern?  Why doesn’t he know the underlying cause of their lack of expansion capital?  Has this company taken a close look at its gross profit and pricing?  Sometimes companies that focus on customer satisfaction don’t place an equal emphasis on making sure their business gets paid fairly by those happy customers.  Has this company unnecessarily been discounting its premium products/services?  If their customers are so happy, wouldn’t they be willing to pay more?

My guess is that Jeff shouldn’t approach outside investors as its next step.  Fixing the profitability problem that has too long been viewed as acceptable would be a better idea.  Plus the reality is – outside investors would be reluctant to fund Jeff’s company based on limited profit and sustainability.

The 7th top cause of The Plateau Pattern™ is “tolerance of a significant problem.”

 

The Top Nine Causes of The Plateau Pattern™: Martyr Behavior

Cynthia, Jim, and Tim are the executives and equal owners of a successful midsized company.  Recently each owner seems distracted.  Cynthia is spending more and more time on her nonprofit boards and speeches for associations.  She is talking about writing a book to provide advice for younger women business owners. Tim is starting another business and has another partner in mind. And Jim spends more time working from home and watches the kids while his wife is at work.  All three feel like they are overdue for a break and are entitled to collect some return on their long term investment of money and long hours.

The risks associated with this vignette are pretty easy to see.  The company may be leaderless for too long.  Subordinates may or may not step up to fill the void.  Resentments might develop.  Competitors might take advantage of the fact that these business owners are coasting and have let their guard down. Star employees could be cherry picked while Cynthia mentors, Tim diversifies, and Jim babysits.

What do you think?  Is the company positioned for growth? A plateau? Freefall?

Although a vignette cannot possibly convey the whole story, there IS enough information here to prompt some relevant questions.

My guess is that this business hasn’t been as successful as things may have seemed for quite a while.  Why do all three owners now feel like they deserve a significant break…almost a group sabbatical?  Why do the three owners feel that they are due more ROI now?  Haven’t they been receiving reasonable salaries and appropriate profit sharing?  Why do all 3 owners seem to need more ROI and a break at the same time?  As equal owners, have they been forcing equal pay and equal treatment on one another?  Could they have delegated or asked for more help sooner?   Did they take care of everyone BUT themselves too long?

The business is positioned for freefall if the leadership void is not addressed. Ironically, this business could actually be well positioned for growth if someone else recognizes the opportunity and buys the company.  Cynthia, Tim, and Jim have lost interest in running this business and want/need money. The timing could be right for an acquisition. The company could do well if subordinates of the owners are ready to take over the leadership reigns.  Ownership can even be transferred to key employees over time.  Maybe Cynthia could mentor one of her own employees to become a woman business owner without having to leave the company.

The 6th top cause of The Plateau Pattern™ is “martyr behavior.


[video] The Top Causes of The Plateau Pattern™: Complacence

The Top Nine Causes of The Plateau Pattern™: Complacence

George is the President of a midsized 8 year old company.  The company was included on the lists of the fastest growing companies and best places to work for several years in a row. George has won local “entrepreneur of the year” awards and is frequently invited to speak about “innovation” at chamber of commerce and technology council events. 2009/2010 were challenging years for just about every company in their niche, so George’s team did not over-react when their growth slowed.  After all, “flat is the new UP,”right? George and his team remained confident that the launch of the 5th version of their software would be well received in 2011.

What do you think?  Is the company positioned for growth? A plateau? Implosion?

The bad news is that the 5th version of the software did not sell well.  But the good news is that the disappointment might be just the wakeup call George and his team needed.

Although a vignette cannot possibly convey the whole story, there IS enough information here to prompt some relevant questions.

How dependent is George’s business on one software product (be it 1st or 5th version)?  Have the revisions been based on updates in technology, research about customer needs and preferences, both, or neither? Have they been riding the wave of success from past innovation? Sometimes people start to believe their own press clippings. Maybe George and his team were quite entrepreneurial and innovative 8 years ago. Are they now?

It would be very interesting to learn what younger, bright, ambitious employees in George’s business are thinking.  Do they view the management team as exciting industry leaders who continue to earn the respect of their team?  Or do they view George and his team as out of date and out of touch?  8 years is a long time when it comes to technology.

George and his team could prevent a mutiny (or exodus) and a plateau (or free fall) IF they can renew their commitment to and investment in:

  •   timely market research,
  •   a culture and process of innovation and continuous learning, and
  •   expansive thinking, so they reduce their dependence on a single product line.

The fifth top cause of The Plateau Pattern™ is “complacence” (cockiness).

 

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