What to Do if Your Division Has Been Hovering Around the Same Gross Revenue for Too Long

When a division president says that business has been pretty “flat,” in a single word, he/she conveys a lack of change in gross revenue, net profit, the size and number of customers, and the number of employees.  One can just imagine the graphs and charts that provide details about the plateau at corporate meetings.  The word “flat” also conveys how it feels to work in that division.  Energy levels are flat.  The vibrant taste of innovative juices is long gone.

Ironically, breaking out of a plateau can be more difficult that digging out of a hole.

When a division or department is clearly in trouble, leadership tends to kick in and make decisions.  It may be no fun to lay people off, reduce operating budgets, further focus marketing efforts, and postpone promotions, but hopefully your company can respond when it starts to bleed red ink.  Somehow, a plateau doesn’t cue emergency action, but if a plateau persists, the next phase will inevitably by a downturn, so it’s important for leaders to find ways to “blast past a plateau” and not linger too long.

What are the Typical Responses to Plateaus?

One classic response to plateaus is a sigh of relief.  Frankly, for many people, a plateau is welcome relief from the stresses associated with growing or downsizing. A second classic response is denial where the leader acts as if the plateau doesn’t exist and continues to set goals the same way they have been done for the past few years. A third classic response is avoidance where the leader assumes that things will eventually change and asks him/herself why they should bother doing something now when there is no crisis?  Avoidance is a particularly popular response among leaders who enjoy dealing with large accounts and don’t really like to deal with employees or internal issues.  A fourth classic response is lip service where the leader says that he/she wants to make a change but then resists learning new skills to actually address an intractable plateau.  These people seem insincere, scared, and/or cheap to their subordinates. The fifth classic response is to stall.  Some leaders subconsciously choose to stall and remain at the plateau because they are afraid that they will lack the skills needed to succeed in a much larger organization.

Fortunately, there are alternatives to sighing, denial, avoidance, lip service, and stalling.

One of the first steps in blasting past a plateau is to assess the underlying causes.  The initial inclination is to look at the impact of competition, customer purchasing patterns, and problems within distribution channels to find causes for a plateau.  Shifts in the economy and the cost of debt can also lie beneath a plateau.  However, it’s important for a division president not to become so caught up in the quest for reasons that the data camouflages the organizational causes of plateaus.  My 30+ years of experience as a growth strategy consultant has taught me that 90% of the time plateaus are a matter of organization dynamics and/or the inability of the leaders to embrace transformational change.

Frankly, I have found that the external factors don’t result in plateaus unless the psychic energy of a division had been compromised prior to the advent of the adverse external factor.  The people in a division who have the hunger to succeed and have a sustained thirst for growth become accustomed to facing challenges and don’t tend to over react or use external issues as an excuse to coast.

Analyze Career Goals, Individual Skills, and Group Dynamics 

Looking at organizational dynamics first, one can’t help but notice that plateaus often occur in divisions with a core work group of 7-9 people and again at approximately 25 people.  This pattern also happens in small privately held companies.

With a core group of 5-7 people, a single leader can know everyone, meet with each individual, and make the key decisions.  One of the most important steps to take to blast past the 5-7 person plateau is for the leader to examine his/her own career path.  Does he/she really want to oversee a 5-7 person division for the rest of his/her career?  Even if the answer is yes, would the corporation actually permit him/her to remain at that level forever?  A second step would be to consider the skills and career paths of the 5-7 people who work for the leader.  Does the plateau simply announce that the existing staff has reached the limits of its capabilities, interests, and ambitions?   The third step is to look at the group dynamics.  Has some inertia and resistance to growth developed because the 5-7 people get along so well, pitch in to help one another, and socialize after work hours?  In a way, has the core work group become a clique that would resist the introduction of new people, personalities, and approaches?

At 25 people, other managers have been brought in and decisions must be shared.  So the three steps in blasting past the plateau would again involve looking at the career goals of the leader, the skills and goals of the individuals, and the group dynamics.  How often have longtime employees been given an opportunity to learn to be managers only to discover they prefer to do the work and don’t really want to delegate? The collateral damage is obvious by the time a division reaches 25 people.

So at both the 5-7 person and 25 person plateaus, discussion of career goals, review of skills, and honesty about group dynamics helps the leader see what to do.  Sometimes, more experienced people need to be hired.  Sometimes, less ambitious employees need to be demoted or reassigned.  Sometimes, the leader should sign up for seminars, career counseling, or advanced education.

Revisit Vision and Mission

Plateaus often occur when the previous vision and strategy has played itself out, and it’s time to update everyone’s view of where things are going. Fortunately, a division leader does not necessarily have to get into painful, time-consuming wordsmithing of mission statements to make sure everyone shares the same vision of the future.  The overall mission of the division may well remain the same despite the plateau.  It’s the vision of the future and strategies that typically need to be updated when a plateau becomes stubborn.

Use Dynamic Instead of Arbitrary Goals

Goal setting methods must also change when a leader is facing a plateau.  Instead of incremental goals (e.g. “Let’s try to grow 10% across the board”), dynamic goals make more sense. Often to blast past a plateau, the growth goals will be a dynamic 52% rather than an arbitrary 10%. In dynamic goal setting, each aspect of the business is addressed and the sub goals are added up.  Perhaps improving the sales department’s closing percentage could result in 10% improvement all by itself.  Maybe 5% growth could be accomplished through technology improvements. Maybe another 2% growth can be accomplished through the acquisition of new skills.  Perhaps another 7% growth can be accomplished by targeting larger accounts.  Maybe another 6% profit can be achieved through improved efficiencies or cost cutting. Perhaps more focused marketing could result in 3%.  If the existing group of people can’t imagine how to achieve dramatic growth, bringing in experts to brainstorm or taking benchmarking field trips to excellent companies can pay off.

Expand Your Repertoire of Growth Strategies

When a plateau occurs, it is often helpful to expand the growth strategies being utilized by the division or corporation.  Perhaps the corporation has executed strategic alliances, but has never tried true joint ventures.  Perhaps the division leader has looked into licensing products but never considered franchising.  Perhaps the division has tried to increase its control over various channels of distribution but has been reluctant to consider true geographic expansion.  Perhaps it’s time for a different form of equity deal or profit sharing.  It might be time to consider further specialization or diversifying into a new line of business.

 

Known as The Growth Strategist®, Aldonna R. Ambler, CMC, CSP helps professional service firms, technology-driven businesses, and construction-related product/service for distribution companies reach their goal of Achieving Accelerated Growth With Sustained Profitability® through a combination of speaking, consulting, executive coaching, authorship, and growth financing.  She has executed an ESOP, grown multiple international businesses, won just about every major award an entrepreneur can win, provided expert testimony on economic growth at over 30 legislative hearings, conferred with four different Presidents in the Oval Office, and published two books and over 100 articles.  She currently hosts a weekly Internet radio show, The Growth Strategist® on www.GrowthStrategistShow.com every Tuesday at 11 a.m. ET.  Aldonna Ambler can be reached at Aldonna@AMBLER.com, 1-888-ALDONNA (253-6662) or at www.ambler.com.

 

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