doug thorpe musings

The Surf is Up Before the Tsunami

SUrferThere is an old Beach Boys song with this lyric. It made me think of a phenomenon I have seen from time to time in business. After almost 20 years in commercial banking I saw a lot of highs and lows with my business customers. Companies on a good, perhaps even great, growth track are sometimes headed for a big storm. I am not talking about the tide shift when the economic conditions go bad. No, I am talking about having the success of the company outpace the change within.

When the company’s leadership fails to recognize and act upon the things that need to change to sustain growth and prosperity, the company may ultimately fail. I’ve named this condition “The Paradox of Success”.

BSP_GraphAll companies will go through various life cycle stages. As they mature from start-up to become going concern, there are critical changes that the leadership and management must execute. These are things like capital investment in equipment or facilities, people and process. Sometimes the leadership team itself needs to grow or change. Founders often fail to see these things coming. Often with entrepreneurs, the business gets bigger than their own management ability. The wise founder will accept advice from advisers or investors and allow the reigns of control to be handed to other, more qualified leadership.

It is this kind of change that is most difficult for entrepreneurs to recognize and adjust. Just because things are going well, be ready for the next growth spurt. Embrace the change that is needed, make plans, seek wise counsel, and deal with making the right change.

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