Structure of an organization allows defining of who does what. Most small businesses operate with little or no structure, and roles and responsibilities overlap. When there are only few balls bouncing, all the balls may be handled well. But when the business grows, and there are too many balls to handle, the play becomes inefficient and more time is spent picking up the fallen balls than keeping all the balls bouncing. Having a well defined structure allows for role clarity and definition of competency needed for each role. This allows for division of labor and co-operative functioning within an organization, resulting in operational efficiencies.
Systems within an organization define how the work should get done for the best possible outcomes. Most work flow in a small enterprise is intuitive - therefore not very organized - resulting in suboptimal performance. When the business is small this will do but as the business grows, the operational complexity grows too. The enterprise needs business process organization and the systems and processes have to be put in place.
Staffing becomes critical to keep pace with the growth of business. Issues like staff adequacy, competency and compensation need to be addressed strategically and professionally and cannot be done in an emergent manner.
Role of the business owner (Chief Entrepreneurial Office) changes over the life of the business. During the early stages, there is very little middle management and the business owner plays many roles and does most of the thinking, managing and doing. As the business grows it is impossible to continue doing this. Business owners need to let go and must allow others employees to take over many things they are used to doing. Most business owners fail to do this and come in the way of their organization’s success. They become the bottleneck that prevents the business from making the transformation from being small to becoming big.
The role of the CEO, organizational structure, presence of standardized processes within a reliable system and competent staff that has well defined roles and is high on energy; create a potent interplay that enables an enterprise to gather the right momentum to make the transformation from being small to becoming big, by breaking through the phantom ceiling effect to create a scalable enterprise. Such a scalable enterprise travels on the autobahn to unlimited growth. Growth now happens because you have created a system that allows growth to happen, and the CEO is not a bottleneck but the engine for growth.
The next blog will address how the organizational structure of small business can be amended to facilitate its growth.
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