Tag Archives: go-go

The Second Sea Change

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As the organization moves from Startup to Go-Go, the second sea change occurs. The Startup always struggles with revenue. “Please find a customer to buy my product or service.” And, these first sales don’t even have to be profitable sales, because all the expenses go on a credit card, line of credit, whatever it takes to get the organization out of ground zero.

Every sale for the Startup is a one-off, tweaking the product or service to each individual customer. Those Startups that survive (make enough sales) find that as volume increases, they can no longer treat every sale from scratch, they must institute methods and processes. The struggle shifts from a revenue problem to a profit problem. The shear volume of the successful Startup becomes its biggest problem. A few unprofitable sales for the Startup becomes a staggering amount of red-ink for Go-Go.

And, profit becomes elusive.

The first sea change was a shift from organizing the work around the people to organizing the people around the work. The second sea change is a shift from organizing the work around methods and processes to organizing methods and processes into a system. It is only this second sea change where the organization begins to see its first signs of sustained profitability.

The Chaos of Go-Go Disappears

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WHY I wrote Outbound Air –

The organization re-sequences its methods and processes into coherent systems that bring efficiency, consistency and predictability into sharp focus. The chaos of Go-Go disappears and profitability emerges. The entrepreneur relaxes as cash flow improves. Sales volume increases as the market has higher confidence in the reliability of the product or service. The company offers a warranty program.

The roles defined in Go-Go grow up into departments where groups of people focused on the same function transform into teams. The system becomes more efficient as the focus turns inward, each step examined for time and motion, work hand-offs flow-charted for sequence, planning organizes resources, paring unnecessary elements. Every function goes through this transformation as the organization careens toward the next wall.

This internal focus builds the competence of internal teams, but the organization suffers the malady of the next level of friction. Those internally focused teams begin to compete for budget, resources and managerial attention. They stand next to each other and shout – “NO, look at me, pay attention to me.” One or two teams (departments) outperform, but the throughput of the organization grinds to a halt with the laggard teams setting the pace.

____________Prime – multiple systems/sub-systems create friction
_________Adolescence – internal focus on system creation
______Go-Go – define and document methods and processes
___Infancy – focus on sales, production, find a (any) customer

Many organizations get stuck and stay stuck. Some survive. Survival depends on a higher level of work.
______

This model is adapted from a comparative study of two models, Corporate Lifecycles, Ichak Adizes and Requisite Organization, Dr. Elliott Jaques.

Smile Training

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WHY I wrote Outbound Air –

As the organization grows, the chaos of Go-Go is killing the organization. The company has clearly defined its methods and processes, but the sequence is not necessarily efficient. Mom and Pop, who started the organization, long for the days when they could just do everything themselves. This motley crew of people (the team) is going through the motions, doing what they have now been trained to do.

For the most part, the product or service makes it to the customer, and for the most part, the customer is happy. But as sales volume grows, the chaos of Go-Go creates enough substandard output that people begin to notice. Deadlines are missed, defects become visible. The organization reacts by creating a customer service department, to apologize and smile.

But smile training doesn’t cut it. The company is now in pursuit of some sort of consistency, so that every product consistently meets its specification, so that every service meets the standard, every time. The strategic focus turns to a system focus.

____________Adolescence – system focus
________Go-Go – define and document methods and processes
____Infancy – focus on sales, production, find a (any) customer

The methods and processes are examined for sequence and priority to create a system that is efficient, predictable and most of all profitable. The bank wants that line of credit paid off.
______________
Homage to Ichak Adizes, Corporate Lifecycles, 1988.

The Organization Has to Become Profitable

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WHY I wrote Outbound Air –

Organizations moving to the next level, have solved the problems of the past, but solving those problems created the new problems of the future.

In the stage of infancy, everyone did a little bit of everything, but market demand required more volume, so headcount increased. With more headcount doing a little bit of everything, chaos increased and worked against the higher volume. It was great to have all hands on-deck, but the chaos wreaked havoc on efficiency. Sure, the product was delivered to the market, customers were satisfied, but in the wake, were body bags and organizational friction. These were the hallmarks of the Go-Go stage.

In the stage of infancy, efficiency was not an issue, because the point was “proof of concept.” Make the product or service, and (please) find a customer to buy. The sale did not have to be a profitable sale because the expense was pushed to a line of credit. But, at some point, the bank actually wants the line of credit paid off (primarily, so they can take it away, but that’s another story for another day).

At some point, the organization has to become profitable, it has to become efficient.

What Comes After Go-Go?

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WHY I wrote Outbound Air –

I watch organizations struggle. It is normal, uncomfortable, but normal. This organizational discomfort causes the founder to look for answers, in all the wrong places.

Go-Go is the most fun stage for any business. There is energy and enthusiasm. With a sustained momentum of sales, there arises a new feeling, invincibility. The entrepreneur says, “We faced the odds against us and we didn’t die. Our customers love us. We have a superb business model. Flawless execution of a brilliant business plan. We could take our business model and conquer any industry.”

This organization bounces inside its geography, opportunistic in its behavior. Its organizational challenge is focus. It cannot figure out if they are in the real estate business or the shoe business, because they believe they could make a fortune in both.

The momentum of sales has turned the negative cash flow of infancy into revenue streams of Go-Go. With a credit facility for expenses, this organization is on top of the world. The customer is happy and promises to buy more. But a subtle inspection in the wake of this organization produces body bags and friction. It is a wonder there is not more collateral damage. Efficiency is elusive. Profit is fleeting (in spite of the appearance of cash).

All of this is normal, but the entrepreneur is stumped, wondering why the organization does not run more smoothly and why it staggers in inefficiency. There are many who would provide answers, but most would be wrong.

This is the beginning of WHY I wrote Outbound Air. Tomorrow, the next stage.

Maybe It Should Have Stayed a Hobby

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Why I Wrote Outbound Air –

Before I tell you why, here is what I see. An organization bands together to accomplish something noble. In the beginning, everyone is organized around that noble idea. It is all about that noble product or service. Find a customer to buy it. Simple. So simple that most startups go out of business in the first five years.

Yet some survive. Those that did not die, make enough sales to prove market potential. I said market potential, not market success. In fact, those initial sales did not have to be profitable sales, because this startup put all its expenses on a line of credit or a credit card, whatever it took to emerge from this infant stage.

This noble product or service, this entrepreneurial idea was in some cases a hobby. In some cases, it should have stayed a hobby. But, the entrepreneur cannot help this feeling, this cause, to bring this idea to market. All odds are stacked, yet if enough early adopters buy enough product or service, create enough market demand, the organization just might survive to the next level.

If there is enough market demand to outstrip the organization’s capacity to produce (it is all about production), then the organization has the potential to grow. To grow requires change. To produce more volume requires more resources, more people. Headcount increases along with chaos. Ichak Adizes calls this Go-Go.

In the beginning, everyone did a little bit of everything, that was all that was required. With more headcount, that strategy, everyone doing everything, creates organizational noise and friction. To reduce the noise, individual roles are created with defined accountability and authority. This transition signals the first emergence of structure.

This is the beginning of WHY I wrote Outbound Air. Tomorrow I will write about what comes after Go-Go.

The Go-Go Stage

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“That which does not kill you, makes you stronger,” Jim Dunbar grinned. “Our momentum told us we were not likely to die, at least not in that fiscal year,” he said. “We were invincible. So, I signed a lease on the second plane.

“Passenger loads picked up, and I had to hire more people. And that led to a predictable stumble. There was no rhyme or reason for the way we did things. We survived on our tenacity, but our tenacity began to fail us. My wife described our behavior as improvisation. Invincibility and improvisation make for a toxic cocktail. We over-promised, extended our thin resources.

“I remember our first overbooking. We had more passengers than seats. I looked at my schedule, figured we could make the run to Denver, flip the aircraft around and come back for the other group. For some reason, we thought the stranded passengers would wait the four hours. But, a weather system moved in. In spite of our promises, we never made it back, and missed another flight leg with a scheduled full plane.

“To say we flew by the seat of our pants was an understatement. But, at the time, I figured that my team practiced for months. We successfully flew one plane, how difficult could it be with two planes?

Excerpt from Outbound Air, Levels of Work in Organizational Structure, by Tom Foster, now available on Kindle, soon to be released in softcover.

Outbound Air