We love growth journeys

I was recently with a Member company, and they were debating whether or not they should set a target for staff recruitment over the upcoming year. They wanted to grow as a business, and associated this with an increase in headcount (HC), particularly in the sales team.

They identified a correlations between the 2 statements:

  • ‘Grow business’, and
  • ‘Add people’

The debate went back and forth as to whether growing HC itself was in fact a legitimate target, or whether it was the outcome of other growth-related activities. Essentially, some people were saying that the relationship between these 2 statements is linear, as in:

This is an example of ‘linear causality’, one thing leads to another. An equivalent statement might be ‘Get rich / achieve a senior status, then hire a PA’.

Over time though, in business and in life, we learn that the relationship between statements like these is often not linear, but circular. For example, if you hire a good sales person, they will help grow the business, not the other way round. Jack Daly refers to this as ‘the original sin of entrepreneurs’ i.e. the idea that ‘When I reach xxx level of sales, then I will hire a Sales Director.’ In fact, he says, it’s hiring the SD that will take you to that level of sales. Embracing this idea was a turnaround point in the growth of my previous business.

With circular causality, the relationship between the two original statements looks more like this:

A better term to describe this might be complementarity. It is an AND statement, rather than a THEN statement. One reinforces the other, with no distinct start or end point.

We find a similar relationship with what we do with companies. On the one hand, we help them to ‘think’ and about strategy and direction, and we help them with the ‘doing’ – execution. However, in order to improve the strategy, you need to move forward with execution, one reinforces the other.

These ideas tie in with two concepts that Jim Collins often talks and writes about:

  • The power of the AND. Life is often not black and white, situations are not either this or that, but more often this AND that. For example ‘people are motived by a positive purpose in their lives’ and ‘teams are highly motivated by incentives and money’. They sound like they could be either/or statements, but they are in fact AND statements.
  • The flywheel. At first, running a business takes so much energy to make any progress. Then, with each incremental improvement (e.g. new customer, team member, system/process, or improvement in financial standing) the system starts to move ever quicker, it gains momentum, and ends up pushing you forward.

Combining the concept of strategy for growth and the flywheel can take us to a most interesting model which is where the strategy of the business is itself a self-reinforcing flywheel. Take this great example about Amazon, shared by Jim Collins:  https://www.youtube.com/watch?v=W9yPOFxD44o

So where did that leave the team looking to set HC targets? In this case, they did set HC as a target for the sales teams. They took the view that each person and each team they added would drive revenue generating capacity over the medium term for the business, which would drive growth.

Interested to talk through any of these ideas?
Get in touch @ andy@scalecoach.co.uk

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