How to avoid or resolve three organizational crises that can occur after start-up and early-growth phases

Founder's MentalityIn The Founder’s Mentality: How to Overcome the Predictable Crises of Growth, Chris Zook and James Allen identify and discuss three predictable crises that can result from growth.

Each of the three occurs at a different phase of an organization’s lifecycle. Here they are:

o “The first crisis, overload, refers to the internal dysfunction and loss of external momentum that management teams of young, fast-growing companies experience as they try to rapidly scale their businesses.”

o “The second crisis, stall-out, refers to the sudden slowdown that many successful companies suffer as their rapid growth gives rise to layers of organizational complexity and diluted the clear mission that once gave the company its function and energy.”

o “The third crisis, free fall, is the most existentially threatening. A company in free fall has completely stopped growing in its core market, and its business model, until recently the reason for its success, suddenly no longer seems viable.”

Look and Allen go on to observe, “These three crises represent the riskiest and most stressful periods for businesses that have made it successfully through their start-up and early-growth phases. The good news is these crises are predictable and avoidable. The killers of growth that these crises contain can be anticipated and even turned into a constructive reason for change.”

With regard to the book’s title: “The founder’s mentality constitutes a key source of competitive advantage for younger companies going up against larger, better endowed incumbents, and it consists of three main traits: an insurgent’s mission, an owner’s mindset, and an obsession with the front line.”

* * *

Chris Zook is a Partner in Bain & Company’s Amsterdam office and has been co-head of the Global Strategy Practice for the past 15 years. He specializes in helping companies find new sources of profitable growth. He is the author of five books with Harvard Business Review Press in the past ten years including his Repeatability: Build Enduring Businesses for a World of Constant Change, published in March 2012. Among his best-selling books are Profit from the Core: a Return to Growth in Turbulent Times (HBRP, January 2010), an updated edition of his 2001 book, Profit from the Core: Growth Strategy in an Era of Turbulence, Unstoppable: Finding Hidden Assets to Renew the Core and Fuel Profitable Growth (HBRP, May 2007) and Beyond the Core: Expand your Market without Abandoning Your Roots (HBRP, November 2004).

AllenJamesJames Allen is a partner in Bain & Company’s London office and a coleader of Bain’s Global Strategy practice. He has served a variety of leadership roles at Bain and is the founder of the Bain Founder’s Mentality 100, a global network of high-growth companies mostly led by their founders. Allen has more than twenty-five years of consulting experience and has worked extensively for global companies in consumer products, oil and gas, technology & telecommunications, healthcare and other industries. He has advised clients on the development of global growth strategies, emerging market entry strategies, and turnaround strategies.

If you read a better business book than this one in 2016, please let me know immediately.

Posted in

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.