Joel Peterson on how to survive growth

In Entrepreneurial Leadership, Joel Peterson focuses on leaders who “demonstrate a particular mind-set and an approach to problem-solving. They are change agents. They are intentional, staying true to their vision and agenda rather than only reacting to day-to-day turbulence…I’ve come to recognize the mind-sets, instincts, and maps [i.e. pathways to success] that differentiate entrepreneurial leaders from other kinds of leaders.”

In one of the chapters, he shares his thoughts about how to survive growth. He cites Larry Greiner who conducted what is widely considered to be the classic study of organizational growth. Cick here to learn more. These are the five stages:

Phase 1: creative expansion leads to a leadership crisis.
Phase 2: directional expansion leads to a crisis of autonomy.
Phase 3: expansion through delegation leads to a crisis of control.
Phase 4: expansion through coordination leads to a crisis of red tape.
Phase 5: expansion through collaboration seeks to overcome the barrier of red tape through adopting a more flexible and versatile matrix structure.

Here are Peterson’s thoughts about how to survive growth, each accompanied by a comment of mine:

1. Create specific rules for sunsetting unfocused initiatives. The right analytics should be able to tell  (in Don Schlitz’s words) “when to hold ’em, when to fold ’em, when to walk away, and when to run.” Also, the problem may be one of alignment rather than focus.

2. Anticipate margin compression. Make certain you know exactly what your customers value most…and least. Also, see my first point.

3. Think systematically and holistically. Your organization’s infrastructure must enable it to expand and contract, like a Slinky.

4. Make sure you have access to cash. Differentiate investments from costs and prioritize each group. Determine cycles of  payables and receivables with meticulous care. You may need more or less cash than you think.

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Joel Peterson is the chairman of JetBlue Airways and the founding partner of Peterson Partners, a Salt Lake City-based investment management firm. Entrepreneurial Leadership:The Art of Launching New Ventures, Inspiring Others, and Running Stuff was published by HarperCollins Leadership (April 2020).



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