As organisations grow, inevitably systems and processes are needed to keep things efficient and to scale up. In some companies, organisational growth can be slow and progressive over many years with processes evolving naturally, which can result in the development of good, steady systems. In other companies the rate of growth is far higher, fuelled by the demands of financial backers, VCs and the stock market. For the luckiest companies it’s based on the demands of their customers. For these ambitious souls the relentless pressure to grow year on year, quarter on quarter, even month on month can be intense.
One well-trodden path to growth is through acquisition. Well funded growth organisations can quickly find that once the low hanging fruit and the ripe deals have been plucked from the orchard of their market, they are better off looking at their neighbours crops to keep the hungry funders happy. And so they acquire competitors, collaborators, suppliers and buyers are all fair game. There’s an immediate boost to top-line revenue. Perhaps a greater share of the market, and the fiery breath of the investment dragons recedes for a month or two. It’s a well-worn path to growth and for good reason. The capitalist approach favours a well-executed acquisition strategy.
As anyone who has been merged with, acquired or been acquired will know, the hard work in a new partnership really begins once the ink on the contract is dry. Aside from cultural fit (a complete study in its own right), lingering resentments and the challenges of viewing yesterday’s deadliest foe or subservient supplier as your new best friend, there are many more pitfalls facing the newly composite company.
Firstly, the number of people involved increases. Even if there are plans for efficiencies from the acquisition, these will take time and often will hit the lowest levels of the organisation first. Within management there will be an exponential increase in the number of interactions, decisions and thus decision-makers. New political dynamics come into play. New power bases are formed and allies can be made, but so too can new areas of distrust. Clarity on exactly who makes what decisions is often the last thing to be determined when two companies merge. If you’re lucky it may be clear at the highest levels, but within the increased number of foot soldiers, it’s often left to natural selection to decide where the power lies.
So our growing organisation can find itself with a rapid growth in people who wish to hoard power. The net result of this is that the salesperson who once was master of her domain and decisions (or at least had direct access to the old king) now has many masters, and they don’t all have the same objectives.
Where once she could construct a deal on her own, or with quick reference to the founder, she now finds herself caught in the organisational quicksand that mysteriously appears as a company expands.
Now there are finance directors and their juniors to appease, product managers, service delivery managers, contracts and legal teams get involved on the bigger deals that shes surely tasked with chasing. Depending on the exact business of the organisation there may be many, many, many more.
The larger the firm gets, the harder it becomes to do business. As the cast of extras in the deal making process grow, it can become a case of decision by committee, which is a phrase every experienced salesperson learns to dread.
Deal cycles lengthen, which frustrates customers and account managers alike, and the momentum, which is critical for larger deals, can easily be lost. Even in smaller deals, a delay in responding can introduce uncertainty into the customers mind, and provides a window of opportunity for competitors to slip in to the customers buying process.
During any delay theres always a risk that something fundamental changes in the customers world. A new quarter’s results can change the landscape. A corporate re-organisation or the resignation of a key player can knock a deal off the rails. Even when nothing obvious changes, it’s really easy for a customer to go cool on a deal as other pressures mount. Nature abhors a vacuum, and so does a deal something will rush in to the fill the space left by a slow response to a customer.
For the very largest organisations the deal making process can become achingly slow. There are some industries where this is accepted and a global brand or reputation for excellence can carry out business despite this. However, in the ever connected, instant gratification 21st century world in which we live, even the largest organisations are coming under intense pressure to be as responsive as possible.
As an organisation grows larger organically or through acquisition, it is sailing hard into this headwind. If left unchecked it will grow worse with time, and worse with growth, and the business impacts can be severe.
When I speak to sales managers I hear tales of revenue being left on the table as their salespeople and channels are unable to respond to a customers need in time because they cant get decisions and approvals made effectively.
If any of this resonates with you and you want to explore how you can streamline your sales processes to get out of the quicksand, please get in touch. We’ve got the experience to help.
“The Challenges of Organisational Growth” is written by Walpole Partnerships MD, Andy Pieroux.
