What is it and How can we prevent it?
Companies are our founded to satisfy the dreams and desires of people. Someone or few people decide one day that a business is a great idea. They start slow, with a vision, a shared set of goals and destination. The business continues a steady trajectory towards the goal has it grows in sales and in size. Soon the few founders must hire another person to help with managing the business growth. All the time the shared vision and goal is communicated between the small team members and newer members of the company. As the company continues to grow, they add more and more people to the rank and file and soon they must have directors and vice presidents and perhaps business unit presidents. Now, the vision begins to get a bit distorted as the newer members believe they know and understand the vision and desire of the company. These very intelligent leaders begin to direct their respective business departments in the direction they understand the company needs to go. Soon the direction becomes not so clear, they understanding is fragmented, the communication is less through and not as personal, there is just simply not enough time or people to complete all the tasks needed. The answer, hire more people, more human resources, more operations, more supply chain, more business development. All these great, educated, and experienced people are driving the business in the proper direction, or at least they firmly believe so. Things are being done, new products are being developed, sales are being pursued, production is building products, raw material are being procured, lean initiatives are being pursued, by looking in every department one would think the business is growing. However, sales are growing, inventory is increasing, sales are flat to down, the company as a whole has reached a plateau.
At some point, the misaligned direction from all the diverse business segments, begin to become more and more disconnected. The epicenter or core business direction is no longer the same by all the leaders. Much like lining up 15 people and whispering a short story to the first allowing each to pass it on until it the last person repeats the story they just heard. This is then compared to the story which was originally read to the first person, the disparity can and is, usually very broad.
At some point the business reaches a pinnacle and we typically see among other things, people being let go from high level positions, to the gap between the epicenter and the reality becomes too broad to be self-supporting. At this point, the business seems to lose momentum, lost sales, service drops, and the business implodes to some lesser point. For example, if sales were at $500m or $100,00, sales may drop or remain flat. The hope is that when this does happen the company can be caught prior to hitting a point of no return and the company goes out of business and the founders and leaders wonder what happened.
So, what did happen and what can be done to stop it before it happens?
We lost alignment, strategic alignment is critical right? So how do we get things back on track? Lets start by looking at some basics...
Sales and Operations Planning? Strategic Planning? Stratrgic Alignment is critical.