Five Key Steps for Managing Business Growth in a Volatile Environment
Jan 24, 2019
Think back to before 2007. Managing a small business was different then. You probably knew what “normal” was in your business and in your market; but, today, that comforting sense of normalcy has disappeared for many small business owners.
Small and medium-sized businesses are reporting more uncertainty and volatility in their markets. This is putting extra pressure on their ability to manage, because many are dealing with the challenges of growth at the same time.
In “ordinary” growth situations, standard management practices are effective. There is some challenge with actually applying these practices to each situation, but planning, communication, and accountability can be applied close to how the textbook describes them.
There are two situations that many small businesses face today when the standard growth “playbook” doesn’t work: rapid growth and growth in a volatile environment. Both are actually a variation on the underlying theme of managing uncertainty. In rapid growth, the volatility is created inside the company; in a volatile market environment, the uncertainty comes from outside.
The good news is there are steps leaders can take to manage more effectively when faced with growth and volatility.
Practice “Good Enough” Management
The reality of an uncertain environment is that you cannot use standard management practices. The uncertainty will overwhelm and undermine them, and the gap between the results you expected and the ones you actually get will create problems, mostly because your expectations are too high.
The solution is to lower your expectations, especially about how much progress your team will make and how well things will be managed. The point isn’t to throw in the management towel because of the uncertainty—it is to think realistically so you can manage based on reality, not hope and desire. If you manage based on hope or desire, you will eventually be forced to throw in the towel because that method won’t work.
As you lower your expectations, you should also redouble your focus on making progress—however messy and incomplete—on a smaller number of key issues. Progress, not perfection, is the goal, and your focus on progress should not waver even as you lower your expectations for what that progress will be.
Tighten Your Planning Horizon
I like a good long-term mission and vision as well as any other business owner, but in an uncertain environment, the planning focus needs to shorten up. Every strategic planning session we do for clients has a mix of long-term, medium-term, and short-term discussions. In a stable environment, the need for short-term coordination is less substantial and more time can and should be spent on the question of “where are we going” long-term.
In a volatile environment, short-term coordination and prioritization take precedent and need to be addressed before longer-term issues get attention.
When that happens, you should still spend five to 10 minutes reviewing the mission and vision in your planning meetings (the need to give attention to all horizons never goes away completely) and then spend the rest of the meeting on short-term issues.
Keep the Dialogue Going
There can be a tendency for leaders to go into “command” mode when things get uncertain. That works if the uncertainty is relatively simple and short-term, impacting tactical actions. In that case, a command from someone who better sees the bigger picture can be effective.
However, if the volatility is broad, multifaceted, or sustained, the only way for a team to deal with the complexity is to have robust and ongoing discussion. At times, that will mean it takes longer to make a decision. However, by going slow to go fast, a leader will make better decisions and have a team better equipped to carry out the decision quickly once it is made.
Often times, volatile environments also require that a team have more frequent discussions. For example, a company that used to rely on a monthly two-hour planning meeting can change to a weekly 15-minute “stand-up” and a monthly one-hour meeting to manage the uncertainty the company is facing.
Highlight Weaknesses and Blind Spots
Conventional wisdom says it’s best for us to focus on our strengths. Leaders must realize, though, that that wisdom applies to individuals, not teams. If you are the leader of a team of any size or scope, that conventional wisdom will hurt you, especially in a volatile environment.
Unless a team is small or narrowly focused, it needs to take a balanced approach. To do that, a leader should add emphasis on the team’s blind spots and weaknesses. This approach gives leaders a more complete perspective to understand their problems and a more complete toolkit to solve them.
Note that I said “add emphasis on” blind spots and weaknesses. The point isn’t to focus on them but to acknowledge them and intentionally counterbalance them. How? By bringing outside perspectives into your meetings and discussions. If you are in charge of marketing, have someone from operations sit in on your meetings once a month. Or, if you have a shoot-from-the-hip style, meet for lunch every other week with someone who is more process-oriented.
Plan for Contingencies…or Rapid Response
Things never go as planned, especially in a volatile environment. Some leaders are naturally inclined to want to plan for contingencies. Others will want to wait until a problem rears up before dealing with it. I have seen both work—if managed properly. The important thing is for a leader to pick one style or the other and follow through on it.
Most small businesses do not have the time, expertise, or resources to do extensive contingency planning; yet, it’s still possible to do it. Contingency planning for small businesses involves identifying the top three to six risks and deciding how the business will monitor those risks. Then, the planning focus is on ensuring that the business has the ability to recognize a few key problems as early as possible.
Many small business owners are more comfortable with a “rapid response” approach to handling problems. That approach is effective as long as the leader guides the team to acknowledge and agree that it will kick into “rapid response” mode when a problem comes and set ahead of time the general expectations for how the team will handle rapid responses.
The worst situation is when a business does not do contingency planning and has not had general planning discussions about its rapid response. That combination is likely to force a team into an environment in which one crisis follows another, and the leader never gains control of the situation.
If you put these five steps together, you get a general sense for what it’s like to manage growth in a volatile environment. You have more frequent discussions about a smaller number of issues so you can spend more time coordinating short-term issues and making sure your team can effectively act on the few “big-picture” issues you do address. All of this results in some progress, but not as much as you’d ordinarily expect.
If you’re in a small business and that doesn’t sound familiar, get ready, because it will. It’s what you should expect if you’re managing growth in today’s uncertain environment.
If your business is in a volatile environment, growth may seem improbable. Learn how to transform your personal growth to find true value with this free AMA webcast.