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Managing Growth Phase

Dr. Harris Turino

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Agenda

Growth Phase of CompanyLook inside the internal of organization

Growth and Innovation Growth and Diversification

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Part I:

Growth Phase of Company

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Introduction

Growth is the biggest challenge for company.

When company grow, many parties enjoy

prosperity. In the same time, company also faces

higher complexity than before.o More employees to be supervisedo More and various problems to be managedo More formalization reduce flexibility

o More competitive forces, etc.

In the certain level, this complexity triggers muchproblems that influence crisis.

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Existence Survival Success Take-off

ResourceMaturity

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Phase I: Existence

Start-up business that establishes through entrepreneurscreativity in identifying opportunity.

Organization Structure : Simple, informal Management Style : Direct supervision, individual

Formalization : Nonexistent minimal

Focus:o Make and sell productso Get more customers (market penetration)

Challenge:o how to get enough customers and expand sales broadero how to generate enough money to cover cash demand

Crisis : LEADERSHIP

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Phase II: Survival

Young business that grow through direction

Organization Structure : More functional Management Style : Supervised supervision, central Formalization : Minimal

Focus:o Efficiency of operationo Build competitive position

Challenge:o how to generate enough cash to break even in the short-run (and

economic of scale)o how to generate enough cash to stay in in the business, and

finance future growth

Crisis :AUTONOMY

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Phase III: Success

Completely business entity that grow through delegation

Organization Structure : Functional, more decentralized Management Style : Functional delegation Formalization : Basic and developing

Focus:o Market expansiono Product development

Challenge:o Disengagement of owner (delegate to professional), or head for

growtho How to get resources to achieve faster growth

Crisis : CONTROL

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Phase IV: Take-Off

Corporation that grow through coordination among SBUs.

Organization Structure : Divisional and decentralized Management Style : Watchdog Formalization : Many and maturing

Focus:o Consolidate the organizationo Product development

Challenge:o How to grow rapidly and how to finance ito How to overcome owners power syndrome

Crisis : RED TAPE (BUREAUCRACY)

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Phase V: Resource Maturity

Corporate entrepreneur that grow through collaboration.

Organization Structure : Divisional, with team-based,matrix, and flatter.

Management Style : Participative, mutual adjust.

Formalization : Extensive Focus:

o Problem solving and innovation

Challenge:o How to consolidate and control the financial gain brought on by

rapid growth.o How to retain the advantage of small size (flexible and

entrepreneurial spirit)

Crisis : ??? (psychological saturation)

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Existence Survival Success Take-off

ResourceMaturity

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Success in Every Phase

Growth has two faces: prosperity and pain (crisis).

Solution for every crisis triggers the next crisis, andthreaten the company existence.

Not every company can follow the growth phase linearly.

Some companies fail to continue to the next phase (fail toovercome crisis).

They could be:o Back to the previous phaseo Sell to other investorso Bankrupt (fold the operation)

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Thank You