Fast-growing entrepreneurial companies often face a daunting task of maintaining autonomy while continuously improving the structure and controlling mechanism. As business environment in and out side company is normally not clearly defined, a rigid structure and control system will limit the future of company. The answer is a good balance between a flexible control system that emphasizes cohesion and deliberate plan to grow trust.
Nothing is like being a part of a fast-growing entrepreneurial company, exciting, ambitious and still chaotic. Growing out the first period, there is a strong sense of satisfaction with empowerment, without which, the company would not be this successful. Many people, especially management still remember the days when everyone knows everyone else, did everything and still worked as one.
However, the company has changed with many new generations of people joining, management simply don't have visibility into everything anymore. Management team is challenged by the enormous amount of works and has to rely on trust to give autonomy to units. Without autonomy, the company runs the risk of limiting its future, or even slowing down and doom. Trust is difficult when there are many new people, and when most of the management are working in new capacity than they had been doing before.
On the other hand, management starts to be under pressure from new stakeholders to reduce the risk of losing control of the organization, which they are fully responsible for. Growing the company through the initial days, management often has fear that employing too much control will destroy "the magic" and hamper the growth. In other words, management often finds it difficult to make a compromise between trust and control. In fact, management has no choice, though, but combine these two seemingly contrary measures of reducing risks while managing a bigger complexity.
This post presents a set of recommendations to strike this balance. The measures pointed out below are applicable to the whole company or its autonomous unit. It is still worthwhile to note that application should varies with situation of the company/unit. If most of the people identify themselves well with company, there should be less control necessary. If people have low
commitment and there are high potential gains from deviant behavior, control is more important.
The measures proposed included a flexible and lean control system with deliberate trust growing plan. In addition, coordination, negotiation and monitoring are important to reduce the drawbacks of control and to avoid too much interference that harms trust building efforts.
Flexible Control System
Traditionally, companies immediately establish the formal structure with effort to define tasks, authorities and information flows. An issue with clearly-defined structure is silo thinking that reduces collaboration. A thorough exercise like this requires a lot of effort and a large part may not valid for long in a changing environment like in fast-growing entrepreneurial companies, anyway.
Managerial cybernetic sheds new light into the concept for structure,
that is a better fit for entrepreneurial company. It is stable relations that
allow people and other resources to operate
together as a totality define structure. The organisation's structure
is thus viewed as a network of stable 'real life' on-going
communications, or organisational processes, and not as static formal
reporting relations. Objects, such as communication devices or
information systems, thus constitute an organisation’s structure.
Fast-growing entrepreneurial companies should focus on understanding, establishing and modifying these stable
communication relationships, which happens directly by conversations or indirectly through
coordinate actions as an outcome of sharing a context or culture,
among its units and roles.
In addition, these companies should spend time together with their
units to define and agree on the coherence boundaries. These are
guidelines to make sure identity of the company, company's operational
direction and synergy with other units of
the same company are taken into consideration in unit's decision and
operations.
Fast-growing entrepreneurial companies also need to tune their incentive
system. The system should encourage collaboration, tight compensation to level of support
(e.g. service quality) to other parts of organization, or support
achievement of whole organization.
Leadership development and training are effective measures, though less often thought of as mechanisms to ensure compliance and coherence. These help enhance management community,
create sense of direction and involve key members from unit management to development of
strategy and policies.
Finally, these companies should also facilitate sharing with new
generations by reviewing resource allocation agreement more often, recognizing
contribution and seniority but emphasizing growth of the company or unit as
a whole.
Coordination, Negotiation and Monitoring
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