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5 stages of business that the c-suite must understand

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Over the past year, I’ve had the opportunity to meet with hundreds of retailers and CP companies. I’ve experienced excitement, fear, depression, opportunity, and hope for the digital teams and individuals I have spoken to and worked with.

Why specifically the digital teams? In my experience, if you want to understand the overall health of an organization, speak with their emerging or future teams – the ones tasked with future growth.

If the avant-garde of the organization, whose function is to think and see ahead, has trouble culturally fitting into a machine that has been operating a certain way for many years, they experience a disconnect. They have a tough time accomplishing their goals and being successful. This is a great indicator that the organization is in trouble as a whole.

Businesses have needs, too, you know: A new linear growth model

Consider, for a moment businesses as organisms. Its current state of mental or physical health depends upon the healthy and efficient function within the collective whole. The organization must be able to act and react to its environment.

Like any organism, businesses have needs, too. In Maslow’s Hierarchy of Needs, those are broken down into three levels—Basic Needs, Psychological Needs, and Self-fulfillment Needs—with each level containing two floors, so to speak.

At the bottom of the pyramid we find the most basic needs: physiological (food, water, warmth, rest, etc.). Once those are met, the organism turns to other, “higher” needs, like safety and security.

Ascending to Psychological Needs, we seek to satisfy “Belongingness and love needs” with intimate relationships, friends, etc., before moving higher yet to “Esteem needs” like attaining prestige and feelings of accomplishment.

At the peak is “Self-fulfillment needs” which involves achieving one’s full potential. If we apply this concept of development to businesses and break them down, a clearer vision begins to emerge. 

The 5 stages of business: Hierarchy of organizational needs

After several conversations with digital and other cross-functional teams over the past year, the same struggles have emerged, leading me to believe that businesses also have a hierarchy of five basic needs.

Stage one: Financial security

This first goal is rather straightforward: Achieve and maintain overall financial security of the organization. If employees don’t feel confident that there is any level of financial security, you’re not going to accomplish much. If you don’t have money to invest into the business, people aren’t going to invest the time.

Many retailers and companies are really struggling with this organizationally, and it’s tough to get out of this particular foundational component. Struggling financially means other needs and goals aren’t as relevant. Although I believe a linear growth model to be built precept-upon-precept, that’s not to say that other, more advanced goals are impossible to achieve – they’re just harder to do right if that preceding block in the overall pyramid is not established.

Financial security is a very basic need, yet many companies want to hatch grand, long-term plans and spend time and money pursuing the fun and “sexy” side projects. Meanwhile, they sacrifice their most immediate and pressing short-term need of making money. You can’t R & D the future if your runway doesn’t reach the R.

Stage two: Executive alignment: Vision, direction, company culture

Executive alignment (or misalignment) around a vision also breeds company culture, for better or worse. 

Without executive alignment, the organization operates in isolated silos. Digital teams working on their own initiatives are left to develop on their own, and consequently don’t align with whatever the rest of the organization might be working on.

Meanwhile, individuals on digital teams will be incredibly frustrated, feeling they lack support, and every day becomes a battle. The struggle is real as they achieve minimal levels of success within their own world, and those successes are often at odds with other elements and parts of the organization.

For example, I was once responsible to an organization for the e-commerce channel. Oftentimes, the brick and mortar store managers – who were accountable for their individual stores – felt that e-commerce was cannibalizing sales.

E-commerce ran our own promotions, and if customers ordered online, we got credit for that sale. However, if they returned the item to the brick and mortar store, the return was counted against the store, while we retained credit for the purchase.

While we did well, others did poorly. E-commerce flourished as brick and mortar stores suffered. This caused no shortage of conflict. When the distribution chains worked against each other, the organization overall suffered because of this lack of executive alignment.

Stage three: Teams, talent, cross-functional relationships, role definition

Oftentimes, teams who have been able to surpass the second basic need and are operating in this third sector of the pyramid don’t know what they want.

They’re at odds cross-functionally. They’re bouncing around. They don’t have any of their own elements for their own realm and are world-defined.

These digital teams don’t know who they are, and because of this the organizations around them don’t know what they do.

This all boils down to the overall maturity of the individuals and the team. How much experience do the digital teams have? What talents do they have? What roles do these people fit in specifically? Have they simply graduated from some other role within the organization – whether merchandising or operational or I.T. – where they performed well, so they were thrown into digital?

If that’s the experience level of the digital team, it will be difficult to achieve whatever future growth is being thrust upon them. The overall emotional states and cross-functional relationships will be frenetic because nobody really knows what anybody is doing.

At this point, even the dynamics of generational differences can drive wedges between team members. And it really starts with those digital teams. It is incumbent upon them to define responsibilities because other roles in the organization are typically much more well-defined.

Simply put: Teams can’t be successful without people in the right roles for their experience and skill set.

Stage four: Success: Roadmaps, tools, 98% revenue

If you have the right team in place, roles defined, good executive alignment supporting them, and financial security, this is when organizations achieve what I consider success. Setting these organizations apart is their ability to build out roadmaps and succeed in those roadmaps. This is attained because they have the tools and/or the support needed.

I would define success as achieving 98% of the total potential revenue that your organization could recognize. And that will continue to grow exponentially year over year, not just because the consumer is shifting more toward digital, but also because you’re able to plan and leverage everything established and secured in the previous stages—financial security, executive alignment, the right teams in place to achieve those goals.

Stage five: 1-percenters, AI, machine learning, personal growth, special projects

Now the thing – the shiny object getting all the attention. Let’s talk about that.

From a personal perspective, this means achieving an apex of personal growth in self-fulfillment and self-actualization to reach one’s full potential. From a business perspective, the organization as a whole reaches its true potential. This is the next-level category. Now time and money can go toward innovation like AI and machine learning – the fun and exciting special projects.

While you can get here to a certain extent before addressing other needs, I don’t recommend it. Chasing level five before achieving the previous stages can become an exciting distraction or way to drown your sorrows.

Focusing time and effort on stage five while wallowing in stages two, three, and four can be self-detrimental to an organization. Chasing a small percentage of revenue that could be gleaned as opposed to the bigger opportunities already present do nothing to correct dysfunction within the organization.

Oftentimes, we will come to market with that silver bullet. “Oh, you know if you had AI or machine learning, my goodness, what you could do with that extra time, and how that could change your world.” When businesses feel the need to continually reinvent themselves to drive sales and revenues, it takes a lot of self-discipline to resist chasing the shiny objects instead of focusing on the necessary ones.

Ground zero: Self evaluation

So, where do we go from here? If you’re working for these organizations, start with self-evaluation. My challenge to you is to decide where you really fit in, and speak with your executives. Where are we going? What are we doing? Where do we feel we are, and what will it take for us to get to those higher levels?

If you’re an executive, or in the c-suite, take a look around. Talk to your teams. Be self-reflective and exercise strength of character so you can steward your organization in the right direction – toward real, consistent, and stable growth.

Ask employees if they feel supported in the right ways within your organization. Look at your emerging and digital teams and see how they are doing. Chances are, they are struggling. Figure out how much of that is real. Figure out what needs to be addressed at your level.

I assure you that employees will appreciate the tough conversations and you championing their success, which helps them in turn work functionally overall to achieve the organization’s ultimate success.

John McCoy
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12 shares
June 1, 2018
John McCoy

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