The owner's potential to execute specific staff responsibilities and their capacity to supervise, manage, and lead people is now critical to its success—a small but significant change.
FREMONT, CA: One of the most interesting lessons and insights obtained from decades of working with independent business owners is how firms evolve and grow through time; the business life cycle.
The four basic levels of the business life cycle are owner/operator, owner/manager, management organization, and leadership organization.
As a firm grows, the owner/operator is naturally the driving force behind all elements of the organization. S/he is in charge of sales, marketing, production, financing, customer support, equipment maintenance, logistics, delivery, etc. As a result, the owner-operator is the absolute finest the firm offers at each of these things.
As the company expands, it begins to move to the next level. The owner/manager now begins to assemble a small team of experts. Depending on the organization's demands, this could be the company's first outside salesperson, a full-charge bookkeeper, or a production supervisor. Although the owner remains very hands-on, some of the operational responsibility is delegated to staff experts who are direct reports to the owner, who now assumes management responsibility for overseeing their work, growth, and development. The owner's ability to execute specific staff responsibilities and their capacity to supervise, manage, and lead people is now critical to the company's success—a small but significant change.
Growth continues and frequently leads to the next level of management. Structure, processes, and procedures are implemented over time. Directors, managers, and vice presidents set up and lead functional departments responsible for sales, marketing, finance, production, and other aspects of the organization. The owner's position changes substantially in this situation. This is reflected in their title, which varies from "owner" to "president" and "CEO" over time. Performing staff job is no longer practical or even essential. Rather, they must be skilled at bringing together a diverse set of specialists to form a coherent management team.
The CEO is responsible and accountable for this group's individual and collective development, a significant determinant of organizational success. The CEO will be responsible for a separate set of duties for which they may have received little or no official training or preparation. While they understand what drives the business from an operational standpoint (which is valuable), this new role comes with its own set of obstacles and stress.
The leadership organization is the fourth level of
organizational development. A special emphasis is placed on developing supervisory and managerial abilities. In addition, the importance of leadership development and succession planning is underlined. The senior team takes on two roles: one for their primary area or department, and the other to actively participate in strategy creation and execution. As a result, aspirational leadership organizations outperform their competitors and exceed industry norms significantly.
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