Let (Controlled) Chaos Reign

“Strategic inflection points are not a phenomenon of the high-tech industry, nor are they something that happens to the other guy.” Strategic inflection points come in all shapes and sizes, but the big ones that often go by unnoticed result in ‘10X’ Changes.

Unfortunately, sometimes it takes a blowup to make us realize that we have gone through a strategic inflection point / major change and are often it is noticed too late. Given the gradual nature of these changes, which over time add up to a very large change, the old rules of business will often no longer work. New rules prevail will prevail, and they will be powerful enough to force a company and its management team into actions that cost fatal amounts.

Speaking from personal experience, I can vouch for this framework. When I went through a significant inflection point in a prior consulting business (4yrs old, 7-fig revs, 50 staff/contractors, bootstrapped), the trouble was not only did we realize that the rules had changed, we also didn’t know what rules we now had to abide by. Everything we were doing no longer seemed to be enough.

As Andrew Grove (Founder & Chairman of Intel) describes in his book Only the Paranoid Survive, that “what happens to us in the course of this event is something that happens to many businesses. All businesses operate by some set of unstated rules and sometimes these rules change — often in very significant ways. If there is no flashing sign that heralds these rule changes. They creep up on you as they crept up on us, without warning.”

Grove expands on the theory with a spot on analogy of navigating a sailboat. “It’s like sailing a boat when the wind shifts on you but for some reason, maybe because you are down below, you don’t even sense that the wind has changed until the boat suddenly heals over. What worked before doesn’t work anymore; you need to steer the boat in a different direction quickly before you are in trouble, yet you have to get a feel of the new direction and the strength of the wind before you can hope to right the boat and set a new course. And the tough part is that it is exactly at times like this that hard and definitive actions are required.”

It is in the nature of an entrepreneur to be optimistic, and often passion clouds the judgment of whether the optimism is too high when contemplating future outcomes, so it is not uncommon for inexperienced managers to believe that this may not happen to them because they will do things differently. However, such phenomena are very common.

Businesses are about creating change for other businesses. Competition is about creating change; technology is about creating change. The appearance and disappearance of regulations cause further changes. Sometimes these changes affect only a company, and other times they affect the entire industry. So “the ability to recognize that the winds have shifted into take appropriate action before you wreck your boat is crucial to the future of any enterprise.”

But sheltering yourself from any and all possible storms is not the solution here — in fact, it would actually be a detriment to the business by causing it to stagnate. Experienced teams with operational efficiency and infrastructure offerings (Big 4 management consulting firms or even smaller firms like Baxter & Brunello) help management teams proactively instill the protocols for weathering the inevitable storms. The greater in advance that these systems are set up, the greater the chances of survival will be, because we all need to expose ourselves to the winds of change. We need to expose ourselves to our customers, both the ones who are staying with us as well as those that we may lose by sticking to the past. We need to expose ourselves to lower level employees, who, when encouraged, will tell us a lot that we need to know.

And arguably most importantly, we must invite comments even from people whose job it is to constantly evaluate and critique us. A team like Baxter & Brunello — one that is comprised of people who have both successfully navigated boats through storms as well as sunk boats in storms — is critical to any growing enterprise, especially before the storm is on the radar.

What such a transition does to a business is profound, and how the business manages this transition determines its future. “Resolution comes through experimentation. Only stepping out of the old ruts will bring new insights.”

‍