1. Managing Rapid Growth Venture Planning Chapter 17 Dowling Fall 2005

2. Managing Rapid Growth Stages of company growth Stages of company growth R&D Stage R&D Stage Startup Stage Startup Stage Early-growth Stage Early-growth Stage Maturity Stage Maturity Stage Stability Stage Stability Stage Note: Few firms experience such smooth, linear stages of growth. Note: Few firms experience such smooth, linear stages of growth.

3. Managing Rapid Growth Core management modes (by company size) Core management modes (by company size) Doing Doing <$3 million, <30 employees <$3 million, <30 employees Managing Managing $3-$10 million, 30-75 employees $3-$10 million, 30-75 employees Managing managers Managing managers >$10 million, >75 employees >$10 million, >75 employees

4. Managing Rapid Growth

9. The problem in rate of growth The problem in rate of growth Pressures & Demands Rate of Growth

10. Managing Rapid Growth Issues faced in rapid-growth situations: Opportunity overload Opportunity overload Abundance of capital Abundance of capital Misalignment of cash burn & collection Misalignment of cash burn & collection Decision-making Decision-making Surprises Surprises

11. Managing Rapid Growth Industry turbulence Industry turbulence Rapidly growing firms wrestle with: Rapidly growing firms wrestle with: Fast-growing industries Fast-growing industries Many new entrants Many new entrants Competing products/services Competing products/services Substitutes Substitutes Fluctuating prices Fluctuating prices Rapid shifts in cost and experience curves Rapid shifts in cost and experience curves

12. Managing Rapid Growth Culture and organizational climate Culture and organizational climate Climate of organization can have significant impact on performance Climate of organization can have significant impact on performance Climate is created both by the expectations people bring to organization and the practices/attitudes of key managers Climate is created both by the expectations people bring to organization and the practices/attitudes of key managers An entrepreneur’s style and priorities – particularly, how he or she manages tasks and people – is well known by the people being managed and affects performance An entrepreneur’s style and priorities – particularly, how he or she manages tasks and people – is well known by the people being managed and affects performance

13. Managing Rapid Growth Approaches to management Approaches to management Leadership Leadership Consensus building Consensus building Communication Communication Encouragement Encouragement Trust Trust Development Development

14. Managing Rapid Growth

15. Key points, Chapter 17 Key points, Chapter 17 Demands of rapid growth have led to invention of new paradigms by entrepreneurs Demands of rapid growth have led to invention of new paradigms by entrepreneurs The entrepreneurial organization today is flatter, faster, more flexible and responsive, and copes readily with ambiguity and change The entrepreneurial organization today is flatter, faster, more flexible and responsive, and copes readily with ambiguity and change Entrepreneurs in high-growth firms distinguish themselves with leading entrepreneurial practices in marketing, finance, management and planning Entrepreneurs in high-growth firms distinguish themselves with leading entrepreneurial practices in marketing, finance, management and planning

16. Managing Rapid Growth Key points, Chapter 17 Key points, Chapter 17 As high-potential firms “grow up big,” they experience stages, each with its own special challenges and crises, which are compounded the faster the growth. As high-potential firms “grow up big,” they experience stages, each with its own special challenges and crises, which are compounded the faster the growth. Establishing a culture and climate conducive to entrepreneurship is a core task for the venture. Establishing a culture and climate conducive to entrepreneurship is a core task for the venture.