To what degree is your business dysfunctional? How do you fix it?
How fixing a dysfunctional team led them to quadruple their profits, double their revenues and create the foundation for a very successful sale of the business.
By Phil Ives
3 minute read
To what degree is your business dysfunctional?
I seem to offend CEOs when I pose this question – as the question obviously assumes that they are dysfunctional at least to some degree. And it’s most likely true. I have very rarely met a highly functional business.
Yet the somewhat defensive answer I usually get is “well, I think we’re pretty functional…”.
On the conversation goes, and, when I ask about what frustrations exist, I more often than not hear about people not stepping up; not taking responsibility; lacking accountability; blame games; lack of decision making; recurring issues; increasing stress levels; worsening culture; bottlenecking; dwindling margin; inefficiencies; lack of trust… I could go on!
All these frustrations are frequently symptoms of a lack of functionality in a business. They’re not only common, but, I would argue, typical.
The fact of the matter is that, as a business scales, complexity grows exponentially. Two people share two lines of communication. Add a third, and now we have 3 lines. Add a fourth and we jump to twenty-four! And on it goes…
If functionality doesn’t keep pace (for which read functional structure; clarity of roles and ownership; decision making process; task allocation etc), you’ll quickly end up with escalating degrees of dysfunction. Often these go unaddressed for lengthy periods of time – or not at all. Let’s face it, the majority of entrepreneurs and founders don’t leap out of bed in the morning to spend the day working on systems, structures, processes et al.
When we support businesses to get serious about their functionality, we start with getting a true understanding of where clear ownership does/doesn’t exist in relation to the SAND model. This model breaks business functions down into four key business areas. When we do this exercise, we expect to find over-dependency on certain individuals and/or duplication (i.e. lack of real accountability) and/or gaps. Forcing clarity on all these quickly drives a whole new level of clarity, efficiency and effectiveness.
Using the SAND framework, a client in the US also calculated where all the senior team’s time was going, and established that they completely lacked a level of activity in relation to their strategic priorities. Recutting where their time went led them to quadruple their profits within a year, more than double their revenues within eighteen months, and ultimately created the foundation for a very successful sale of the business three years later.
So I wonder if all the functional responsibilities in your business are truly clear and owned? And do your colleagues know where they are actually spending their time, and do their activities correlate with what needs doing? If not, your business is almost certainly dysfunctional…