Unlock and Scale: The Power of Organizational Structure and Management Systems in SMEs

Greetings, entrepreneurs and business leaders. 

Do you find yourself bogged down by recurring challenges like a lack of time, talent issues, or cash flow struggles? You're not alone. Today, I want to share the story of Megan, CEO of TechEase, who employed a transformative strategy to turn her business around.

Megan is the vibrant and ambitious CEO of "TechEase," a tech startup that had seen fast initial growth but now finds itself stalling. Despite putting in long hours and constantly chasing revenue opportunities, Megan feels stuck. She feels she alone is trying to move the needle in spite of the fact that, she has a full-fledged team in place. It often gets frustrating when senior people come to seek even the smallest approvals. It is as if they do not have any ability to think for themselves. Their service delivery teams seem more interested in racking up frequent flyer miles and loyalty points rather than helping their clients with their problems.  

The Turning Point: Embracing the Need for Change

Megan’s optimism hit rock bottom when a crucial deal, one she had been nurturing for months, collapsed. This wasn't just a revenue setback; it was an indicator that the foundational strategies and routines that initially got TechEase off the ground were now the very elements holding it back. This triggered a soul-searching period for Megan. 

Sitting in her office late at night, Megan realizes that what got her company to its current state won't get it to the next level. She needs a change.  She has to make a decision: either continue spiraling downward or pivot her approach drastically.

Megan took some time away from daily operations to introspect. She decides to reach out to her old friend, Bruce Willis. Bruce Willis, a veteran of helping SMEs and mid-size companies to scale, has been a great support and mentor for Megan over the years. 

Upon introspection, Bruce realizes that Megan is facing the classic SME bottleneck which prevents them from scaling up. He narrows down the issues faced by Megan down to the following challenges that are familiar to many entrepreneurs:

• Lack of time
• Talent challenges
• Cash flow dilemmas
• Revenue dependence on the founder
• Business stagnation

All in all, Megan seems to be carrying the responsibility of the entire company on her shoulders. 

Rings a bell, doesn't it?

The Epiphany: Identifying Focus Areas

Bruce conducts a discovery exercise based on data, organization structure, team feedback, and a SWOT analysis. The findings from the analysis pointed to a few facts. Megan was a visionary leader and this fact was well recognized by the industry as well as their customers and strategic partners. Megan had been trying out new ideas and ways of doing business over the past several years but they were not working. She had tried to give more responsibility to a few high-potential employees but to no avail. Employees seem to be constantly bickering and pointing fingers at each other. New employees who come with fresh ideas find it difficult to adapt to the culture of the company and end up leaving sooner rather than later. There are written processes, policies, and procedures, but the staff members openly flout them. And the list goes on. 

Bruce realizes that there are several issues related to performance that need to be addressed. He runs an assessment on a business strategy model called PROMISE. 

Bruce meets up with Megan and discusses the findings and recommendations. Megan realizes that a significant part of her business pains stems from an ineffective organizational structure. With her team stretched thin and reporting protocols unclear, it's no wonder tasks are falling through the cracks. Her conclusion was unequivocal. The most urgent changes were needed in these two key areas: Organizational Structure and Leadership ("O"), and the Management Operating System ("M").

Organizational Structure and Leadership (O)

While it would be painful in the initial days, based on Bruce’s advice, Megan decides to bite the bullet. Recognizing that she couldn't pilot this transformation alone, Megan takes a bold step. She hires Emily, a seasoned COO with an impeccable track record in scaling businesses. Emily’s arrival means Megan can finally turn her attention away from daily firefighting and toward long-term strategy, solving the persistent issue of time scarcity. With Emily handling the day-to-day business operations, Megan now has time to focus on growth and strategy, alleviating her time constraints considerably.

As for the rest of the organization, Megan and Emily get to work immediately, dissecting the existing hierarchy and chain of command. They redefine roles within the company, creating a hierarchy that fosters efficient communication and transparency. They eliminate redundant roles, redefine job descriptions, and set up a flatter organizational structure that encourages team collaboration. New reporting lines are clarified, leading to improved accountability. Megan also invests in leadership training programs, nurturing her current team into capable managers. By empowering her team leaders, the struggle with talent is partly mitigated. She finally feels like she has a team that can win, not just participate.

Management Operating System (M)

The new structure is a step in the right direction, but Megan knows that to have a lasting impact, she needs a robust Management Operating System.

Megan and Emily sit down to design a streamlined workflow system that aligns with their strategic objectives. They adopt a performance management tool that allows them to track KPIs in real time. By doing so, they can better manage cash flow and revenue generation, as the system automatically flags any performance anomalies that could lead to financial issues.

Concurrently, they launched an initiative to set up a robust Management Operating System. They incorporate performance management metrics that are tied to both short-term tasks and long-term objectives. They also integrate an ERP platform to centralize data and unify all aspects of operations—from sales and marketing to HR and finance.

Emily also oversees the implementation of an ERP system for SMEs to integrate all business operations. From finance to HR, all departments now operate cohesively. This systemization enables the company to scale, addressing the problem of business stagnation.

Instituting change is just half the battle; making it stick is the other. Megan and Emily introduce a rhythm of accountability into the system. Weekly scorecards are generated, focused on key performance indicators (KPIs). Every quarter, the leadership team holds strategy reviews to assess their progress, make course corrections, and realign with organizational goals. This helps keep everyone focused and aligned, making the business more self-sustaining and reducing Megan's need to chase revenues personally.

The Results: Where Practicality Meets Strategy

Within the first three months, TechEase saw a 25% bump in revenue. Improved cash flow allows Megan to invest in additional growth initiatives and reduce dependence on external financing.

Boost in Employee Engagement

More significant than the revenue increase is the palpable change in team dynamics. Employee engagement levels soar as team members find their roles more meaningful and are clearly aligned with the company's renewed objectives.

Achieving Scalability and Self-Sustainability

The most impactful transformation, however, is in Megan herself. She transitions from a micromanager firefighting daily crises to a strategic leader, guiding her business toward a new horizon of scalability and self-sustainability.

Epilogue

Megan sits in her modern, yet cozy, office, looking over the city's skyline. She can't help but smile. Her company, TechEase, has finally evolved from a chaotic startup into a scalable, self-sustaining business. She's proud of the company she's built and optimistic about its future. She reflects on the journey and how the PROMISE model made her business scalable and self-sustaining. Megan knows this is just the beginning, but for the first time in a long while, she's excited, not anxious, about the future.

Your Turn to Act

Are you an SME owner and finding it challenging to scale? Are you ready to stop running in circles and start building a business that doesn't just depend on you? Feel like you're at a crossroads similar to Megan's? 

Then it’s time to take action. Commit to organizational and operational changes that will transform your business from a struggling startup to a scalable enterprise. Our high-performance solution, based on the PROMISE model, could be exactly what you need to turn your business around.

Introducing PROMISE

If you find yourself in Megan’s shoes and are grappling with similar challenges, then Fifth Chrome's PROMISE framework can offer a holistic solution. While Megan focused on the "O" and "M" components, the complete PROMISE framework offers a full-spectrum approach to achieving business excellence.

Why PROMISE?

PROMISE is a business strategy framework that helps companies create high-performance businesses. It is based on seven key factors that have the most impact on business performance:

• People and Professional Development
• Rewards and Recognition
• Organizational Structure and Leadership
• Management Operating System
• Innovation and Critical Thinking
• Strategic Future and Strategic Capabilities
• Employee Experience

Your future self will thank you for taking a holistic approach that not only solves immediate concerns but sets the stage for sustained growth and scalability.

Don't make decisions in the dark; illuminate your path to success with Fifth Chrome's PROMISE model. Contact us today to learn more.

This article was published originally as a blog on the Fifth Chrome website