All insights Leadership 8 min read

Translated from the Vietnamese original

In medicine, growing pains are the leg aches children feel during growth spurts. In business, the term describes the problems that appear when internal capacity can’t keep pace with commercial growth. Internal capacity here means financial strength, people’s skills, organizational culture, and the processes and systems behind operations and management.

When growing pains appear

Every business moves through stages: launch, growth, shake-out, maturity and decline. Each stage has its own pains, but the ones that matter most come in the growth and shake-out stages. A business that gets through these two can grow steadily in the stages that follow.

In the growth stage, hiring needs rise but recruiting is hard because pay and the employer brand are still weak. One person wears many hats, there is almost no middle management, turnover is high, and the organization’s know-how walks out the door with the people who leave.

In the shake-out stage, revenue still grows but more slowly, as the market saturates or competitors arrive. Profit may fall as costs rise. This is also when major changes in the team tend to happen, sometimes at founder and executive level.

Ten warning signs

If your business shows many of the signs below, internal capacity is probably falling behind revenue:

1. There isn’t enough time in the day to get everything done.
2. Too much time goes into handling emergencies.
3. People don’t know what others are working on.
4. People don’t understand where the company is heading.
5. The organization has too few good managers.
6. Many people feel that if they want it done right, they have to do it themselves.
7. Most people feel meetings are a waste of time.
8. Plans are made but rarely followed up, so they don’t get done.
9. Some people have started to feel insecure about their place in the company.
10. Sales keep growing, but profit doesn’t.

Three areas of pain and their causes

Growing pains rarely sit in one place. We group them into three areas, each with its own symptoms and causes:

1. Strategy and business modelSymptoms: no clear growth drivers; growth that burns resources such as overtime and rising ad spend; key metrics out of step, such as revenue rising without a matching rise in profit. Causes: usually a business chosen without the capabilities to win in it, or a model that needs heavy resources to scale while capturing little value.
2. Operating modelSymptoms: incidents multiplying with growth; conflict between teams over who is responsible for what; long training times for new staff; shortages of finance, tools and technology. Causes: usually too little attention to designing the operating model and documenting processes and know-how; operations disconnected from strategy; or processes that exist but aren’t followed.
3. Management and cultureSymptoms: decisions made beyond people’s authority, or the opposite, responsibility passed around; personal conflict between teams, sometimes between the founders themselves; people serving their own interests. Causes: usually too little investment in governance and culture, inconsistent implementation, or the wrong management metrics.

The leader can be part of the cause

How the person at the top leads has a direct effect on whether a business suffers in management and culture. We often see three profiles:

1. The absent leaderDelegates everything, rarely appears in the business, and lets approvals drag on. This fits no stage of a company, and suits an investor better than an operator.
2. The helicopter leaderHovers low and watches everything the team does. That can be necessary when the business is small, but it becomes a bottleneck once the business needs specialization and systems.
3. The liberating leaderHires and empowers strong specialists while keeping the overall view of strategy, plans, governance and culture, and balances running the business with changing it. Thanks to solid systems, this leader isn’t tied to the business, yet is ready to step back in when the market turns.

So solving growing pains has to start with the leader’s own awareness. Some leaders don’t see the problem until it is too late, or believe everything is fine because they have little contact with the business and the teams on the ground. Like a person’s health, a business needs regular check-ups.

Three common responses

Once they see the problem, many leaders reach for one or more of these:

1. Ignore it or put it offThe problem is known but deferred, because today’s work always feels more urgent.
2. Hand it to someone elseResponsibility goes to one person inside or outside the organization, who usually lacks the full picture, the influence and the support needed to fix the root cause.
3. Rely on a toolSoftware gets rolled out. Tools only support; they fix surface-level, fragmented problems and don’t reach the root cause.

Three ways forward

From our experience building and running businesses, we group the answers into three directions, one for each area of pain:

1. Choose the right direction for growthThe right strategy and business model come first. Growth from the core, meaning what the business already does well, usually succeeds more often than leaps far from the comfort zone. Alongside business as usual, a company needs a portfolio of initiatives to create new growth drivers.
2. Fit the right capability piecesThe leader is the one who arranges resources. Start by defining the capabilities the next stage requires, then decide whether to build, buy or partner, and attract people at the right level. Capability needs change over time, so today’s organization is rarely enough for tomorrow.
3. Let governance and culture keep the rhythm instead of the leaderA business runs smoothly when people are aligned on four things: goals, scope of work, metrics and culture. Then the leader no longer has to be present for every decision.

Growing pains are not all bad news

A business that isn’t growing rarely gets to feel these pains. The pressure of growth pushes a company to be more creative, raise quality and streamline its processes. What matters is to notice early, name the area of pain correctly, and treat the root cause rather than just taking painkillers.

Drawn from Weraki’s workshop “Growing pains in startups and SMEs”, presented at the BNI 15th Anniversary Summit, 9 March 2024.