"The ability to foresee consequences before you act is the mark of the profound person." - Ralph H. Blum
Since the 1920’s, economics and business management professors have been teaching about the Stages of Growth. This model of business growth is based on the fact that all businesses experience common problems that arise at similar stages of development. Familiarity with this concept allows business owners to attain valuable insights into their organization to ensure that their business will not only continue to survive, but to thrive as well.
What Makes Stages of Growth Important to Franchisors?
According to Rebecca Monet, President of Proven Match, “Understanding a franchise system's Stage of Growth is a critical element relative to a Franchisor’s expansion.”
A number of business and management theorists have alluded to these developmental stages – and they have been the subject of considerable research. Some early practitioners include proponents of the Organizational Life Cycle, (OLC), the Greiner Curve and other models based on the work of James F. Moore or Haire’s Modern Organizational Theory.
For Monet, a behavioral scientist, the Stages of Business Growth made great sense for franchising. Monet set out to research and write algorithms that would accurately predict a companies stage of growth and assess individuals most likely to embrace and adapt to each of these stages. These algorithms have since proven successful in its application to franchising.
Kitchen Solvers -- a national franchising company that specializes in kitchen remodeling -- is just one example. Like many of us, Gerry Henley, General Manager of Kitchen Solvers, has seen great change throughout his industry as well as within his company in the last decade.
Fast Company: Kitchen Solvers
Kitchen Solvers initially focused on providing cabinet re-facing services to La Crosse, Wisconsin homeowners. As demand for cabinet re-facing and remodeling grew, the company expanded their service area to include all of Western Wisconsin.
In 1984, the Baldners established the first franchise division of Kitchen Solvers in Janesville. Soon thereafter, Kitchen Solvers grew internationally in 1999 with the opening of its first Canadian franchise in Ottawa, Ontario. Today, Kitchen Solvers has established itself as an industry leader in both cabinet re-facing and new cabinetry.
Henley learned about the 5 predictable stages of growth all companies go through at a webinar hosted by Proven Match. He quickly recognized that some of the challenges his company was dealing with could be attributed to “growing pains.”
The 5 Stages of Growth in a Nutshell
Basically, all companies pass through a recognizable life cycle -- or sequence of developmental stages -- from existence through maturity. The number of life cycle stages has been the subject of considerable debate over the years. While some analysts have delineated as many as ten different stages, others have consolidated the model into as little as three stages.
Says Monet, “Most models -- including the classic Harvard Business Review Study – support the view of the organizational life cycle as a period comprised of five stages.”
At Proven Match, the 5 Stages of Growth are as follows:
Stage 1: Entrepeneurial
Stage 2: Partnership
Stage 3: Systematic
Stage 4: Bureaucracy
Stage 5: Intrapenuerial
According to Monet, “Within each stage of growth, a franchisee’s motives and skill sets need to complement a franchisor’s strategic plans and market expansion strategies.” In other words, says Monet, “the Franchisor’s Stage of Growth and the Franchisee’s Stage of Life need to be aligned.”
The Moral to the Story
Fast-growing companies can often be chaotic and demanding. According to Henley, Kitchen Solvers – with its rapid expansion was certainly no exception. “As market share increased exponentially, our systems and needed to change to accommodate and support our growing number of franchisees.”
Mason Haire’s 1959 work Modern Organizational Theory is generally recognized as one of the first studies that used a biological model to illustrate business growth from a developmental standpoint. Essentially, it serves as a useful metaphor in terms of developing the framework outlining the 5 key stages of small business growth.
“Child development specialists will tell you that a child who skips crawling will face developmental challenges – and the same holds true of a company that forces growth or systemic changes before it’s ready,” says Monet.
Additionally, to sustain and grow a franchise system, there must be a clearly defined and interdependent relationship between the Franchisor and Franchisee. By analyzing the issues and growth patterns of small business, companies are able to take a step back and better assess the needs of the franchisee. Monet cites “The Greiner Curve” as it proves helpful in thinking about the common misconceptions that organizations face as they grow. “Systems and procedures must adapt to support an evolving business model, the needs of your franchisee as well as satisfy end-user demand.
Says Henley, “By understanding Stages of Growth, you can quickly grasp the root cause of the problems you are likely to experience in a fast-growing business. Furthermore, you can troubleshoot problems before they occur, so you can meet them head on.
Proven Match Stages of Growth algorithms are based on empirical research and allows companies to better prepare for the next growth transition, as well as ensure everyone is operating in tandem.
“The fundamental questions are centered on whether the franchisee’s life stage matches the franchisor’s stage of growth,” says Monet. “Are we compatible? If so, are we all on the same page? Sometimes it’s a case of diagnosing problems and matching solutions. In other instances, it’s a case of outgrowing a franchisee that is not able to adapt or keep up.”
Monet presents a compelling case for the business model. “The Stages of Growth helps franchisors to determine their stage of development to ensure a prosperous future.”
Crisis to Expect at Each Stage:
STAGE 1:
Since the 1920’s, economics and business management professors have been teaching about the Stages of Growth. This model of business growth is based on the fact that all businesses experience common problems that arise at similar stages of development. Familiarity with this concept allows business owners to attain valuable insights into their organization to ensure that their business will not only continue to survive, but to thrive as well.
What Makes Stages of Growth Important to Franchisors?
According to Rebecca Monet, President of Proven Match, “Understanding a franchise system's Stage of Growth is a critical element relative to a Franchisor’s expansion.”
A number of business and management theorists have alluded to these developmental stages – and they have been the subject of considerable research. Some early practitioners include proponents of the Organizational Life Cycle, (OLC), the Greiner Curve and other models based on the work of James F. Moore or Haire’s Modern Organizational Theory.
Regardless, by the 1970s and 1980s the model became an accepted reference as it pertained to overall organizational growth. But it wasn’t until Neil Churchill and Virginia Lewis’ 1983 article in Harvard Business Review that this concept garnered the attention of management consulting firms around the world including Arthur Andersen (now Accenture), Deloitte and McKinsey.
For Monet, a behavioral scientist, the Stages of Business Growth made great sense for franchising. Monet set out to research and write algorithms that would accurately predict a companies stage of growth and assess individuals most likely to embrace and adapt to each of these stages. These algorithms have since proven successful in its application to franchising.
Kitchen Solvers -- a national franchising company that specializes in kitchen remodeling -- is just one example. Like many of us, Gerry Henley, General Manager of Kitchen Solvers, has seen great change throughout his industry as well as within his company in the last decade.
Fast Company: Kitchen Solvers
Kitchen Solvers initially focused on providing cabinet re-facing services to La Crosse, Wisconsin homeowners. As demand for cabinet re-facing and remodeling grew, the company expanded their service area to include all of Western Wisconsin.
In 1984, the Baldners established the first franchise division of Kitchen Solvers in Janesville. Soon thereafter, Kitchen Solvers grew internationally in 1999 with the opening of its first Canadian franchise in Ottawa, Ontario. Today, Kitchen Solvers has established itself as an industry leader in both cabinet re-facing and new cabinetry.
Henley learned about the 5 predictable stages of growth all companies go through at a webinar hosted by Proven Match. He quickly recognized that some of the challenges his company was dealing with could be attributed to “growing pains.”
The 5 Stages of Growth in a Nutshell
Basically, all companies pass through a recognizable life cycle -- or sequence of developmental stages -- from existence through maturity. The number of life cycle stages has been the subject of considerable debate over the years. While some analysts have delineated as many as ten different stages, others have consolidated the model into as little as three stages.
Says Monet, “Most models -- including the classic Harvard Business Review Study – support the view of the organizational life cycle as a period comprised of five stages.”
At Proven Match, the 5 Stages of Growth are as follows:
Stage 1: Entrepeneurial
Stage 2: Partnership
Stage 3: Systematic
Stage 4: Bureaucracy
Stage 5: Intrapenuerial
According to Monet, “Within each stage of growth, a franchisee’s motives and skill sets need to complement a franchisor’s strategic plans and market expansion strategies.” In other words, says Monet, “the Franchisor’s Stage of Growth and the Franchisee’s Stage of Life need to be aligned.”
The Moral to the Story
Fast-growing companies can often be chaotic and demanding. According to Henley, Kitchen Solvers – with its rapid expansion was certainly no exception. “As market share increased exponentially, our systems and needed to change to accommodate and support our growing number of franchisees.”
Proven Match helped Gerry at Kitchen Solvers to identify what Stage of Growth they were in, and perhaps more importantly, better determine what the franchisee needed to succeed within that Stage of Growth. This allowed him to tackle the complex problem associated with systemizing the company.
A Useful MetaphorMason Haire’s 1959 work Modern Organizational Theory is generally recognized as one of the first studies that used a biological model to illustrate business growth from a developmental standpoint. Essentially, it serves as a useful metaphor in terms of developing the framework outlining the 5 key stages of small business growth.
“Child development specialists will tell you that a child who skips crawling will face developmental challenges – and the same holds true of a company that forces growth or systemic changes before it’s ready,” says Monet.
Additionally, to sustain and grow a franchise system, there must be a clearly defined and interdependent relationship between the Franchisor and Franchisee. By analyzing the issues and growth patterns of small business, companies are able to take a step back and better assess the needs of the franchisee. Monet cites “The Greiner Curve” as it proves helpful in thinking about the common misconceptions that organizations face as they grow. “Systems and procedures must adapt to support an evolving business model, the needs of your franchisee as well as satisfy end-user demand.
Says Henley, “By understanding Stages of Growth, you can quickly grasp the root cause of the problems you are likely to experience in a fast-growing business. Furthermore, you can troubleshoot problems before they occur, so you can meet them head on.
Proven Match Stages of Growth algorithms are based on empirical research and allows companies to better prepare for the next growth transition, as well as ensure everyone is operating in tandem.
“The fundamental questions are centered on whether the franchisee’s life stage matches the franchisor’s stage of growth,” says Monet. “Are we compatible? If so, are we all on the same page? Sometimes it’s a case of diagnosing problems and matching solutions. In other instances, it’s a case of outgrowing a franchisee that is not able to adapt or keep up.”
Monet presents a compelling case for the business model. “The Stages of Growth helps franchisors to determine their stage of development to ensure a prosperous future.”
Crisis to Expect at Each Stage:
STAGE 1:
- Limited resources and under staffed
- Support and training short
- Dynamic systems causing chaos and errors
- Overly liberal franchise agreements
- Franchisee resistance to change
- Reporting and royalty problems
- Franchisee validation issues
- Increased competition
- Franchisee retention problems
- Franchisee validation issues
- Increased litigation
- Increased costs due to franchisee demands
- Poor shareholder value and franchisor profitability
- Poor internal and franchisee-franchisor communications
- Disconnect from end-user
- Franchisee's loss of hunter instinct
- Many systemic changes
- Increased marketing and support costs
- Compliance and regulation issues
- Lack of agility and speed to market
Yes, these are very useful steps of Growth a franchise, but a Franchise Lawyer provides extra infromation with their knowledge and experience that is very beneficial to the franchise.
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