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What Growth Stage is your company in?

20 TO 29 EMPLOYEES: OPERATIONALIZE & CUSTOMER-CENTRIC

Excerpt from Cool Companies www.coolcompanies.ca
Content by Don Rumball. Interviews by Claudia Sammer.

Read PDF version that appeared in the Cool Companies industry guide [PDF] This version contains graphics and pictures.

TOP CHALLENGES IDENTIFIED BY CEOS
1. Hiring and retaining good employees.
2. Technology and its integration.
3. Operations

Operational focus
To maximize production efficiencies, CEOs begin to operationalize their business; they set up systems that avoid having to reinvent the wheel.

Marketing and products
Something unusual happens to a company with 20 to 29 employees. The CEOs get close to their customers again, and many adopt an extreme customer-centred focus. Taking their lead from existing customers, they concentrate everything they do on serving their existing customers. As customers request additional products, they expand the number of product lines and tailor their products to fit their customers’ needs. Financially, this might not be the best choice for the company. New product development slows. They continue to add product lines, though at a slower pace. The result is that their customer base starts to shrink because they are not trying to find new customers for the products they offer. This is the first time many companies take the plunge into exports. Most of them start with the U.S. Using up-to-date technology is very important in reaching efficiencies and there is often a big technology project in this stage.

HR
These CEOs are more realistic than they were in the last stage about what their employees can do for them. They continue to delegate more responsibility as they grow. Two-thirds of them have a formalized management structure with 2 layers of managers, and 3 managers reporting directly to the CEO. Most CEOs have regular review meetings with employees rather than setting goals or meeting when milestones are reached. They shift toward bonuses as a means of motivating employees and managers. CEOs start to appreciate management talent.

Financing, ownership and shareholders
The portion of CEOs with 100% ownership of their companies stays constant at 57%. In companies where the CEO does not own 100% of shares, there is a significant slow down (to 40% of the companies from 52%) in giving shares to employees as incentives because CEOs realize that with greater sales, the company starts to look more attractive to outside investors. Private investors are shareholders in 50% of the companies.

Planning
The percentage of CEOs with a written business plan continues to climb. 47% of companies have them now, compared to 38% in the first two stages. Only 19% of CEOs have long-term strategic plans. Manager participation and frequency of business plan review increases. Since CEOs take their advice mostly from customers, there is little need for strategic thinking.

Core competencies
As in the previous stage, CEOs believe the unique skills of their employees and flexibility to deliver highly customized service are their top competitive advantages; however, in this stage their order is reversed.

Company Profile: iDVR International
GRACE BABA, co-Founder, Vice-President and Administration Manager, iDVR International Inc. is a leading designer, manufacturer and supplier of digital video technologies for the security industry, 72 employees in Canada plus 39 employees overseas, 1,883 % growth in 3 years, bootstrapped, founded in 1990, BDC’s Young Entrepreneur Award for Ontario, one of Profit magazine’s 2007 fastest growing companies, i3dvr.com, based in Toronto, ON

SYSTEMS AND PROCEDURES
35 employees was a definite turning point for us. We had to implement new policies and have formalized policies versus informal ones that had worked when we were smaller and the communication was easier. Again past 50 (employees), we needed to hire more skilled people with management experience. We had gotten to a level where we decided we would rather hire people that have the experience already rather than learning how to do it ourselves.

(At 50 employees) is also when we started looking into getting our ISO registration, which is really a quality standard. It helped us continue our work in standardizing. {What did you standardize?} Reporting structures, standardization of forms, introducing new marketing materials and updating our website. . . . The image of our company was a key thing for us. We were coming to the table with some pretty big customers and it was important for us to portray the image that we could compete head-to-head with big security providers. So we needed to have marketing material that was the same if not better quality than those competitors.