What About Bob?
Bob’s Situation: The Facts
Bob owns a specialty contracting company. He has 30 employees and last year’s revenue was close to $8 million. His top line revenue has been growing between 10-15 percent annually with consistent profitability.
Bob has a problem, though: His company has had the same management team for roughly 20 years, and he’s outgrown them.
Before buying the business from the founder five years ago, Bob was a 7-year employee with the company. When Bob took ownership, he essentially left the existing management structure in place. The incumbent team was fine when the company revenues were $4 million and 90 percent of that income came from one service offering. Since then, however, the company has evolved.
Not only has revenue grown substantially, but also the company now has a second significant service offering. Additionally, this year, a large client presented Bob with an unexpected opportunity—to engage in a large contract that involves expanding what is now a minor “side hustle” for Bob’s contracting company. The new contract is worth $4 million annually and signing the deal would result in the side-hustle service generating more revenue in 2019 than either of the company’s primary service offerings.
The projected revenue breakdown would look like this:
Service Offering 1: $3.5M
Service Offering 2: $3.7M
Service Offering 3 (the expanded side-hustle): $4M
Miscellaneous Revenue: $800K
Service Offerings 1 and 2 are representative of the company’s core competencies, but neither one has a designated VP or leader overseeing it. Instead, cross-functional teams are assigned per project, and responsibilities and accountability fluctuate between different project managers. (This has worked well in the past, as the two project management team members, who are retiring this year, always worked well together.)
Service Offering 3, however, will require team members dedicated exclusively to managing that line of business. (This would be uncharted territory since no one person at the company—because of the founder’s ironclad grip on the business—has ever been in charge of any service offering.)
Bob has always been reluctant to make management team changes, so he has been “waiting out” for two key employees to retire later this year. He feels good about his new replacement hires, but he lacks confidence in the two remaining management team members, who view the two retirements as an opportunity to assume greater roles. Unfortunately, the two remaining managers do not work well together and have a history of conflict.
What Bob Must Do
On the surface, Bob’s situation appears to be about getting the right people in the right seats.
However, there’s more to it than that.
Yes, Bob needs to upgrade the caliber of talent in his organization. But on a deeper level, Bob must resolve the company’s fundamental structural problems of ineffective hierarchies and unclear organizational strategy.
Also, Bob will need to designate a dedicated leader for Service Offering 3. This will mean creating three separate divisions within the company—one for each service offering—and appoint a VP for each division.
Bob is unsure of how to accomplish this degree of organizational change. And so, he continues to wait to take action.
Food for Thought
If you were in Bob’s shoes, what steps would you take?
Leadership theory and organizational models are fantastic tools. And in the SMB space, consultants, coaches, and experts draw upon them heavily when making recommendations. Yet sometimes, multiple options complicate the decision-making process and lead to inaction. That failure to act will stall an organization’s progress. Therefore, leaders must have tactical solutions that they can implement immediately.
The scenario I’ve described in this post is based on a real-life situation faced by one of my clients. If, like Bob, you’re struggling with multi-faceted organizational challenges, let’s talk. I would love to help you move your company forward.