In this article, I’ll lay out why a growing business will almost inevitably experience chaos. I want to show you how you can actively manage and use the three coordinating mechanisms
- Standardization and
- Informal communication
to get in control of your company and end this chaos.
What are coordinating mechanisms
Entrepreneurs set out to build a team to help pursue the goals he or she is after. Building a product, selling a service or solving a problem, etc.
Now, this team with an important shared mission, also called an organization, needs to coordinate the work that is necessary in order to achieve success.
Consider this coordination as the answers to the following questions:
- What needs to be done?
- How do we do it?
- Who does it?
- When or how often do we do it?
- How do we arrive at a solution if we disagree or face a new problem?
- And many more
The overall need for coordination is defined by how often you need to ask one of these questions.
On a fundamental level, there are three major mechanisms that deliver answers to these questions.
The first mechanism is formal Hierarchy. It describes who makes decisions in the company, who assigns tasks to whom, and decides whether work performed meets the expectation.
Think about your team members: If you tell them what to do or how to do something, you’re employing the mechanism of formal hierarchy.
The second coordinating mechanism is Standardization. When you standardize a task or resource allocation, you define a predetermined way of how to do things. Examples include
- Standard operating procedures
- Processes documentation and policies
- Standing meetings around defined topics
- Predefined decision-making logic
- Forms and workflows
- Canned responses in customer support
- Many more…
Another component of this coordinating mechanism is automation. If you automate tasks, you eliminate the need to coordinate them. (You will however, still have to monitor and manage the automation)
The third coordinating mechanism is informal communication. It includes everything that your team does organically to solve problems, allocate tasks or resources and to perform work.
Think of it as your marketing person having a quick catch up with account management to get some fast input for a new campaign.
Or as your R&D team sitting together to solve a complex task.
For more information regarding employees engagement, please read our previous blog post on Tips to keep employees engaged.
The different stages of growth
Every company goes through different times and stages of growth that will have a different distribution of coordinating mechanisms.
Also, this is never the same for any two companies, but is very much an expression of the company culture.
So next, let’s look at what the coordinating mechanisms can look like in different phases of a business.
This phase is often characterized by a high degree of informal communication and low levels of hierarchy and standardization.
The early team and people in the company solve problems together. Everybody figures stuff out as they go. Usually, there’s not a strong hierarchy (however there are startups with a highly hierarchical founder that calls the shots).
In this phase, standardization doesn’t exist and isn’t necessary: Most problems are new, so you can’t have a catalog of processes to rely upon.
Depending on how good culture and informal communication is, we often see this phase last anywhere up to 10 – 30 employees.
There’s a fluid transition into the next phase.
The Growth phase is characterized by an increased demand for coordination.
As the company grows, tasks need to be allocated to more people and more players need to be involved to solve problems.
Also, the type of issues and challenges usually gets more complex.
If the existing coordinating mechanisms don’t evolve simultaneously, there will be a gap that’s not covered by any of the coordination mechanisms: Chaos.
Coordination and problem-solving is not effective anymore, things “fall through the cracks”, the leadership team is often overworked to fire-fight and morale goes down.
Now on the way to a mature business, you need to deliberately increase the capacity for the coordinating mechanisms. You’ll do this based on the culture and what you want the company to be like.
A possible scenario, like in the picture, would be to increase Standardization and Hierarchy.
This means, you might start to set up process documentation, provide an onboarding plan for new hires and some workflows, maybe even automated.
At the same time, you will create a more sophisticated org structure, giving team members responsibilities over functions (sales) or divisions (product line a).
For more information regarding organizational structure, please read our previous blog post on how to develop your organizational structure.
And you might also work on informal communication. Engage team building activities, implement a new and capable chat app, set up random meetings for people to get to know each other etc.
The point is: Especially if your business grows quickly, the coordinating mechanisms won’t expand at the same speed automatically.
You have to actively manage to get the areas of hierarchy, standardization and informal communication right.
That’s the simple way to end chaos in the company.
I didn’t say it was easy.
What’s your experience with coordinating mechanisms and chaos during growth?|
Let us know in the comment section below!