Case Study #1: 'Scaling but Failing' with Dave and Hannah

In this weeks case study we discuss the problems a company can run into with growing outside of their capacities. Often things can get lost in the movement and morale can diminish with no clear direction.

Dave and Hannah breakdown some quick fixes and point out possible identifiers on where your company should start first.

Have any scenarios you wish Hannah and Dave to discuss please email info@theevolvedifference.com

To watch the entire episode check out our Youtube channel here.

To find more information on The Five Facets and Evolve Leadership Consulting visit the link here or email us at info@theevolvedifference.com

Hosts: Dave Newell & Hannah Pniewski

Produced by: Dave Newell, Hannah Pniewski and Christopher Paul Smith

Edited by: Christopher Paul Smith

Coordination:  Loli Basualdo

Transcript

Dave Newell 0:00

It's literally the answer to the question, where are we going? And everybody is asking that question all the time. And so when I hear, you know, we've lost a sense of priority or or we have mixed priorities, I start thinking about, well, the clarity conversation is happening, but we're not, we're not concluding that conversation. We're just having it. So the people in the organization are saying, where are we going? And the leadership team is saying, to the left. Oh no, no, sorry, to the right. No, wait, behind us, maybe in front of us. I don't know. We're just wandering around. It's like, well, that's going to create chaos in your organization if you're not having that conversation cleanly, clearly, and making decisions at the clarity layer. We did it. We did it. We pressed the right buttons.

Hannah Pniewski 0:45

We pressed the right buttons. Welcome, Hannah. Happy spring. Welcome, Dave. Happy spring.

Dave Newell 0:51

Yeah, it's uh we are now the first flowers of the season uh have popped, and it's my favorite time of year. I love the spring.

Hannah Pniewski 1:01

Yeah, me too. Right before all the pollen snow sets in. Yeah, exactly. It's the best.

Dave Newell 1:08

Yeah, yeah. I will say the one thing. So I I grew born and raised in Minnesota, lived there for a long time. I now live in North Carolina. And one thing I miss is the smell of lilacs. We don't have it's my favorite smell in the world. It's the most beautiful smell. You have about a two-week window, and it's usually mid-May in Minnesota, but it is the most fragrant, beautiful. You just go for a walk and you can just smell it in the air, and it's lovely and it's beautiful, but we don't have them down here. Uh, and I I miss that part of spring. But to your point, in the south, there are so many flowers there. I just looked out the window. There are so many flowers, there are so many wonderful things. Uh and uh that's so much pollen, a sea of yellow, you'll put on your windshield wipers, and it's just yellow fluff flying all over the place. And I'm like, that if I I feel so bad for the people that have extreme allergies, I can't imagine.

Hannah Pniewski 2:04

I know, I know. It's so tough. But it is like once that big rain comes, too, once it all washes away, that is also really nice. Um, but yeah, I do love the springtime. We do in the south, though, we have the kutzu flowers, and those smell amazing. If you can find them, they smell wonderful and also honeysuckles. I love walking by some honeysuckles, that's really nice.

Dave Newell 2:24

Have you ever tasted a honeysuckle?

Hannah Pniewski 2:27

Oh my god, of course. When I was a kid, all the time. We thought we were such little, little rebels, like, oh yeah, we're eating the honeysuckles.

Dave Newell 2:35

Yeah, our kids love that as well.

Hannah Pniewski 2:37

Yeah, it's awesome. Well, listeners, thank you so much for tuning in. Here we go, season four. This is episode two. And today we have something very different for you. Uh, what I'm gonna do is I'm going to present a problem of a real business, and we are gonna break it down like we usually would as consultants.

Dave Newell 2:55

Ooh, fun challenge for the day. I like it.

Hannah Pniewski 2:58

Um, yeah. So, what I'm gonna do, Dave, is I'm gonna give you uh a use case, some info about kind of what's going wrong, and then uh what I think is like the true issue, and then we're just gonna play and pick it apart and ask questions and basically come up with like what would our plan of attack be?

Dave Newell 3:17

That's great. And just so we're all aware, I've never heard this before. I have no idea what you're gonna put in front of me.

unknown 3:23

Nope.

Dave Newell 3:24

This will be fun. I like it. Not at all. I like it.

Hannah Pniewski 3:26

All right, you ready?

Dave Newell 3:27

Yeah, yeah.

Hannah Pniewski 3:28

So here's the use case a 15 to 40 person service business that has recently grown really quickly, but now everything feels slower, messier, and even more frustrating than when it was smaller. So some things that are going wrong in particular, the leadership keeps changing priorities midstream. So they're working on a project and then they redirect to a different direction, keep changing you know, people's objectives and the things they're supposed to be doing. The teams are unclear of who decides what, like which leadership team members to go to for decisions. Processes do exist, but nobody really follows them. And everybody feels really busy, but the outcomes are all like really inconsistent. So it kind of feels like busy work that keeps changing directions, and they're not really sure who to turn to uh for direction and leadership. So that's the framing. Yeah. I think I'm just gonna let you sit with that first. So, what are you hearing? What are some questions you have? We'll go with that.

Dave Newell 4:36

First of all, this is super not relatable. I mean, pretty much everybody we work with has really clear priorities, super clear objectives, and the processes are documented and everybody follows it. So I'm just kidding. Of course, of course, this is super relatable. I mean, even at our in our own space at times. Honestly, the first the first question that came to my mind when you were talking about priorities is what are they shifting for or what are they shifting from? So if it's hey, we set a really clear sense of priority, we we knew what we were doing, and then we got to a certain size, and now we don't know what we're doing anymore. Is that because the goal was achieved, or we hit some sort of target, or we did a certain thing? My guess is that they kind of pushed the system that got them to that target as far as it could go, and they found the edges. And now that they've found the edges, they're starting to see all sorts of things fall apart. They've what we call the complexity threshold, they've kind of hit their complexity threshold, and now the leadership team is starting to scramble as opposed to be disciplined in setting the next stage and setting the next standard. That's my guess, but that's my first question.

Hannah Pniewski 5:47

Is what was the goal all along?

Dave Newell 5:50

Yeah, what are what are they what are they straying from a priority perspective? What are they why are they straying or what are they straying from? That'd be my first question.

Hannah Pniewski 5:59

It's a great question. It's a great question because this is a hypothetical. I'm gonna make something up.

Dave Newell 6:06

Okay, cool.

Hannah Pniewski 6:08

I'm gonna say the goal was to increase revenue. And so they knew that certain processes and systems and structures worked, monopolized on those, hit their revenue goals with this larger team. But to your point, now the wheels have fallen off and they have hit their complexity threshold. So the revenue goal was achieved, but they've sort of outgrown this like implicit operating system that they had going, but they haven't really like solidified the structures to survive this size now.

Dave Newell 6:45

Yeah, I I think that's uh a normal, a normal approach, right? We set a revenue target, let's say it's five million dollars just for an easy number. Yeah. They were at three and they did whatever it took to get to five. Right. And then it pushes that system to you start to make concessions or you start to work outside things, or the people that are really good at what they do, they push and they push and they push and they get to that number. And once that number is achieved, now we realize all the concessions and sacrifices we made for systems and structure and organization and the way we operate to the point where those things start breaking or falling apart, or urgency starts to take over. The other thing I would say that we see regularly is when you start to approach and you start to hit that target, you start to then find kind of shiny, interesting things that are happening outside, or you kind of go away from core business. What I mean by that is whatever that core main value driver that is like the thing that is going to make us money, we start to find alternative ways to bring in revenue. And we start to find, like, oh, maybe we should sell t-shirts, uh, or maybe we should, you know, add this like SaaS component, or oh, we could do this thing over here, uh, guilty as as well. Uh, we could add this thing over here, and what that does is it starts to water down the core value driver and it starts to add a level of complexity to the way you operate. And so when you have that level of complexity starting to show up, job descriptions get less clear, processes get a little bit messy, or they get so volumous that it gets hard to follow them because there's so many of them and they're different. We've seen a lot of organizations that have added, you know, their core business is a service-based business, and then they add a technology component, and then they add a retail component, or they add an e-commerce component, or they add a different service line. All of those are essentially different business models. They're essentially different ways of accounting, they're different ways of setting things up, they're different ways of pushing things. Anytime you add a full layer, it adds significant complexity to the way you operate, to the way you lead, to the way you even just look at data and make decisions.

Hannah Pniewski 8:58

Yeah, I mean, to your point about the process documents, even, which is just such a tangible thing to address. The process documents that they have documented, I would be curious if, yeah, if they have grown sort of in this kind of um Frankenstein way and added on a uh not so they are supposed to be a service business, but they've added on some kind of e-commerce, e-commerce arm? Well, the processes that you have, have you tried to re birth rewrite them for the e-commerce work? Have you duplicated them and then adapted them for e-commerce? And when you duplicated them, did you think keep it all together and did you simplify? Or did you get really prescriptive and really complicated? And so, you know, to the to the point that like nobody follows them anymore. How complex did your documents get to reflect the speed in which you moved? So the speed in which they moved, it sounds like they, to your point, like they grew and grew and grew, but they haven't gone back and sort of culled and cleaned and maintained like really nice solid systems because now the wheels are falling off. Another thing that I I would probably want to do with these guys is two exercises that we usually start with with our clients who experience stuff like this. Document the core process. So, like lay it all out, look for the issues. Where are things getting hard? Where are where in this flow are people not reading their process documents, aka not doing the thing the way they're supposed to be doing it? Where in this flow are they asking for decisions to be made? And those decisions are unclear, because that was one of the points was that the teams are unclear who decides what. Where in this flow are things supposed to be elevated and maybe they're not being elevated because there's some kind of bottleneck, or leadership isn't, I mean, to the other point about leadership changing priorities, I think people will often hide from leadership when the leadership is unclear or when they are getting mixed signals.

Dave Newell 10:53

So where is it's easier to hide when the leadership is unclear because what am I being held to account for? Yeah. What am I being too held to account to?

Hannah Pniewski 11:02

Yeah, exactly. So like laying that full core process out and analyzing it from all these different angles. So that's like one of the first things I would do. And then I would do the same thing with the what we call the core role chart. So laying out everybody in the business and what is their core role? What is the thing that they are supposed to be primarily responsible for? And where are the wheels falling off for each of these people? Are you ready to accelerate your business's growth? Or are you just tired of putting out fires day in and day out and ready to see your business finally find its stride? After 10 years of working with clients, we designed the five facets of business framework to streamline your operations and enhance efficiency by aligning the culture, strategy, operations, story, and finances of your business. Discover how to transform your challenges into opportunities by taking our business velocity assessment available on our website at theEvolved Difference.com. Want to talk to someone instead? Visit our website to book a time with a member of our team. It's time to kick off your journey towards significant growth and sustained success. Because when your business is aligned, you can achieve business velocity. Now, back to the show.

Dave Newell 12:16

Yeah, I mean it's interesting. You you provided a really good case study. I mean, we could probably do this for another two hours if I'm being honest. But uh the maybe foundational component I'll come back to is we talk about there's three conversations that are happening in every organization all the time. It's the clarity layer, the alignment layer, and the execution layer. The clarity layer is where are we going? It's literally the answer to the question, where are we going? And everybody is asking that question all the time. And so when I hear, you know, we've lost a sense of priority or or we have mixed priorities, I start thinking about, well, the clarity conversation is happening, but we're not we're not concluding that conversation, we're just having it. So the people in the organization are saying, where are we going? And the leadership team is saying, to the left. Oh, no, no, sorry, to the right. No, wait, behind us, maybe in front of us. I don't know. We're just wandering around. It's like, well, that's going to create chaos in your organization if you're not having that conversation cleanly, clearly, and making decisions at the clarity layer. You started mentioning a little bit about the alignment layer. And there's kind of two layers to the alignment layer. There's the higher level strategy, which is what are those focused things? What are the priorities? What is the core business model? Like, what do we actually do from a value driver perspective? And are we committed to those things? And then the next layer down is, and what are the actions and the processes and the things that we do that then make those true? And then there's the execution layer, which is and who's doing what by when? That's that accountability and measurability and all those things that we talk about. What I heard in your example is all three of those conversations and those levels are taking place, and we have questions at all three of them, but the organization has lost sight of what the answers are to those conversations and those questions. And something we run into regularly, and I ask myself this sometimes, which is is it best to start at the clarity layer or is it best to start at the execution layer? It depends. My bias is almost always towards the clarity layer. If we don't know where we're going, how will we know when we get there? And there's merit and value to say, if you're on fire and things feel like they're burning down and we can't make decisions about anything, it's really difficult to create a vision and a high-level strategy because stuff's on fire.

Hannah Pniewski 14:28

Yeah, it's almost like you have to kind of first jump into the fire and put and like put out the fire in the kitchen so that at least you can cook and clean every day. And then, you know, put out the fire in the living room and then put out the fire in the bedrooms. Like, you know, you have to kind of like create a safe, I should maybe say not the fire, but like a renovation. We are renovating. Let's renovate the kitchen first so that we can use it as the rest of the renovation happens.

Dave Newell 14:52

Yeah. I mean, you know, I like using the analogy of you got to clean the house before you invite people over. Right. So there is merit to kind of a well, let's get clean. Let's identify what those some of those core processes are going to be and are they in service of where we're going? And let's identify the core value-driving processes and let's document those things. Okay, now that we've got the house back in order a little bit and we're not stressed and we're not putting out fires every day, we're not carrying around fire extinguishers. Can we now then say where are we going and what are we doing? So I don't think there's a right answer to that question of is it binary? Do we focus on clarity or do we focus on execution first? Sure. The answer is yes. Right? Like we actually have to be paying attention to all three of those conversations, and we have to address all three if we truly want to solve the issues in the organization.

Hannah Pniewski 15:45

So, my my next question for you. Uh, so listeners, our framework is called the five facets of business. When we talk to new clients, we analyze their business from the perspective of five different facets: operations, story, strategy, finance, and culture. So, Dave, my question for you is can you give me a little diagnosis of what you're hearing so far in each of those facets?

Dave Newell 16:12

On each of those facets, really quickly, the strategy has become unclear. I didn't hear much explicitly about the culture, but I would imagine the culture is the culture is heading more towards uh unspoken truces and more towards, hey, we'll tolerate stuff if we can get stuff out the door, as opposed to like a codified and followed culture. We like to borrow uh Seth Godin's definition of culture, which is people like us do things like this. I doubt they've lost sight of people like us, but I would imagine they've lost sight of do things like this. Right. Yeah, probably act in a certain way and we hold it. That's an assumption. You didn't explicitly state that, but that's usually a result of things feeling a little bit stressful. From an operations perspective, what I heard in there is we've lost sight of core business, core value drivers. And so what happens then is processes start to fade, role clarity starts to fade, who's doing what, uh, measurability starts to fade when we lose sight of that. So my immediate reaction, and based on what you said, is up the operations and strategy facets are starting to crumble a bit, which means you're going to see culture problems, and it means you're going to see financial problems eventually as those two things kind of fade up. I didn't hear anything about sales or marketing, so I'm not sure. Sounds like they're being pretty good because the revenue is there.

Hannah Pniewski 17:38

Yeah, for sure. No, it's it's uh all you know, right on point. I a couple of the things that I had written down, sort of in this use case. I mean, yeah, like unclear decision making in the strategy. Uh, you said it like the half-documented process that feels messy in operations, uh, like an erosion of trust in culture, like because people aren't sure who's making decisions, and also because leadership keeps changing their mind, people aren't trusting leadership to make decisions. And usually the people that I talk to at clients that are similar to this use case are the doers and the people that are actually doing the work day to day. And there is such an erosion of trust. If leadership keeps changing their mind left and right, people are just like, well, I just show up and do my job and I don't know, I don't know what they want to do. You know, I don't really have a lot of faith, you know, and then people start to look at the door. So there's an erosion of trust that happens. Um, and then the finance thing was that there might be some inefficiency hiding in their labor costs. So they've grown and they have all these people now that can sort of sustain the revenue goal that they've hit. But I bet you there's an efficiency in that because if they grew really fast, I promise you they didn't have very good onboarding. So that person probably doesn't know the full scope of their role. They probably, to your point about losing measurables, they probably don't have a really strong way of measuring utilization. So I think that could also play into the finance piece as well.

Dave Newell 19:03

Absolutely. Yeah, and I think there's so many questions and there's so many ways of interpreting it. I mean, the other, the other half of this is we've really been talking about it from a business operating structure perspective. Like what are the tools, what are the what are the ways that we would process and we would diagnose kind of the system side of that? The other half of this coin is always the behavioral side, which is well, and and what are the patterns and what are the kind of limiting beliefs of the leadership team or the people that are in the organization that are causing some of these or perpetuating some of these system challenges and what's the relationship between that? So I would definitely want to, if we were following our normal approach or process, we would ask a lot of questions, we would dive in, we try to discern, we try to get as much information as we can, and half of that coin would be and what's happening for you as a leadership team.

Hannah Pniewski 19:56

Yeah, I'm always so curious. Like, we usually do start talking to leadership teams first. So we hear their perspective on it. And then once we dig past it, sometimes you hear like, well, actually, it is, it's the leadership team. Like they think it's, you know, the doers. The doers are like, uh, nope, it's them. And then you got to find kind of like the truths in between and unite everybody back together.

Dave Newell 20:18

Yeah. Well, and I I think too, like the as we talk about clarity alignment execution, you know, these observations, these lessons learned, these things that folks are seeing often get seen on the front lines before they get seen at the leadership team level. Right. And as a leadership team, are we doing a good job of listening to the issues and listening to the challenge and seeing the things and hearing the things that the people that are, you know, getting crushed on the process side of it or are feeling overwhelmed or feeling disconnected from priorities? Are we listening to them? Do we understand what they're asking for when they say priorities feel messed up? Can you help me understand what we're what it is that we're trying to do? Like, are we listening to them? Are we under like are we actually then saying, Oh, there must be a clarity problem here? Because I feel clear, but they don't feel clear. So it doesn't matter if I feel clear, if they don't, then we have a disconnect there. Uh so we have to make sure that we're we're sharing that message effectively.

Hannah Pniewski 21:17

Yeah, absolutely. Well, listeners, if you or someone you know, if their business is experiencing a scaling problem, what I would call like a uh hitting the complexity threshold problem, we'd love to talk to them and also just send them this episode. Maybe it'll help them out, start to think about things a little differently. Um, check out our website. We also, if you're paying attention on um or listening in on uh YouTube, we'll have a few visuals for you to kind of again break down what the problem was and then also um the clarity alignment execution approach that we take. So uh come hop over on YouTube and watch our videos instead.

Dave Newell 21:56

Check it out. And I have to say a thank you to our audience. We had more downloads last week uh than we ever have before. So thanks all for who are tuning in and jumping in and and uh continuing to support the podcast and or spread the word. It doesn't go unnoticed or unappreciated. So thank you.

Hannah Pniewski 22:15

Yeah. And if you do have a real world experience that you are coming across in your business and you'd like to submit it to us to process through, please send it to us at info at the evolveddifference.com. We'll have that email in the show notes. We'd love to hear from you.

Dave Newell 22:34

Absolutely. By all means, real don't feel like you have to listen to this and hopefully we talk about the thing that you want to talk about or the thing that you want to actually address. By all means, share it with us. We're happy to bring in true use cases in real scenarios and just share some thoughts and insights. I think it's great.

Hannah Pniewski 22:54

Yep, we're gonna keep doing these use cases throughout the season. We'll have a couple of really awesome interviews uh with some really cool folks. So tune in and we'll see you next time.

Dave Newell 23:04

We'll see you next time.

Hannah Pniewski 23:07

Thank you for joining us on Business Velocity. Today's insights are just the beginning of enhancing your business's momentum. Don't forget to subscribe on Spotify, Apple Podcasts, or wherever you listen to podcasts. You can also explore our framework at the Evolve Difference.com. And remember the time is now to take these strategies and apply your learning and achieve velocity. See you next time.