The Flame

The Flame Situation

The Flame: Sales slowing down, profitability is decliningSales are continuing to increase but profits do not follow the same steep upward trend. The organisation is slowly outgrowing your capabilities. Time is wasted on meetings: same issues are discussed and no definite solutions agreed. You are finding it difficult to delegate. You are impatient and hungry for success: you want to continue to grow and restructure at the same time. No time for structure and processes. You hire a replacement, a ‘Professional’ Manager. How successful has this been?

 

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▼ The Flame Problems

The team starts rumours and you waste a lot of energy on this. The team agrees that the new person does not fit in. They do not follow his lead and the new structures he/she has put in place. Everybody continues to report to you. Reward systems are ad-hoc. You are concerned about employee morale so you offer stock options to most trusted employees. If they leave they will take the ‘company memory’ with them. This makes them indispensable and gives them a lot of political power.

You implement new technology but still do not have access to relevant information for quality decisions making. At this point you will:
(i) either hire another person, but this time someone who is more “like you” or
(ii) abdicate and let the directors run the company.

If you have gone for (i), you ultimately realise that the newly hired professional manager is not organising and engaging the team, as they are too busy doing what you would do! This is because you need someone who complements your leadership style.
If you have opted for (ii), you eventually find out that they are spending too much in the name of controls and systems. This happens due the absence of systematised decision-making due to the lack of task-based structures and institutionalised systems of governance.

 

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▼ The Flame Consequences

In scenario (i), timing is crucial. Ideally, excessive pressures force the wrong style of leadership for a newly hired professional. If you have not created an effective administrative system and institutionalised the management leadership, the company will remain stuck and unable to move to the next level.

If like in scenario (ii) you abdicate or are squeezed out. Talented employees leave the company as the company has now become too inflexible or political. Ultimately, this will drive the business to a premature aging as it loses its vision and driving force. Profit might go up for some time, but sales will eventually start declining.

If the key conflicts are not resolved, your organisation might find itself in a pre-mature aging, led by a lack of entrepreneurial spirit and reduced effectiveness.

Why is the transition from Sparks to Flame so difficult? Because of 3 key challenges:

1. Decentralisation of authority
2. Change in leadership from Entrepreneurship to Professional Management
3. Fundamental shift in the goals that drive performance.

To solve these challenges, the optimal solution is to resolve the differences and work together. Intervention by an external party is often needed.

 

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▼ How can we help?: The Flame solutions

Finance:

  • Implement effective Financial Control.
  • Set up Financial and Information Systems to aid informed decision-making and create visibility and transparency that supports profitability.
  • Individual and company Performance Measurement linked to company objectives and priorities.
  • Set up KPI system to provide insight into the past and future performance.
  • Design and document Financial Processes, Policies and Procedures that align with the structure.
  • Institutionalise and align the Finance function with other key and long-term functions such as Marketing, R&D and HR.
  • Cash Acceleration Strategies – shorten the cash conversion cycle, eliminate mistakes and improve your business model and P&L.

Human Resources:

  • Set up and implement employee Reward System that incentivises the right behaviours and motivates, aligned to the core values and the company purpose with focus on quality and profitability.
  • Strengthen your leadership team by hiring leaders with competencies that complement the existing ones to enhance the capability of your organisation.
  • Employee Engagement.
  • Talent Acquisition and Management.
  • Systemise the Incentive System and Performance Measurement to strengthen the core value and the purpose of your organisation.
  • Employee and Leadership Succession Planning.
  • Help you build high performance teams by creating a culture where your employees can quantify if they have had a good day or not.
  • Eliminate the power of old employees by capturing their ‘company memory’.
  • Coach the new leaders for an effective transition of leadership with the goal of enabling the business to run without its founder.
  • Help the ‘Professional’ Manager integrate successfully with the organisation and create positive PR with the leadership team.

Operations:

  • Optimise Systematisation and Flexibility capturing vision and the entrepreneurial spirit.
  • Align Process Design with Organisational Structure to match the needs of the business.
  • Set up and implement Systems and Controls, including effective Quality Managements System.
  • Implement Accountability Reporting, financial and non-financial aligned with the responsibilities of the new structure.
  • Institutionalise Integrating Functions such as Business Development, Hiring key staff, New Product Development and Marketing to free the organisation from the old leader.

 

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Organisation:

  • Create effective Administrative System throughout the organisation that optimises control and flexibility.
  • Develop Support System for transitioning the role from the existing leader to the new ‘Professional’ Manager.
  • Help the new ‘Professional’ Manager drive the transition of management by intuition to management by thoughtfulness.
  • Help you capture the vision & its driving force and align the teams to your core values and purpose to eliminate politics and inflexibility and institutionalise the leadership management.
  • Create resilience and business continuity by documenting the “company memory” from the old employees: that is document important processes, procedures and policies.
  • Help the organisation become independent from its Founder by creating an infrastructure and systems to enable delegation and scaling up, as well as integrating all functions and recruiting winning teams.
  • Design and implement a new structure centred on Integrating Functions rather than people to support the business expansion.
  • Governance: help the leadership team define roles, responsibilities and decision-making authorities for the Board, the old leader and the new ‘Professional’ Manager.
  • Build and maintain an efficient Information System so that issues can be resolves quickly and the decisions made effectively.

IT Operations

  • Creating a secure, scalable and agile IT Infrastructure to support current and future growth. Identify, procure and implement Enterprise Management System to aid the creation of Accountability Management Systems as one of the business drivers.

 

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