At the beginning, everything is fluid. In the Entrepreneurial stage, the business is small, flat, and fast-moving. Employees wear multiple hats, supervision is minimal, and there's a strong focus on innovation and the core product or service. Sound familiar? Think of today’s start-ups where teams are small, everyone is involved in everything, and the energy is electric. There’s a lot of freedom and trust as people are passionate about the mission.

 

The challenge? Lack of formal leadership. Without a clear leader as the organisation grows, things can quickly become chaotic. At some point, it becomes clear that informal structures aren’t enough, and leadership must step in to create focus and direction.

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Problem: In this early stage, businesses are small, flexible, and informal, with employees handling multiple roles. However, a lack of formal leadership can lead to disorganisation and chaos as the company grows.

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Solution: As the business expands, it’s crucial to establish clear leadership. A strong, focused leader is needed to maintain direction and manage growing complexity.

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As the business expands, so does its need for structure, and this marks the Collectivity stage. At this point, leadership emerges, and goals become more defined. There’s still room for creativity, but it’s within clearer boundaries. Teams and divisions begin to form, and employees start to specialise in more focused roles. Communication is still fairly open and informal, which helps maintain flexibility during this growth phase.

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However, growth presents new issues. The business may become too large for one person to manage effectively. Enter middle management. Leaders delegate responsibilities, creating teams with their own managers, allowing upper leadership to oversee multiple parts of the organisation without being spread too thin.

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Problem: In this early stage, businesses are small, flexible, and informal, with employees handling multiple roles. However, a lack of formal leadership roles can lead to disorganisation and chaos as the company grows.

 

Solution: As the business expands, it’s crucial to establish clear leadership. A strong, focused leader is needed to maintain direction and manage growing complexity.

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The Formalisation stage is where the business becomes a "real" corporation. Systems and processes are formalised, layers of management are added, and communication becomes more structured. This is the corporate phase: rules, regulations, and set procedures. There’s stability, but innovation can suffer. Employees now work within strict departmental boundaries, and the once open communication turns hierarchical.

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Problem: With growth comes structure. Layers of management, formal communication channels, and strict processes can lead to bureaucracy and stifle innovation. Employees become confined to their departments, slowing decision-making.

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Solution: While formalisation is necessary for stability, keep an eye on efficiency. Encourage cross-departmental collaboration and streamline decision-making to prevent the organisation from becoming too rigid.