What is a tipping point and how does it apply to business growth?
Malcolm Gladwell, in his book, “The Tipping Point: How Little Things Can Make a Big Difference,” describes the tipping point as “the moment of critical mass, the threshold, the boiling point.” Gladwell describes examples of this such as, “Ideas and products and messages and behaviors spread like viruses do.”
In the same way, business growth stages can occur, wherein a business reaches a point at which it moves from one stage to the next – over the tipping point. As he goes on to describe, going over a tipping point requires extra effort than normal operating procedures. If you think about it like reaching boiling point, at 211 degrees, water is starting to show some activity, while at 212 – one extra degree, water goes from still to boiling.
For example, your company might experience a tipping point when you hire additional staff to take on the work you expect to have at some point in the future. It is difficult because the amount of resources exceeds the amount of income or work while we push to increase productivity. Once over the “Tipping Point”, we will be back to a normal situation where the amount of work is equal to the number of resources and paying them properly.
The challenges with tipping point is a) funding it, b) negotiating it, c) becoming a different sort of leader and d) maintaining the integrity of the product.
Many times, during a growth stage, you run into problems with staff. It is important to remove people quickly who would not be as committed or be detrimental to the flow of business. If they are not removed immediately, it could have long-standing implications on the business, causing other members to either not be as committed to the work or creating a lower morale amongst the team members.
Ideally, all new members have to be with the understanding of doing more than their job, but rather, contributing to a greater purpose – to the sustainability of the business. If the business is sustainable, it provides steady income and opportunities for growth of its members.
A wise business leader will encourage his or her team to consider the business as their own and have an understanding of how their thoughts and actions impact the business. A wise employer will also hire based not only on current skills, but also potential, ability to think and conceptualize, ability to learn, work ethic and integrity. In other words, people should be hired on their ability to be developed and what they can bring to the company. This makes for a greater exchange than simply work for money.
The tipping point, if not successfully planned for and managed, can put a business out of business. Having more clients than the company can handle can cause poor customer service, poor pipeline (sales) management, product outages, poor financial controls and cause irreparable damage to the company brand. While some of these issues can be worked through, the greater the impact, the more it will cost to overcome it.
This is why people have written about business growth phases and the different expectations a business should have for itself at each stage, ranging from having the on-site owner through company mergers and acquisitions; from raising money through personal savings and assets to going public. Thinking about the business lifecycle in terms of stages allows the business leaders to prepare the business for and navigate that stage.
Rick Meekins is the Managing Consultant at Aepiphanni, the trusted advisor for business leaders who are seeking forward-thinking solutions to help them plan for and navigate through the challenges of business growth. Our entrepreneurial multidisciplinary team works with clients to develop differentiating solutions and provide direction focused on lasting, strategic results. We exist to help our clients CREATE | DESIGN | BUILD extraordinary businesses.
We would love to hear from you. Please share your thoughts and comments below. If you are seeking advice on how to grow your business, streamline systems and processes, implement software or overcoming challenges to growth, please contact us, directly or submit a request for a complimentary Coffee & a Consult to learn how we can help you CREATE | DESIGN | BUILD an extraordinary company..