fbpx

Breaking Through Family Business Growth Plateaus

Nike Anani, award-winning family business strategist and host of The Connected Generation podcast, interviewed Six-Point’s CEO, Meghan Lynch, about the “soft-side” of scaling, growing, and evolving a family business. 

Hosts & Guests

Nike Anani

Meghan Lynch

 Share Video

podcast transcript

Nike Anani:

Hi and welcome. Welcome to The Connected Generation. My name is Nike Anani, and I’m your host. This week’s episode, I was joined by Meghan Lynch. Meghan is a brand strategist. She helps second-stage businesses breakthrough growth plateaus and challenge the Goliaths in their industries using brand strategy, sounds very serious, right? But no, Meghan has incredible expertise and knowledge as to how to use branding communications to level up businesses, and we had a really interesting conversation. It was the soft side of scaling, a following conversation from that with Kimberly Ofori, where we spoke about scaling businesses in terms of assets, revenues, and growth, et cetera. This conversation is really about how can you scale your trust, scale your influence, and navigate your business so that it’ll be future focused. Really enjoyed it. I encourage you to tune in, share the love, thank you. Hi, Meghan. Welcome to The Connected Generation. It’s awesome to have you today.

Meghan Lynch:

Thank you so much for having me. I’m excited to be here.

Nike Anani:

Yes. So you’re a brand strategist, a speaker and founder and CEO of Six-Point Creative. How did you get to where you are today?

Meghan Lynch:

My journey, I feel like I’m a little bit of the reluctant entrepreneur. I never really wanted to run a business. I was actually in school to be an English professor, my mom’s a teacher, my dad is an Episcopal priest, and so for me, business was just not part of our family’s vocabulary. It’s almost probably the opposite of a lot of the listeners, I did not grow up anywhere near a family business, but basically what happened was I was in graduate school and I was working at the same time, and I just really started liking my day job better than I was liking kind of the world of academia.

Meghan Lynch:

I liked being more hands on, and just like the people I worked with, like the work itself and the more I got into it, the more I realized that, oh, a lot of the skills that I have that I was applying to books and literature apply just as easily to businesses. That seeing patterns and kind of making connections and reading carefully, listening carefully, all of those things serve you really well when you’re trying to help businesses sort out complex problems. So yeah, that was kind of where I made this hard turn to being an entrepreneur myself and then helping other entrepreneurs.

Nike Anani:

Wow. So was that straight out of college? Or did you kind of-

Meghan Lynch:

I worked at a number of different areas of marketing and branding and communications for a while, and then I ended up starting my own business with two partners and really, they were kind of the ones who were starting the business and I just said, “Oh, I would come work for you. You guys are so smart.” I was 27, 28 at the time. And they just finally said, “No, why don’t you come with us and be a partner?” And I was like, “Oh, okay.” And I think when you’re young and you haven’t really been in that world very much, you don’t know really what you’re saying yes to. And I think if I had known how difficult it was going to be, I might have made a different choice, but here I am.

Nike Anani:

So tell us more about the difficulties that you face in entrepreneurship.

Meghan Lynch:

Yeah. I mean, I think one of the things that I learned after a while, we had kind of what I think a lot of businesses have, which are these kind of… The hustle of startup is difficult, but if you love the work and love what you do, and you’re good at what you do, you just have some initial success that says like, “Yes. Okay, I’m doing the right thing and this is working.” And then as you start to grow and the business becomes more complex and you need more work to feed the machine and you also have more people in your system that make it more complex, then you just start to plateau and kind of what made you successful as a startup entrepreneur is not going to be what makes you successful as a second stage or scale up entrepreneur.

 And I look back on like the few years where I was just like, “Oh my gosh, I thought I was decent at this, but now it seems like I am terrible at this. I’m doing all the same things, but I’m not getting the same results.” And it is just fundamentally frustrating and feels like failure, and it was only after doing a lot of pure conversations and learning that I realized, “Oh no, this is actually growing pains.” It’s a sign of being successful is having these kind of level up moments in the business, and I think once I realized that, it just gave me this whole new perspective that I found really exciting. I was like, “Oh, the second stage scale-up phase of companies is a thing and it is predictable. And nobody told me about it.”

Maybe I could help other companies going through these same growing pains and help them skip some of the pain that I felt, or at least help them navigate the pain with a little bit more intention and let them know that they are not failing. That in fact, they are this thing called a second stage company, called a scale up company. And again, kind of like the what got you here, won’t get you there, so help them kind of go through just some of the best practices that help you navigate that. And then also for me, a big piece of it is also we deal in brand and marketing, right? So it’s kind of the softer side of scale-up.

I heard one of your conversations with Kimberly Ofori and she was really talking about the operations of scale up, and as she was talking, I was like, “Yes, absolutely spot on.” And I think what we do is kind of the compliment to that kind of scale of operations, where it’s almost like the softer side of scaling. How do you scale trust? How do you scale relationships? How do you scale a founder’s influence on a company? And that’s where we often are working with probably 80% of the companies we work with are family businesses, because it’s often that next gen that needs to be the connection between the past and the future.

And respect the past, but have a vision for the future and help that company navigate change, and change leadership is extremely difficult and fraught, and so helping companies navigate that for me is just, again because I’ve been there, I’ve had to navigate change with my partners. They were almost kind of the parents of my business, and when they retired, I was like, “Oh no, now it’s me. And I’ve got to run this thing and just don’t mess it up.” So I feel like even though I’m not part of a family business, I feel like I relate to some of the feelings if not all the dynamics that go into it.

Nike Anani:

Wow, whilst you’re speaking really reminded me of a metaphor I often use for businesses, so when you’re starting a business, it’s like you’re pregnant and you get to a point where you have to go into labor and just push this damn thing out. And the doctor that you needed during your pregnancy is different from the doctor that you need once you’ve given birth. The lifestyle that you have during your pregnancy is very different from the lifestyle that you have once you’ve given birth. And what you need to focus on during those stages are completely different. So can you school us a little bit on the distinction between first stage and second stage? And you mentioned that there’s some growing pains. What are those growing pains? What are those indicators that it might be time to switch what one is doing?

Meghan Lynch:

Yeah, so second stage is usually anytime a company gets beyond about 10 employees, that is when you start to see some of the growing pains. And a big thing is just the need for more systems and processes. Again, when you have an owner-founder who’s great at what they do, and they’ll often surround themselves with a few people who just get it and can execute really easily and you have that nice flow between this visionary founder and then a bunch of people who just go out there and just get shit done. And that’s a really comfortable place to be. And then at some point you start bringing in people who are more like, “Okay, well I need more framework. I need more processes.”

You need to delegate a little bit further and you can’t watch every single thing that they’re doing. It’s just the degrees of separation become larger and the business becomes more complex. So again, where you used to be able to delegate really easily, now all of a sudden it’s like sometimes it takes the format of just individuals pushing back and saying, “I don’t know what you want, you’re not being clear.” All those kinds of things. And you’re like, “Well, I don’t know. So-and-so got it. They used to get it. Why can’t you get it?” And it’s really just that, again, the skill sets that you’re hiring for are different than what you needed.

You start to need more expertise, more subject matter expertise, and then as you bring in some of those process people, the business kind of slows down and you go through this pain of like, “Oh my gosh, okay, now we’re implementing all these processes, and it feels like we’re becoming a process company. We’re getting away from the work that I loved.” And again, speaking from the business leader standpoint, there’s just this feeling of like, “Oh my gosh, I’m going in every day and I’m getting nothing done. This is not as satisfying as it used to be.” And from kind of everybody else’s viewpoint. They’re like, “Why doesn’t this person trust me? Why won’t they let this go?”

And then from the market standpoint, it can just be a very uncomfortable customer experience where it’s uneven, and oftentimes, one of the things that happens is when the owner-founder is more involved, things will go better. The customer will be happier because they’re like, “Oh, I used to have direct access to this person and now we get that back.” And that reinforces this narrative in your head that, “See, I told you I couldn’t let this go. “I told you, this is really all about me.” And this happens from generation to generation too, of as the next generation steps up every time dad or mom is like, “Oh yeah, sure. You go try it.” And then something goes wrong.

They’re like, “Oh, see, see, you’re not ready. I told you I couldn’t trust you with this.” And so there’s this back and forth that happens that’s really uncomfortable. And so a lot of what our work is, is trying to understand at a very granular, specific level. What is the DNA of this company? The do not alter of what makes them successful? Where is their value created? And then what are the things that are just there because they’re there?

They’re not really connected to that value. And really help companies understand at a deep level where their value is created, because it’s not with one human. It’s with the value that that human has created, whether it’s their experience, whether it’s the relationships, whether it’s their empathy, whether it’s their problem solving ability. And once you kind of hone in on what that is, you can then start to problem solve how to scale it. But oftentimes, people don’t even quite understand what they’re scaling for from a brand or positioning or relationship standpoint if that makes sense.

Nike Anani:

Completely makes sense. My brain is going off in 80 different directions and I’m going to start here. You mentioned the DNA. How do you determine what that is when it’s not measurable? When it’s not quantitative? What’s your process of, I guess this is your genius IP, but how do you determine that when you walk into a family business?

Meghan Lynch:

What’s kind of funny about it is that it’s really not genius IP. I wish it was, but really, it’s more about when you’re in a company, you cannot read the label that’s on the outside of your own bottle because you are inside the bottle. So you can’t read what’s on the outside. And so oftentimes, what we do, and again, this goes back to why I love literature. It’s about reading and listening deeply and looking for patterns. So what we do is we will do intake with the company, so we’ll do internal surveys and interviews, and start to really listen to how individuals within the company at all different levels, from the front lines, in customer service and sales, and operations, to the leadership team. How are they talking about the company and the value that they create?

Then we also do the same thing with our customers, where we will listen really deeply to their customers and how they talk about the value that the company creates? And really, all that we’re looking for is what are the places of overlap? Where are they using all of a sudden the same words? At leadership, on the ground, from the customer. That starts to point us in a direction of, oh, this is where the magic is happening. This is something that’s super consistent, the way everybody’s talking. And then we also listen for the outliers, like where some people saying, “Oh, this is what we’re doing.” And then you hear a real disconnect from some other segment where they’re clearly not aligned, and so a lot of what we do is just again, deep listening and then mirroring back to them, “This is what we’re hearing, and this is what we’re seeing. And does this sound true to you?”

And because it’s come from them, it does sound true to them. And it becomes the starting point, this common ground, that we can then use that as the place to constantly come back to, to say, “This is what we don’t want to lose, because if we lose this, we could create all the systems and processes and scalability that we want, but if we lose this fundamental value, something important in the company is going to be lost.” And so our work is not really about new logos, new colors. That is not the work of this positioning work, this change leadership. It’s really about identifying what can’t we lose, and then also, what do we need to change to be successful? And then combining those two things so that it stretches the company without breaking them.

Nike Anani:

It’s about culture, right? It’s company culture.

Meghan Lynch:

It is. It’s very interrelated to culture and very interrelated to, I mean at the end of the day, business, as much as we think it’s about money or it’s about systems or it’s about economics, it really is fundamentally about people in relationships, right? The people who get things done, the leaders who helped them do their work, and the relationships that exist between companies and the problems that they’re solving with the people who they’re serving. And that’s true regardless of what industry you’re in, what continent you’re on. That is just the fundamental piece of business that I think is really important to understand.

And we try to really bring that humanity back to it because oftentimes, I think the next gens will know intellectually, this is what we need to do. I’ve seen the data, the market is all pointing this way. We just need to march in this direction. And what’s really missing is that change management skills of how do we get people aligned? How do we get everybody pointed in the same direction? How do we communicate really well with our customers who got us to where we are so that if we pivot, we’re not going to lose those customers or lose those relationships.

Because that’s often what the older generations are worried about is like, “Hey, we worked really hard to build this thing. Don’t take for granted these relationships that we have, don’t take for granted what it took to build it to this point.” So it’s this real fine balance of respecting that past, and also still pushing towards a bigger future. And especially with family companies, as the family gets bigger, as the impact of the company gets bigger, the company has to scale. Because you can’t continue to support more people and build that next generation wealth if the company stays the same size. So there’s a real need for this company to grow and scale in a meaningful way in order to make that impact happen.

Nike Anani:

I love what you’re saying, and as you mentioned, Kimberly’s episode was very much from the operational side, the considerations for a scale-up and this conversation is on the soft side, and I would presume that most next gens would overlook the soft side. Has that been your experience?

Meghan Lynch:

It has been. Yeah. And I think that it’s often the piece that also seems it’s the hardest part, and because it’s not concrete, it feels impossible to fix. It just feels like this is the way it is and we have to live with it. I believe that that’s fundamentally not true, that there is always a third way. We don’t have to stay the way we are, and we don’t have to throw out everything that has made this company great to where it is, that there is a third way that respects the past and pushes us towards the future. And that our team has really adopted this saying of slow is smooth and smooth as fast. And so that’s also a lot of what our process is about, is just helping companies slowly make these changes, make sure that there’s alignment at every level, because that’s what’s going to create this acceleration out the other.

And if you just speed, I think we all have this kind of bias towards action, especially entrepreneurs. We just like to get it done. We have this idea, let’s do it today. Let’s implement it. But that’s again, often where the wheels start to come off the car. Is like you don’t have that solid foundation that you’re building from. And I think that that’s why that generational transition is really hard. I think at one point, you had mentioned that in Nigeria, only 2% of family businesses make the leap from first generation to second generation. And I’m sure again, you could speak to it better than I could, but I would imagine that it’s this combination of infrastructure and technology and know-how in the operations, but also there is this softer skill side that roadblocks that transition. 

What I get excited about is, oh, if somebody else can solve for the operations part and I can solve for this, then all of a sudden, we have this huge explosion of growth that gets unleashed, which is a huge explosion of impact. And family businesses are businesses that are devoted to their communities, that are devoted to their employees, that are devoted to being around for the long term. It’s much different than having a large global corporation who has no roots in the community, no long-term stake in is the successful? Do these jobs stay here? To me, keeping growth in family businesses is a huge opportunity for just growth and fundamental change and opportunity for not just the business themselves, but for the communities that they live in.

Nike Anani:

I love that. I love that. And what are the common mistakes you observe family businesses making in the soft side?

Meghan Lynch:

Yeah, I think a big one, as I said, is kind of the action bias. So the rush to just get things done, which then causes the people who are kind of invested in the status quo to then undermine any change that’s being made, so you make a lot of change, and then slowly that changes dismantled behind you. So I think that that’s a huge mistake. I think another one is really not talking to your customers or your clients, and asking them where the value of the company is and how they would react to change and engaging them. And it’s both amazing how often companies don’t do this simple thing, and then also the great ripple effects that it has when you do. One of the things that we often hear when we’re doing these interviews on behalf of these businesses with their customers, is that one of the questions that we’ll ask is like, “Why do you do business with these people, with this company?”

And the answer is often, “Because they do things like this. Because they ask me questions and they care about my answers. They listen,” and so I think where oftentimes we don’t ask, because we’re worried or fearful that we’re going to hear something negative. Instead, people love to talk about themselves and why they care and they love to feel valued. And it has the opposite effect that brings customers and businesses closer together and reinforces those relationships. When I think we’re often worried that if we ask what’s not going right, or what they’re worried about, then it’s going to hurt those relationships. And I think that oftentimes, we get held back by some of those fears of that unknown.

Nike Anani:

No, completely agree with you, and so you’ve spoken about the importance of customer-centricity and having conversations with your customers. Are there any other kind of brand strategies our family businesses should be seeking to employ?

Meghan Lynch:

Yeah. I think that the other mistake is, again, sometimes to also err on, we need to position ourselves in a way that just scribes and captures who we are right now at this moment, and I think that that is often where I see businesses waste a lot of resources. And again, as a mom, I often will bring it back to sort of some similar metaphors that you were using in the beginning of this is like, you have two sons, right? When you know that when you’re buying clothes for them, you need to buy clothes a little bit bigger than where they fit because they grow so fast.

Nike Anani:

They grow super-duper fast.

Meghan Lynch:

So if they need some more formal clothes, you might get them a suit jacket or something, you’re going to buy it so it’s a little bit long so when they’re trying it on, you’re like, “Oh, it doesn’t look great, but I know that in six months it’s going to look perfect.” And that’s often what we try to really coach them through with the brand is if you’re waiting for something that you’re like, “Oh, that’s us, that’s perfect.” You are going to outgrow that thing in six months to a year. You want something that is a little bit too big for who you are, that you can grow into it.

That helps to articulate the vision of who you want to be, and not only does that help to level up your team who is now like, “Oh, yes, you’ve been talking about it or you’ve shown us the business plan.” It also makes it real and concrete and emotional to them of, “Oh, yes. I see this vision. I see this future in front of me, and now I’m clear on how I can be a part of it or I can help to brainstorm how I could be a part of it.” And the other cool thing that happens is it will start to automatically attract the next level talent who says, “I see where you’re going, and I fit into that vision, and I can help you get there.” Whereas if you’re just describing who you are now, you’re going to attract people, both customers and potential employees, who fit in with who you are now, but you don’t want to be who you are now.

You want to be bigger, better, more impactful than that, and so you need to be attracting the people who want to go where you’re going, and who can help you get to where you’re going. So it’s true on the employee side and the talent side, and it’s true on the customer side. And I think that that’s a big piece of brand and positioning that people often overlook that sometimes making it concrete and real in the brand and positioning, and clearly articulating in visuals, in words, where you are going, where you want to be, is just extremely powerful in helping you level up. As long as it’s authentic and it’s realistic. It can’t be so out there that people are like, “That it’s insincere.”

Nike Anani:

Yeah. I love that. I love that you brought in the piece on attracting talent. Can you speak more about that maybe from your previous work, the impacts that your positioning and branding work has done with companies and talent?

Meghan Lynch:

Yeah, absolutely. I think in a couple ways I can speak to it specifically myself, where again, all of our processes were developed kind of on our own company, so we really created this to problem solve what we were experiencing at Six-Point as we were growing. And one of the things that I found was we had a brand that positioned us very broadly, it was kind of one of those, “We do everything for anyone.”

Nike Anani:

And you attract no one when you do that.

Meghan Lynch:

You attract no one, yeah. And again, we’re a branding and marketing company, you would think that we would be able to avoid that trap, but it’s hard for an owner-founder to let that go of like “No, everybody wants this. This is useful to every single person.” So anyway, as soon as I started to say second stage scale-up companies in these industries with these pain points, all of a sudden, I posted for this director of client services position that we were hiring for. And I had posted for that position pre rebrand, and then post rebrand, and I could not believe the difference in resumes that I was getting.

I was getting major former agency owners who I knew and looked up to, and I was like, “Oh my gosh, no, I want to be you. You want to work for me? What? No.” So it was again, it’s not something that I usually promise as being an outcome because the talent acquisition is its own discipline, that’s not what we do, but I’ve just seen, even in my own business, that it’s this unexpected outcome that happens. That people get that vision and they say, “Oh, yes, I understand what you’re talking about, I get it, I’m excited about it, I want to be a part of it, and I think that my skills can help you get there.”

So I was having all these conversations and all of a sudden I had this choice of people who I was like, “Oh my gosh, these people are way overqualified for this position, but they’re the people who can catapult me to this next level, as opposed to if I was trying to do it with the team that I had who didn’t have that kind of next level experience these folks had.” So yeah, I think it’s just really cool the way I can open up this new channel when you’re communicating clearly. And it comes back down to, again, communicating the vision that’s in our heads that’s so hard to translate to the world in a concrete way.

Nike Anani:

And what are the other implications or results of clients working with you, and getting their positioning tied to the culture kind of better to find them more attractive, so to speak?

Meghan Lynch:

Yeah, so some of the real world benefits of this are these companies usually experience about a doubling of their sales volume, and then at the same time, you’re reducing customer price sensitivity. So people are willing to pay more for the same thing, because you’re clearly identifying how it creates value for them. And so it allows you to value price your offerings, regardless of what you’re offering, because you’re connecting with them with something that even if it’s an intangible value, you’re clearly articulating and connecting with this value, with what they want in a clear and meaningful way. Then you also, again, if you’re listening to somebody like Kimberly, you also have the backend systems to execute on that in an efficient way.

So, you see up to a 10 times reduction in price sensitivity so that you can charge more for the same thing, you also have these streamlined operations, hopefully, which is why timing is really important. You don’t want to brand and market before you have that back of the house operations really fine-tuned and that scalable infrastructure in place, so that you can also see, you’re not only just seeing the increased revenue, which is great for adding head count, but if you’re also not seeing the bottom-line profit and the cash flow and all of those things, then what’s it all for? So this allows you to kind of both get the sales up, but also get your profit margins higher, so that you can reinvest in that scalable infrastructure.

You can reinvest in the company going forward. And you can also, again, start to create that more generational wealth opportunity because there’s more left at the end of the day, that can start to build the ability to diversify and reinvest. And I think the long term implications of it are huge and very sweeping, but I think some of the short-term things are just seeing that interest in customers who you’ve been trying to reach for a while, an increase in responsiveness. Sales teams love it because they’re finally like, “Oh my gosh, I don’t have to work so hard to open a door. Customers are actually coming to us, they’re the right customers, and they’re pre-qualified because we’re clear about who we want to serve and how we can serve them.”

Nike Anani:

Amazing. So I think you’ve done very well in articulating the destination where folks would get to work on their branding positioning and whatnot, but where do they start their journeys, so for those that are like, “This sounds amazing and we need to do this in our family business, but where do we start?” I’m a bit confused. What are the simple steps you recommend?

Meghan Lynch:

Yeah. So I think the simple steps, I do think that it is really hard to do internally with a company. Even when I’m working on my own brand, I have a couple of brand strategists and friends who I really trust who I’m like, “I’m saying this, does that make any sense? Is this resonating? Is this working?” Because on my own business, I can’t tell. I’m too close to it. I need my team to do it, I need external experts to do it, so I do think that it is finding an expert who can be that sounding board for you and can mirror back to you the value that you’re creating. And I think it’s also about really doing that deep listening to your internal team.

Again, even if you think you know what people think, asking them questions and really giving them time to answer and not just jumping to conclusions, but truly asking and deeply listening. I think oftentimes companies are surprised at some of the patterns and articulations that come out. It’s like, “Oh, yes, we’ve been trying to say that for so long, and you just said it so perfectly.” And you can capture that. Oftentimes, we’re not writing their positioning, their customers are writing their positioning, or their internal team is writing their positioning.

We’re just listening and kind of going, “Oh, yes, that thing that you just said, that’s good. That’s the clearest we’ve heard.” And then working from there, so it’s not even that you need to be a great writer or a great designer. It’s really that you have to be a really great listener and be patient at that, because often hearing where people are disconnected is also important, and just being open to that, which it means being vulnerable, which is really difficult. You have to be vulnerable to hear the things that maybe aren’t so good or that might hurt a little bit. Again, we’re using the child metaphor. I mean, it is true. There was some study that hooked up business owners’ brains to a brain scan machine.

Nike Anani:

MRI? Is it MRI?

Meghan Lynch:

MRI, I think, yeah. It’s MRI. And they were watching what parts of their brains lit up, and so they would show them a picture of their child, and they would show them a picture of their business or their business logo. And the same part of their brain lit up when they looked at those two things.

Nike Anani:

Wow.

Meghan Lynch:

So when we talk about a metaphor of child, this is why I feel like this is literally your child.

Nike Anani:

Literally your child. Oh my God.

Meghan Lynch:

And so if you could imagine going out and just surveying people about what they think about your boys, you only want them to say good things, and as soon as they say something bad, you have to work to put that mama tiger like, “Calm down. It’s okay. It’s probably true, but they’re perfect.” And so it’s the same thing with a business, and that’s why it’s easier to have a third party do it because it stops you from shutting those conversations down emotionally because you’re like, “No, that’s not true. That hurts me. Don’t talk about my baby that way.” So, I mean, honestly, I do think that starting with listening and openness is the best place that people can get started for sure.

Nike Anani:

Excellent advice. And my last question for you, how has COVID impacted family businesses’ appetite to look at this work or-

Meghan Lynch:

I think it’s both accelerated the need for it. I think people are feeling like, “Oh, yeah. The whole what got you here won’t get you there, is hitting more and more true now.” I think the biggest roadblock to it is that resources are scarce, and the future is extra uncertain, and that it makes people even more concerned about loss, so this idea of, “Oh, if I change, am I going to lose more than I’m going to gain?” And so I think the fear roadblock is very, very strong right now, but also the view toward the potential opportunity is also really strong. So I think it becomes for most companies, what’s going to win out is the fear or this sense of optimism and opportunity, and it’s where we’ve really tried to also kind of be responsive to that.

We’re offering and do more workshops where we’re teaching companies more about the opportunities and more about how to take advantage of those, versus saying, “Well, we have to execute everything,” so that the investment of maybe their time and kind of sweat equity is larger, but that the price tag is shorter, so that if they’re worried about conserving cash or things like that, that they could start to implement some of these things internally with their team with some support. It’s more of a DIY. If you’re working on your house and you’re like, “Oh, I’m going to fix this myself. I’m going to watch some YouTube videos and figure it out and maybe have somebody I can call if it goes really wrong.”

We kind of are offering more of a DIY version versus what we used to do, which was more the do it for me version, of its only companies who have the resources and the ability to invest in a future. I feel like some of the companies who need us the most are in that place of fear and uncertainty, which I think that there is some cool is that we can problem solve for that to help that not be a barrier to capitalizing on some of this opportunity and change, because I think it’s really real. I think there’s lots of opportunities to reinvent right now in exciting and meaningful and truly scalable ways, and I think a lot of the roadblocks that people were feeling like, “Oh, we could never have a virtual office”.

All that stuff is kind of going away. People had to do it, they had to do it. And so now I think it’s opened the door, taken off some of those barriers in people’s minds of what’s possible, and it’s been an exciting time to watch small businesses because companies I was talking to this time last year were like, “I don’t know that we’re going to survive,” and then now they’re talking about, “Hey, we’ve got so much growth. We see so much opportunity.” It’s a great time to be an entrepreneur because it serves you well, we’re great at solving problems and there’s plenty of problems to solve right now.

Nike Anani:

Plenty of problems, indeed. Thank you so much, Meghan. If anyone wants to get ahold of you, how best can they reach you?

Meghan Lynch:

Probably the best way to do it is just on LinkedIn. I’m pretty active there and responsive, so reach out and connect. Shoot me a message with questions. I’m happy to do that, so I’m Meghan Lynch of Six-Point Creative on LinkedIn, and then our website is sixpointcreative.com, we’re on some social media, pretty sure.

Nike Anani:

Some Facebook, some Instagram, some something.

Meghan Lynch:

Exactly. Exactly.

Nike Anani:

Awesome. It’s been great having you today and thank you so much.

Meghan Lynch:

Thank you so much for the conversation. I appreciate it.

Nike Anani:

Awesome. Oh, I love that conversation. I love that Meghan’s life work has nothing to do with what she went to university for. For me, it just represents so much possibility and I find it so freeing and just so inspiring. I also love what Meghan said about how businesses go into different stages. And at different stages, they require different focuses, and I love when she spoke about growing pains, that as businesses are transitioning, it’s different seasons. They may be growing through some pains, and these pains are not necessarily a bad thing, they’re not necessarily indicating that something’s going wrong.

Sometimes they’re signs of being successful, and they’re just your indication that we need to level up, and I find that’s just powerful life advice. Sometimes in life, we go through seasons of immense difficulty where it’s very arduous. It feels like we’re pushing a boulder, a huge boulder up the hill, and it’s not necessarily that things are wrong about our life. It’s actually a result of immense capacity building as a result of transitioning into a new season, and we just need to level up. We need to level up our endurance, we need to level up our strength, we need to level up our capacity, because growth is coming. So thank you so much for tuning in, take good care and God bless you.

 

Certified Women-Owned Business on Clutch

“Throughout various industries, women-owned companies provide a unique and important perspective that’s often overlooked.” stated Clutch Revenue Operations Analyst Carolyn Rider. “We want to highlight these companies for everything that they bring to the table, from their thoughtfulness to their detail-oriented mindsets.”
Six-Point Creative is a Certified Stellar Women-Owned Business on Clutch

Did you know that most family-owned businesses have more than 70% of their business dependent on a few customers or a single channel? Here at Six-Point, we are on a mission to help family-owned businesses diversify their customer base while strengthening existing customer relationships through our Solve for Y program. We combine smart brand strategy with effective communications and marketing plans to achieve 2X growth for our clients without losing the DNA that got them to where they are.

Six-Point Creative is a brand strategy agency based in Massachusetts and we are known for our smart, fast, and efficient solutions that drive growth.

Headquartered in the heart of Washington, DC., Clutch is an independent B2B platform that is dedicated to helping corporate buyers connect with the right service providers. The site is widely respected in the industry for its comprehensive market research, agency shortlists, and client review directories.

Clutch has a reputable certification program that aims to highlight and help socially and economically disadvantaged firms from different industries. The esteemed certification program allows B2B agencies to self-identify their LGBTQ, veteran, and racial minority identities. We are thrilled to announce that Six-Point has been recognized by Clutch as a top-performing women-owned business.

“Throughout various industries, women-owned companies provide a unique and important perspective that’s often overlooked.” stated Clutch Revenue Operations Analyst Carolyn Rider. “We want to highlight these companies for everything that they bring to the table, from their thoughtfulness to their detail-oriented mindsets.”

We know that this honor was completely dependent on our clients’ trust and support of our team. We are honored to work for family-owned companies who trust us at critical moments in their companies’ trajectories.

“Their customer service was fantastic. They were extremely personable and down to earth, so we didn’t feel like we were talking to a different person who didn’t really care about the project. We could tell they had the passion.” — CEO, Vital Signs LLC

“They set a very clear strategy and helped us implement it. Six-Point Creative gave us the tools we needed, but they also showed us how to best use those tools. They were very encouraging and efficient in helping us get across the finish line.” — Marketing Coordinator, Dairy Company

Want to learn more about our services? Interested in learning more about how Solve for Y can help your family-owned business can double market share within 24 months?

Let’s talk! Send us a message. We’re genuinely excited to hear from you.

To catch the next wave of growth, patience is key

Sometimes moving too quickly will slow you down in the long run. Making the right decision, not the fast decision is critical when your goal is long-term, sustainable, profitable growth. The wrong fit customer, the big but unprofitable sale, the commitment without the ability to deliver… these are all moments when companies think they are moving fast, but often ultimately end up moving backwards. But when you feel a sense of urgency and opportunity, what is the alternative? Take a deep breath and remember: slow is smooth, smooth is fast.

One of our Six-Point project managers brought a mantra to our company that I love: Slow is smooth, and smooth is fast.

He is a big believer that getting the details right up front, excercising patience, asking the right questions, and listening carefully to the answers will save time and rework down the road.

And he is right.

I’ve been taking that mantra to heart not just in the day-to-day of our projects at Six-Point, but to my own strategy for my business as we ease out of pandemic lock-down, and to my work as an advisor for our clients. Slow is smooth, and smooth is fast.

In the spring of 2020, I felt like there was no time for inaction. Anyone who froze and didn’t act was in jeopardy. Since we couldn’t control the landscape shifting under our feet, just moving forward was the smartest way to go.

In the spring of 2021, I feel differently. I feel like there are major opportunities for growth, but particularly for smart growth, because all growth isn’t created equal. And being ready with the right solutions for the right people at the right time will be the difference between catching that wave and getting either overwhelmed or left behind.

So I have taken the past two months and gone into listening mode. Because slow is smooth, and smooth is fast.

What am I doing during this intentional slow down?

I am reading a lot and I am listening to a lot of podcasts. There are a lot of smart people who are extremely generous with their expertise and insights. I am also connecting with the authors and podcast hosts that I find the most valuable on LinkedIn (and sometimes offline, too) to be able to stay connected and in tune with what they are seeing and talking about.

I am interviewing leaders of successful brands in industries where I feel like my team can create true value. I’ve been having conversations with CEOs, sales directors, and marketing directors, and I am learning a lot about what it feels like on the ground in companies right now.

Our team is collaborating with Bean Group Global to survey business leaders all over the globe to better understand the effects of this acceleration into a hybrid world of both virtual and in-person workforces.

I am speaking less and listening more. And I am becoming much clearer for it.

I know it is tempting to just jump at opportunities, especially after you have either experienced a drought last year, or to keep your head down if you were overwhelmed with unexpected demand. But resist that temptation.

I would invite you to figure out what slowing down looks like for your business and your opportunity. Sometimes, the brave thing to do is to move forward even when you don’t know what tomorrow will bring. But right now, I would argue that truly courageous leaders are practicing discipline.

What might this look like? You might:

  • Start “auditioning” new relationships instead of selling to them.

  • Survey your customers to better understand what has changed in their world.

  • Set up some virtual coffees with key customers and just listen to what their world is like.

  • Talk with the competition. (I know, I know… terrifying! But we have seen some amazing collaborations when small competitors take on the big guys together.)

  • Collaborate with someone else who serves your industry and share insights.

  • Scan the social feeds of your ideal customers and see what they are talking about and doing that is not related to your product or service.

  • Read a lot, and not just about your industry. Find macro trends that you should be aware of and incorporate into your planning.

  • Prioritize with your team. You can’t do everything well, so what are the 1-3 things that are most important to knock out of the park? Allow them to really focus on those.

Now is the time to slow down.

To pick your head up and look down the playing field. To listen closely to your current and future customers. Listen, learn, and pick your best opportunity, not just any opportunity.

And then you will really catch that growth wave at its peak and let it carry you swiftly and smoothly to what’s next.

6 consumer trends impacting growing CPG brands

Most leaders feel overwhelmed by uncertainty right now. The questions CPG brands are asking are big ones, and they have consequences for companies with limited resources who are trying to grow and scale. What from the last year was an aberration? What can and should I count on going forward?

Here are six trends we have identified that CPG brands can and should plan to take action on:

  1. COVID-19 made “buy online, pick up in store” a mainstream option for shoppers, meaning even more purchase decisions are being made on our devices, not at the physical shelf.
  2. At the height of the pandemic, consumers would put up with inconvenience to support small businesses by buying direct. Now their patience is waning.
  3. The rise of remote work means that where consumers are spending their time has changed drastically.
  4. Amazon is becoming even more flooded with both brands and third party sellers, increasing competition.
  5. Consumers are becoming harder to reach, which means the ability to speak directly to your current and prospective customers is more valuable than ever.
  6. Consumers are expecting more from social media content than most brands are delivering, meaning there is opportunity for those that create truly relevant and engaging content.

Read on to learn more about each of these trends and get tips you and your team should use to address them.

Trend #1: More retail purchase decisions are being made online. 

 

THE DATA

  • “Buy online, pick up in store” orders placed online increased 202% in just three months from March to May 2020 (Rakuten Intelligence).
  • It’s not just for the upper-middle class. 29 percent of dollars, orders, and items are coming from consumers earning $25,000-$50,000 annually.
  • New order-for-pick-up activity spans all generations. In fact, Gen Z buyers and seniors are the two groups accounting for the most first-time orders, with each group accounting for 22 percent of the new growth respectively.

WHAT TO DO

  • Since CPG brands previously depended on a strong shelf presence in-store, you now need to translate the same experience to digital environments. Here are some ways to make up for that lost tactile experience:
    • Invest in high-resolution, naturally lit photography that will allow shoppers to zoom in on details.
    • Set a style for primary product images (image quality, lighting, distance from camera, background, size, styling, etc.), and then maintain it consistently across all of your brand’s products.
    • Leverage 360-degree product videos to mimic the in-person, three-dimensional shopping experience.
    • Mix in-use and lifestyle images and video with your product images, too. Don’t rely solely on product descriptions to convey your product’s features and benefits. Help your customer imagine how the product will fit into their life.
    • Take image loading speed into consideration. Your product photography can be “saved for web” after photoshopping to limit file size, without significant effect on image quality.
    • Tailor product descriptions to your primary target customer, ensuring you anticipate what questions they will have, and consider their top priorities when making purchasing decisions in your category. Emphasize keywords most important to that primary target, and build your product information hierarchy in a way that’s consistent with their shopping priorities.

Trend #2: Customers did put up with inconvenience to buy direct from CPG brands before the pandemic. Now they expect more of you.

In addition to more widespread consumer adoption of online shopping methods, more retailers have arrived (albeit a bit late) to the ecommerce party, too. This perfect storm will result in higher expectations for CPG brands in direct sales as well-polished, seamless ecommerce experiences become a shopping norm.

 

THE DATA

  • 19 percent of small businesses began selling products online or shipping to customers for the first time in 2020. (Chase Ink)
  • Large retailers are making it more difficult for brands to be competitive with their direct sales. Digital Commerce 360 notes that the top 100 retailers, minus Amazon, accounted for 74 percent of the new, non-Amazon ecommerce growth in 2020.
  • More competition means increased investment required to move your target customer from awareness to sale. The top spending increases for small businesses in 2020 were shipping, social media and search advertising, and ecommerce platforms.

WHAT TO DO

  • Understand how building direct-to-consumer sales fits into your brand strategy and business plan. If you’ve punted on selling direct-to-consumer through your own website and are unsure if the model makes logistical sense for your brand  — now’s the time to decide.
    • Our Solve for Y Ecommerce Gap Analysis can provide guidance on what it will take your brand to compete in ecommerce. We will dive into everything from shipping costs, to logistics, to SEO, to how (and how much) your competition is advertising.
    • Then, invest accordingly. If CPG brands intend to rely on direct sales as a significant revenue stream, you must invest in tech (platform), creative that aids the sale (web design, product photography, video), and advertising that drives traffic (SEO and search advertising, social media advertising, etc.)
    • Winning a first-time sale is only half of the equation. With ecommerce acquisition now more costly than ever, be sure to have a retention strategy in place to keep customers engaged, happy, and purchasing regularly.

Trend #3: Where consumers are spending their time has changed drastically.

Changes to where and how consumers spend their time means your advertising focus should shift. It also means you could quickly become out of touch with your target customer’s new lifestyle if you aren’t proactive. 

THE DATA

Lifestyle changes, new hobbies, new financial priorities — this is a transitional time for everyone. Your target customer has gone through an evolution that will have lasting effects.

  • Job status and finances are volatile. We’ve still lost 10 million jobs in our country overall. Millions have transitioned jobs, and/or have transitioned to working remotely.
  • The number of people continuing to work remotely could increase three to four times compared to pre-pandemic levels of remote work.(McKinsey & Company).
  • An estimated 9 million Americans relocated between March and October 2020 (National Association of Realtors).

WHAT TO DO

  • Go straight to the source. Interview and survey your existing customers, and plan to do so more frequently than you have in the past.
    • Use email surveys to engage past customers who haven’t made recent purchases. 
    • Capture in-the-moment feedback from your site’s visitors with an intercept survey. 
    • Mix optional survey questions into the checkout process.
    • Follow-up with a survey post-purchase as an opportunity to re-engage the customer in your brand. 
  • Compare pre-pandemic website analytics (2019) to present day analytics.
    • Are you noticing major shifts in visitor location? It’s possible that your customers are moving away from major cities, into suburban and rural areas where you may be able advertise more cost-effectively. 
  • Go through the exercise of mapping the customer journey again.
    • For most, the daily commute has instead been replaced with more screen time, frequenting social media and other digital channels during breaks in the day. How you influence the first stage of the customer journey — brand awareness — will need to shift further towards digital spaces. 
    • Think about all of the decision-making advantages your customer has in-store. If your packaging tells your brand story in a way that immediately resonates with customers, that experience needs to be brought into the ecommerce shopping experience. If consultation from a store associate is an important part of the decision-making process for your product, look to mimic this experience in ecommerce. Cover frequently asked questions through multimedia when possible, limiting reading time for the customer. 

Trend #4: Amazon competition continues to increase exponentially.

Amazon’s 2020 growth (38 percent net growth in North American sales) means sellers will be spending more to jockey for the attention of Amazon shoppers. 

 

THE DATA

  • Amazon currently boasts 2.4 million active sellers, with as many as 1.5 million more expected in 2021. 258,000 have joined in Q1 2021. (Marketplace Pulse)
  • 96 percent of Amazon sellers plan to expand their business in 2021. (Jungle Scout)
  • Amazon advertising dollars increased 47 percent year-over-year, with bidding on popular searches commonly costing $7 or more per click

WHAT TO DO

  • If you’re selling on Amazon, a “set-it-and-forget-it” approach to your product listings won’t get you the results you need anymore. Invest in optimizing copy, images, and videos for your product listings. Build an Amazon Brand Store, making it easier for fans of your products to shop your full product lines. 
  • Tap into video ads, which don’t yet suffer from the same level of cut-throat competition. 
  • Understand which Amazon fulfillment model best fits your goals. All have their drawbacks and positives. If you don’t know the difference between them or haven’t recently reviewed them, you need to. If you don’t know where to start, contact us and we can recommend an expert that can help you.

Trend #5: A direct connection to current and prospective customers is more valuable than ever. 

While Amazon’s Fulfillment-by-Amazon (FBA) model makes it easy for brands to sell more without logistical challenges, it’s still critical to keep a direct throughline to your target audience.

 

THE DATA

  • Tech giants are preparing to roll out new advertising targeting policies that will inhibit brands’ collective ability to target potential customers.
    • Apple’s new policies will allow its users to opt for increased privacy in mobile ad targeting. 
    • Facebook is making its own adjustments to remain compliant with Apple. 
  • FBA is an easy sales model logistically, but as more CPG brands lean on it as a primary ecommerce channel, they’re missing out on useful customer-identifying information Amazon doesn’t share. 
  • As consumers uproot and move across the country, your customer data is likely to quickly become out-of-date. 

WHAT TO DO

  • Maintaining a direct-to-consumer ecommerce strategy, even if not a primary sales driver, can help you build and segment CRM lists.
    • Email marketing keeps your brand top-of-mind and reengages existing customers. 
    • Communicating regularly with existing customers helps to increase their lifetime value to you, and provides access to cheaper revenue vs. costly one-time advertising and acquisition programs.
  • Build “data collection” into your social media content strategy.
    • Focus on building a community of engaged fans. 
    • Poll customers where they’d like to be able to find more of your products. 
    • Run contests and giveaways, building a direct connection with winners you can survey or interview in the future. 
  • Engage influencers.
    • Influencers have a built-in, trusting audience. If you can find influencers that appeal to your target audience, you can shortcut the process of getting in front of them. Find influencers that align with your brand, and begin building partnerships. 
    • Start with a $10,000 budget while you’re still learning what influencer partnerships will work best for your brand. In general, influencer activity shouldn’t dominate your marketing budget — and it doesn’t need to dominate it to add value. 
    • Understand that costly “big names” aren’t the only partners who will get a return on investment. In fact, content posted by “nano influencers” (1,000-10,000 followers) and “micro influencers” (10,000-100,000 followers) gets more engagement.  

seTrend #6: Consumer expectations for relevant and engaging social media content are high. 

Virtually all consumer brands have social media presences, and consumers are spending more time perusing social media than ever before. Still, consumers have indicated that the majority of brands are still missing the mark with their content.

THE DATA

  • 68% of people don’t think brands or companies share interesting content. 

As noted in HootSuite’s Social Trends 2021 report, brands are now counteracting this by paying closer attention to what their customers want. 

WHAT TO DO

  • Begin social listening, the practice of tracking conversations and mentions related to topics relevant to your brand. Brand mentions, relevant hashtags, competitor mentions, industry trends, and keywords will provide you with complementary insights you can’t get from customer surveys and interviews. 
  • Use the insights you glean to make adjustments to your content strategy. 
  • Between social listening and trial-and-error of new content, answer the following questions:
    • How does your brand fit into customers’ lives on social media, and how does that influence your posting frequency? 
    • How can you find creative ways to fit into the conversations customers are having, instead of leading them? 
    • What will “break the wall of indifference” customers have to brand social media?
    • Are you “reading the room” to get timing right before launching campaigns? 
  • Treat social listening as ongoing practice and critical must-have to optimizing your social media results going forward.

CPG Brands: Count on the six trends outlined in this article to continue into the long-term future. Nimbleness is an advantage for second-stage brands over slower-moving, enterprise-level competitors. Lean into that advantage! Adjust now, and capitalize on change as opportunity. If you wait until beyond 2021 to address new consumer preferences, expect to fall behind your savvy competitors.

Answer the questions keeping you up at night.

If the pandemic has brought into question your purpose, your target customer, or your brand strategy altogether, find out if Solve for Y is the right solution for your team.

What the heck is a second-stage company?

The definition of “second stage” in business is a company that has 10-99 employees or $1M to $50M in revenue. But the real hallmarks of second stage are the almost universal growing pains that these companies experience as they scale. We have identified the most common themes and pains that early second-stage and late second-stage companies face, especially when it comes to managing changes in focus, positioning, and branding.

I was first introduced to the term “second-stage” through the Edward Lowe Foundation. But it wasn’t the definition of companies with 10 to 99 employees or $1M to $50M in revenue that caught my attention.

It was the signs, symptoms, and stages they described.

As I read about what second-stage companies face, suddenly the pain I was feeling as a business leader made sense. Maybe I wasn’t just a terrible CEO. These were growing pains…a byproduct of success.

It finally brought into focus that I was applying the same skills and tools that made me successful when we were smaller, without realizing that the size and maturity of my company meant that I needed different skills and different tools in order to have the same success at this new level of complexity.

Over the years working with second stage companies, we have identified two kinds of second-stage companies, early second-stage and late second-stage, both with some unique pain points.

Early Second Stage: A New Emphasis on Scalability

Early second-stage companies are usually owner/founder-led, with between 10-50 employees. In early second stage, there are three areas where major pain abounds.

Delegation

Most early second-stage leaders experience delegation pain on two ends of the spectrum: the stuff they love and the stuff they hate.

For the things they love doing and excel at in the business, they will find it difficult to articulate exactly what is in their heads. In brand and marketing, this often happens when branding comes very naturally to the business owner/founder. They automatically infuse branding best practices and a unique voice or design aesthetic into everything they do. When they delegate it, it all of the sudden “doesn’t look right” or “doesn’t sound right” and fundamentally isn’t as effective, because it isn’t them.

For the things they hate doing and don’t have expertise in, the owner/founder will delegate it too quickly, often to the first person who shows interest and/or aptitude, and with very little direction or oversight. In brand and marketing, the first person who shows interest in managing the website or the social media accounts will get tasked with marketing, and will be given no plan to follow or framework to work within. They are often allowed to do or try whatever they want, and then when it doesn’t work, the owner’s response is: “See, I told you marketing just doesn’t work in our industry.”
The fundamental issue is that, whether it is trying to delegate the things they want to keep or the things they want to avoid, the delegation is not being done clearly and effectively. There is no shared vision of success and no clear understanding of what is off-limits and why.

Engaging Expertise

In early second stage, leaders begin to realize that the company has gotten more complex, and needs specialized expertise in order to solve some of the challenges they are facing.

One of the pains they face in this is that they often won’t exactly know what they are asking for experts to do, or they might ask for the wrong kind of expertise.

One recent experience I had with an early second-stage business owner captured both of these pains simultaneously. This business owner was convinced that she needed a marketing strategy and plan developed to accelerate the companies growth. She was talking to several different providers of these services, and getting a wide range of costs that was confusing. I was trying to help her compare apples-to-apples and discern what might be the right fit mix of services and deliverables for her goals.

After about 20 minutes of conversation, though, I learned that the “expert” she had contracted with to manage her Amazon account was doing a terrible job, and that her sales and brand share on Amazon were in rapid decline. It was clear that even if she invested in marketing, it would be wasted time and money until the Amazon problem was solved. Once we had identified this core issue, I redirected her to a trusted friend at an Amazon brand accelerator.

This business owner was doing everything right in theory, but she simply didn’t know what she should be asking for, how much it should cost, or how she should judge success. And it makes sense. She was an expert in her product, not Amazon or marketing.

At its worst, this pain point hits home when an early second-stage company gets taken in by a great sales team that can’t deliver on its promises. It can be a costly mistake, and also one that then makes the company twice-shy about engaging outside experts in the future.

Advice and recommendations from trusted advisors and peer groups becomes the easiest way to manage this leap from working with generalists to working with experts.

Consistency

Consistency is absolutely essential to building trust, both internally with employees and externally with customers. It is also one of the areas in which early second-stage companies struggle the most.

Early second-stagers are still working on creating and fine-tuning processes. They often don’t have the right people completely in the right seats. The owner/founder is still pulled into the day-to-day even while they are trying to spend more time as visionary and coach for their team.

The result of all of this is a lack of consistency. Internally, employees grow frustrated with the lack of clarity, boundaries, and what might feel to them like “moving targets” as they try to focus their own efforts and perform well. Externally, customers might hear and see mixed messages about what the company’s focus is, or might experience major swings in product or service quality.

Internally, the inconsistencies can be especially difficult to navigate because owner/founders are likely the source of many of them as they navigate the transition from “teammate” to “coach.” It becomes difficult for employees to point out the inconsistencies that they are hearing or observing, either because they are fearful of embarrassing their boss, or because they think that the leader is more aware about it than they are. Inconsistencies can be read as intentional, which further undermines the lack of trust, and can lead to a toxic internal environment.

Externally, the inconsistency is unlikely to cause the kind of turmoil that it does internally. Instead, the symptoms will more likely be stagnant growth, difficult sales, and an ineffective marketing budget. If potential customers aren’t clear about how the brand relates to them and what its value is, they won’t buy.

Takeaways for Early Second Stage

For early second-stage companies, the focus needs to be on:

  • Getting clarity on what success looks like for all stakeholders.
  • Finding trusted advisors to connect you to the right experts at the right time.
  • Identifying and quickly mitigating inconsistency, both internally and externally.

Late Second Stage: Tension between the Past and the Future

Late second-stage companies are usually led by a CEO brought in as a change agent, or a next-generation in a family business, with between 50-100 employees. In late second stage, pain arises from two major areas.

Fear of loss

Whether we are talking about family business or simply an enduring privately held company, the stakes of failure are higher the larger the company gets and the longer it is around. Nobody wants to be the one who puts a long-standing business or brand out of business. Plus at this level, the company is likely a visible and important part of the community or its industry. More people depend on the company as an employer, supplier, or customer. It is firmly part of an ecosystem in a way that a younger company is not.

Also, it is likely that there are stakeholders in the company who have a strong fear of loss around certain elements of the company, the brand, or the customer base. Often, these companies were established for a specific purpose, market, or customer that has shifted over the years. In order to make sure that the company endures for the decades to come, some amount of repositioning and reorganization is needed. This can come in the form of strategic mergers or acquisitions, rebranding, product innovation, or simply new leadership with a new strategic vision for the future.

One of our clients is a family business that was founded with a bookkeeping and record-keeping focus, which gradually and organically evolved over the years into printing capabilities, and then evolved again into developing priority technology that can be used in the fast-growing security market, which was where all of their new customers and opportunities were coming from.

Even though the business case was clear, it became a difficult decision to change the original name of the company and to clearly state this new focus. There were still legacy customers who used some of the original products and services, and who had been with the company since the beginning. The fear of looking ungrateful, or abandoning the past is a real factor for late second-stage companies.

This same fear of loss can show up internally as well, as these companies probably also have employees who have been with the company, sometimes for decades. These loyal employees are often the ones that often resist change, or can lack the skills needed to propel the company forward.

It is also important to understand that late second-stage companies live in a place of constant tension between the past and the future. Even though certain elements of the company or the brand need to change, there are also elements that have made the company successful and that need to be preserved.

Change agents in late second stage companies need to walk into the company humbly and looking for what needs to be preserved as much as what needs to be changed. If you can identify the “DNA” (Do Not Alter”) of a company, it can go a long way to mitigate the fear of loss, and also to make the new growth much more efficient and effective because it is building on a firm foundation of success instead of starting from scratch.

Lack of alignment and communication

Since late second-stage companies are honing in on a clear focus for how the company will scale and compete profitably in its “next generation,” they are becoming more and more strategic and visionary. Late second-stage leaders need to make bold strategic moves, like geographic expansion, vertical integration, opening new markets, acquiring new companies or brands, and forming strategic partnerships.

This kind of visionary leadership coupled with the fear of loss described above can lead to a fundamental lack of alignment. To make matters worse, late second-stage leadership teams find themselves misaligned on two fronts, with a board of directors or ownership group and with the employees they are leading.

The cost of this misalignment is huge. Most often, it means that the visionary leadership that the company needs to survive and thrive in its next stage will be thwarted either from “above” by the board or “below” by the employees. But in both cases, it is both predictable and avoidable.

When we do brand strategy and execution work with late-second stage companies, we know that the process and the communication of that work is even more important than the work itself. We carefully engage all stakeholders (internal and external) in the work from the very beginning and have mapped out clear milestones when more communication and engagement are critical for success.

At the end of the day, leading a late second-stage company is a fundamental exercise in change management. For legacy customers, legacy employees, or a board of directors, the solution is always the same: Create a clear sense of urgency for why change is needed, and then clearly and consistently communicate how and why the change will happen. It is also important to celebrate the successes that the company while the change is in process, which will help to keep the momentum going and reinforce the benefits. We build in these moments as part of the process because we know how critical they are for success.

Often late second-stage leaders know who the champions of change will be and they know who the nay-sayers will be. Usually, the impulse is to engage the champions and avoid or steamroll the naysayers, but all it takes is one or two disgruntled employees or board members who feel like they have been left out of the loop to undermine the brand from the inside out. Instead, we advise working with these factions to find out what is important to them, what they are fearful of, and how we can be respectful of that in the process, even if it doesn’t alter the ultimate vision or outcome.

Takeaways for Late Second Stage

For late second-stage companies, the focus needs to be on:

  • Acknowledge fear of loss and fear of failure as strong barriers to change that must be directly addressed for established and/or family businesses.
  • Identify the “DNA” (Do Not Alter) of the company and brand and use it as a foundation for growth and change.
  • Engage all stakeholders in a change effort early and often, especially if they don’t agree with the change being made.

Wrap up: The Strength of Second Stage

While the pains of second stage are familiar, predictable, and real, so are the strength and resilience of these companies.

Second-stage companies make up 17% of the companies in the U.S., but create 36% of U.S. jobs. They are often dedicated to the local communities where they were founded and are likely to bring growth and economic opportunity to these areas that would not come from enterprise-level organizations.

Second-stage companies are tenacious. They have likely survived more than one economic downturn. They have evolved their products and services as the market has evolved. They are often family businesses with a fierce dedication to their employees.

A client once told me that the definition of second-stage success is better problems. If you are the leader of a second-stage business, yes, you should take a moment to realize that you are not alone in your pain. But you should also realize that these new, “better” problems are also a marker of your success, your hard work, and your growth, not just as a company, but as a leader.

So here’s to better problems!