Undercapitalized Transitions

In the world of business, the company moves from startup to mature to perpetuation. There is typically only a single time the company is in the startup phase and one time it moves into perpetuation or exit phase.  While in the mature phase it may swing back and forth from trending like a startup or perpetuation as it navigates the changes in the marketplace. In this mature phase in order to be scalable and sustainable the business MUST reinvent itself through innovative thinking, actions and products and services.

During each of these transition points the company needs to ensure it have various forms of capital to support the changes and position itself to be in a better place at the end of the pivot or shift.  When considering the forms of capital, most leaders look at the financial aspects as the only capital to be concerned with during the investment or change period.  Do they have enough cash flow to support the shift from one product or service to the next and the potential gap between the two?  Ideally there is no gap to be bridged but inevitably some financial strain takes place to support the transition.

Courtesy of our colleague Brandon Schaefer, some of the other capitals a leader needs to look at are: Spiritual, Relational, Physical, Intellectual, and as previously mentioned Financial. As the financial element is one that is at least typically given consideration we will for this time around give our readers the benefit of the doubt they will look at the cash flow needed to navigate the change. We will focus on the capital of relationships in this particular communication.

First of all, many leaders don’t even look at the relationships in their business as capital elements. Leaders can easily see the financial aspects and even the intellectual as it relates to products or service upgrades, but relationships tend to take a back seat.  I’d like to challenge you this week to look at the critical relationships to navigate an upgrade of innovation transition in your business.  As you peer into your organization we must start with all the various people that are involved in the organization.  The simple ones are the employees and leadership team.  What about the other people who support the successful outcome of the organization such as – Customers, Vendors, Colleagues, Friends of staff, Family, Spouses, etc. All these relationships are key to the best possible results to take place.  Gaps in any of these relationships’ places additional burden on the organization no different than running short on cash.  It is not that the outcome can not be attained but the road getting there is just that much rockier and steeper.

For example, if the relationship with staff is not well planned out for the pivot or change then they might just freeze and work activity grinds to a slower pace.  Just at the time you are anticipating acceleration the staff is slowing down. Or your vendor relationships are not planed out to support the shift in raw materials or delivery schedules.  Each of these relationships directly impact the successful outcome of the upgrade in the business.

Coming out of the pandemic, relationships are at an all-time stress level.  People are transitioning from an in home office to either back to the ”company” office or some level of hybrid remote work setup.  When the initial shutdown shift happened, it took place so quickly that the sudden impact was handled in survival mode – almost like fight or flight.  Now that the shift is moving back to a new configuration and the speed and plan is theoretically more thought out, the relationship capital need to be factored back into the process.  Too little relationship capital and staff will be frustrated and possible leave, to much emphasis on relationship capital and added overhead burden through inefficiency and ineffectiveness can weigh heavily on the company finances. The key here is to give a broad inclusion of the various capitals as the organization moves forward in a sustainable and scalable upward movement.

Looking to bring strategy and focus on the various capitals operating in your organization?  Give JKL Associates a call at MI (313) 527-7945 or FL (407) 984-7246.

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