Strategic Execution in the Messy Middle: Three Unique Challenges

In this blog series, we are delving into the complexities and challenges faced by mid-market companies during their growth phase, which we affectionately call the "messy middle." This stage, often seen in mid-market companies with revenues between $10m-$250m and 50-250 employees, is characterized by blurred organizational structures, scaling difficulties, and challenges in maintaining team cohesion. At this juncture, the initial excitement of the startup phase gives way to the practicalities of sustaining growth.

The key to navigating this challenging phase is a robust and dynamic strategy, distinct from traditional strategic planning methods, which often fail due to a disconnect between planning and execution. Instead, a new approach is needed, one that integrates execution from the outset. Incremental changes and minor improvements, while tempting, can lead to stagnation. To accelerate through the messy middle, breakthrough thinking and actions are required.

It is critical for mid-market leaders to understand three unique challenges standing in their way:

1. The Growth Paradox: Complexity as a Growth Stifler

Growth is usually a measure of success, but in the mid-market realm, it brings a unique set of challenges. This paradox arises because growth not only amplifies a company's strengths but also its weaknesses. As these businesses expand, they face deeper layers of hierarchy, more complex operational processes, and slower decision-making. The National Center for the Middle Market has found that nearly 70% of middle-market executives view managing this complexity as their biggest challenge during growth spurts. Unlike startups or large corporations, mid-market businesses often struggle to find a balance between agility and resource allocation, making growth management a tightrope walk.

2. The Stakeholder Dilemma: Balancing Diverse Expectations

The growth of a mid-market business brings an increasing number of stakeholders, each with their unique demands. Customers, employees, investors, the community, and regulators - all have different expectations. The challenge for business leaders is to craft a strategy that balances these diverse needs effectively. This task becomes more complicated compared to the early startup days when the stakeholder map was much simpler. Now, as a mid-market entity, the business must navigate a much more complex stakeholder landscape, making strategic decision-making a delicate and intricate task.

3. The Execution Gap: Bridging Strategy and Reality

Perhaps the most formidable challenge in this phase is the 'execution gap.' This gap represents the difference between the strategic goals of a company and their actual realization. According to McKinsey & Company, about 70% of strategic plans fail due to poor execution. This failure is not necessarily due to flawed strategies but rather because of the unpredictable variables associated with growth. Market changes, internal operational challenges, and shifting stakeholder expectations all contribute to this gap. The Harvard Business Review points out that non-specific, broad strategic objectives are significantly less likely to be achieved than actionable, specific goals. This indicates that a lack of clarity in strategy leads to a dissipation of effort and resources, akin to a ship with multiple captains, each steering in a different direction.

What’s Next?

The journey through the 'messy middle' is marked by these distinct challenges: managing growth-induced complexity, balancing the needs of a growing list of stakeholders, and bridging the execution gap between strategy and actual results. How can leaders overcome these challenges and not just survive, but thrive? In our next post, we will explore three major constraints middle-market business leaders need to be solve for as they try to connect the dots between plan and action.

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