Strategic Execution in the Messy Middle: Three Unique Constraints

Constrained to Grow

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 decisive action are required.

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

Three Unique Challenges

In our last post, we identified three compounding challenges that middle market companies uniquely face accelerating growth:

1. The Growth Paradox: Growth in mid-market companies often leads to increased complexity, slowing down decision-making and amplifying both strengths and weaknesses.

2. The Stakeholder Dilemma: As mid-market businesses grow, they encounter a more complex array of stakeholders with varying demands, including customers, employees, investors, the community, and regulators. This complexity makes strategic decision-making increasingly intricate, as these businesses must balance these diverse needs effectively.

3. The Execution Gap: The 'execution gap' refers to the difference between a company's strategic goals and their realization, with about 70% of strategic plans failing due to poor execution. Factors like market changes, internal operational challenges, and shifting stakeholder expectations contribute to this gap. Strategies that are too broad and non-specific are less likely to be achieved, indicating the need for more precise, actionable goals.

Three Pressing Constraints

Middle market leaders need to be aware of three pressing constraints as they seek to overcome these challenges. A lack of awareness of these limitations will only frustrate efforts to achieve a viable path forward.

1. Expertise: The Expanding Horizon of Knowledge

It's a natural progression: as businesses grow, so does the complexity of their operations. The knowledge base that once sufficed during the initial phases is now inadequate.

Statistics speak volumes: A survey by the National Center for the Middle Market found that 45% of mid-market companies viewed "maintaining competitiveness in a changing market" as their most significant challenge. This underlines the need for expertise in newer domains, be it technological advancements, global market trends, or specialized industry practices.

2. Time: The Ever-Dwindling Asset

Expertise is a function of time. The greater the need for expertise, the more time leaders must spend in training, understanding, and strategizing. But time, unlike other resources, remains finite.

A study by The Alternative Board highlighted that 68% of business owners feel they don’t have enough time in the day. This sentiment is intensified during the mid-market phase. The "do it all" approach that might have been feasible and even practical during the early days becomes unsustainable.

3. Resources: The Vicious Cycle of Scarcity

The intersection of limited expertise and time invariably leads to a resource crunch. Without the right knowledge, businesses can't make informed decisions about resource allocation. And without time, they can't seek out and leverage new resources effectively.

It becomes a vicious cycle: to acquire resources, one needs expertise and time. Yet, to acquire expertise and time, one needs resources. Breaking this cycle is fundamental for mid-market businesses to evolve and prosper. It is no wonder that a study from Forbes Insights reported that 58% of mid-market businesses felt that they weren't optimally utilizing their resources due to gaps in expertise and time constraints.

Breakthrough Strategy

Overcoming the unique challenges and constraints faced by middle-market companies to sustain and accelerate growth starts with awareness. But it certainly doesn’t end there. In our next post, we will look at the breakthrough mindset shift in business strategy that makes the difference between success and failure.