Why Does a
Company Plateau?

Why Does a Company Plateau?

By Michael J. Lavigne – Senior Advisor Strategy & Transformation

Over the past 30 years of working in business, helping entrepreneurs and leaders navigate their journey, there is a phenomenon that typically occurs at some point along that path. Plateauing is inevitable at some point, whether it be an individual hitting a personal lull, or an organization stagnating and unable to find the ability to optimize as a leadership team. In many cases the entire company seems to plateau in their growth trajectory with little ability to pull up on the throttle and climb to higher skies.

This article is the first in a series about the three aforementioned areas: personal growth, organizational growth, and company growth, and the common causes of plateauing in each. I will focus on overall corporate plateauing first.

Lifestyle Companies vs Growth Companies

My experience has been that companies can often be categorized in one of two ways: lifestyle companies and growth companies. Being a “lifestyle company” can sometimes seem like a disparaging label, however there is nothing wrong with an owner / founder choosing to operate a company that provides enough revenue to maintain a certain culture and lifestyle. That doesn’t mean they don’t grow; it simply means that their goals are measured differently.

Other companies—most would fit in this scenario—fall into the “grow or die” category and are driven by different objectives. Owners, shareholders, investors, and other stakeholders will demand incremental growth at the least. Many companies succeed, others fail, and others will plateau. These companies will look to fall on the growth side of that fence.

Recognizing Business Plateaus: A Guide to Identifying Stagnation

Many reasons exist for a company to plateau, and even stagnate, to a point that they simply cannot manage out of this state. Fear, desperation, and stress all set in and the pressure mounts on the owner, CEO, senior management team, and ultimately the employees as they look for solutions to claw out of the rut.

Depending on the business model, common causes can include lack of resources, people or material, and access to goods. Sometimes a company simply cannot furnish the product or service to the market and is unable to meet demand. Conversely, market saturation can be a significant issue. The CEO may be in a business or industry that has grown around them and have not managed to keep up with the competitive environment. How can senior management lead the organization to differentiate and separate from the pack

Internal challenges can include operational inefficiency, and lack of innovation in processes, systems, and product. The company may be facing financial challenges. Cash crunching and relying on single revenue streams means inadequate capital, leading to an inability to take advantage of opportunities. Human capital concerns can hinder organizational growth, stunt professional development, and almost guarantee a lack of innovation. These are all manageable with the right planning and execution. Daunting as this may be, you need to lead a transformation one step at a time.

Many factors will be outside management’s control such as fluctuating regulatory changes, economic peaks and valleys, and competitive threats, however leaders still need to manage these exposures, ideally with a proactive mindset as opposed to a reactive one.

Strategic Transformation:
Unlocking Growth Potential with MC Advisory

Collaborating closely with an external advisor empowers executives and owners to meticulously assess and uncover niche opportunities and swift victories within their organization. Whether it involves refining processes, optimizing personnel, implementing technology upgrades, or making strategic modifications, these changes can swiftly yield substantial positive transformations. Often, the introduction of a fresh perspective can precisely identify and invigorate a company grappling with a plateau.

Breaking free from stagnation requires every element of the organizational ecosystem to operate optimally. Executive leaders face unprecedented challenges in steering their organizations towards sustained growth and competitiveness and existing teams may struggle to pinpoint inefficiencies and capitalize on them. To navigate these complexities, many leaders turn to external strategic advisors to gain fresh perspectives, strategic insights, and expert guidance. Exploring strategic misalignments, an advisor can craft a turnaround strategy that fosters growth across various dimensions, encompassing people, processes, products, and profits.

MC Advisory’s deep expertise can help optimize a company’s performance. Through a comprehensive analysis of strategies, case studies, and best practices, coupled with our teams’ decades of global business experience, we can help you navigate through these challenges successfully, ensuring your company avoids or transcends plateaus with lasting success.

Michael J. Lavigne is an experienced executive leader focused on helping clients navigate transformative and challenging business environments and accelerate growth.