The Stages of Organizational Growth
Titles are not a good way to understand who’s in the market and who we’re looking for when we’re recruiting. You can have a branch manager that has no one, and a branch manager that has two dozen people. You can have an area manager that’s handling <$1 million, and an area manager that’s handling >$10 billion.
We created a more universal system that we call, The Stages of Organizational Growth.
I’m going to share them briefly with you so that you can identify where you’re at, you can see who you need in order to get to the next level, and hopefully drive home the idea and importance of “who” when it comes to building your business.
Stage 1: Starting Alone
In the first stage of organizational growth, you’re starting off alone with little to no experience. While your title might be modest at this stage, the vision you carry is typically very strong: “I’m going to be successful one day, and here’s what it’s going to do for me, my family, and the people I care about.”
What do you need to do to start seeing that success? Of course there’s a lot that needs to be focused on, but you’re not going to go far alone. You need to go out and find a company that’s willing to hire you. Next, you need to find someone who’s willing to invest in you - a stakeholder, someone who’s willing to be a mentor and trainer, to teach you the business. Additionally, you need to find your first client.
When you put those three components together, bam! Your business universe is more. You now have the basic functions put together of the business. After a short time, your business universe has expanded even more and you’re no longer the new kid on the block. Here’s where you move into the next stage…
Stage 2: Practitioner
In the second stage of growth, you become what we call a Practitioner. As a Practitioner, you are 80% self-managed and marginally profitable. (The majority of the business world operates at this level.)
The Practitioner, in order to stay in business needs to do what? There’s a lot of things that you need; you need to learn your products, you need to learn your team, you need to learn your marketing platform, etc. But all of that happens because you’re actually in the business of working with clients everyday. So, your key issue as a Practitioner is lead generating. And if you can focus on that one thing, nothing else really matters.
There are Practitioners that succeed at not great companies, there are Practitioners that crash and burn at companies that have every bell and whistle and resource you could possibly want. So the key issue as a Practitioner is if you want to keep going and doing business, you lead generate, generate, generate, generate. You’re going to hear me say this again, and again, and again, and again, because it’s the #1 factor that’s going to lead to success.
If you lead generate enough, eventually you start to build enough of a book of business that you’re now getting into consistent, steady flow of doing production. As you’re doing more production, you learn the industry and move into the next stage of growth…
Stage 3: Master Practitioner
When you’ve reached the stage of Master Practitioner, you know what you’re doing and you’re highly profitable. This is the dream. This is who the business is built for. This is why we exist. This is who we want to recruit. This person is focused on delivering to the client, closing deals, and brining in revenue. Within this stage, you can go about as big as you want.
As a Master Practitioner, your key issue becomes: you need to make sure you’re still with the right company. You need to make sure you’re operating within a great team that’s able to deliver service, standards, and make a meaningful contribution to the market that you’re proud of.
As a Master Practitioner, the key to sustaining and increasing your volume lies in one critical factor: lead generation for relationships. Beyond product offerings, pricing strategies, or tech stacks, the ability to cultivate and nurture the right relationships with the right people will define your level of success. It’s about having a strong support team, aligning with the right capital investors, and building strategic partnerships within your target market.
This concept is beyond the great equalizer. It transcends all other factors. While every element of your business matters, nothing compares to the importance of knowing how to go out and build the right relationships with the right people to build your business.
Now, here’s something interesting about the stage of Master Practitioner… there’s no reason to ever necessarily grow beyond here. You can be wildly profitable within this stage, and there's nothing wrong with doing that for the duration of your career. The distinction between the Master Practitioner and the next stage of growth, is that the Master Practitioner is focused on the external client. And what ends up happening is the Master Practitioner starts to have this notion of, “Hey man, I've done a lot here, I want to contribute back. I want to start to grow our own operation through and with other people.”
When that happens, you become what we call a Team Leader.
Stage 4: Team Leader
Within this stage, your focus goes from external to internal clients. A Team Leader says, “My plan now is to bring in the right team, and bring in producers.”
It’s important to note that there is a lot of hybrid within this stage. The switch from Master Practitioner to Team Leader is often gradual. I'm not encouraging anybody to drop their production business, but at a certain point it gets to be very difficult if you're going to grow big as a Team Leader when you're still doing your own production. There is a good hybrid space where you can make that happen, but eventually if you're going to become a proper Team Leader, you have to drop your own production and put your full attention on building your team. While this can often seem scary, if you have a strong team and evidence of consistent success, making that leap is the key that opens the door on the next stage of growth.
Stage 5: Expansion Director
The next stage of organizational growth is what we call Expansion Director. This is someone who’s focused on recruiting Team Leaders… really track what I'm saying here, because this is so critical in understanding how great recruiting happens.
When you become an Expansion Director you can grow regions, you can grow nationwide. Your #1 thing is driving in great Team Leaders, whose #1 thing is bringing in Master Practitioners and emerging talent of Practitioners. This funnel is how world-class operations are built. A few good hires at the top can trickle down and inspire success at all other levels. Unfortunately, that principle goes both ways. A few bad hires at the top can quickly poison company culture and create disintegration that’s hard to come back from.
The role of Expansion Director is vital and can create massive ripples of positive growth if done right.
Stage 6: Business Owner
The last stage of organizational growth, we call the Business Owner. The key distinction here is that the Business Owner is no longer driving the day-to-day management of the business. They're actively focused on where the business is heading in the next six months, the next year, etc… but the actual day-to-day management and recruiting is no longer their #1 issue. They're focused on making sure that they have great management systems, strong capital, and a great team to serve the business.
As a Business Owner myself, I can tell you, most of the money we'll make this year, I've had nothing to do with on the day-to-day. And that allows me to continue to focus on growth and the overall trajectory of our collective vision for the business.
In Conclusion…
No matter what stage you’re in or what stage you aspire to reach… it’s imperative that you know how to build strong, productive relationships (whether that be with your client base, your team, your referral partners, your strategic partnerships, or anyone else in your business universe). When you know how to cultivate meaningful relationships, the whole world changes and everything becomes so much easier to do.
So ask yourself: Where stage are you in? Are you just starting out and wondering how to get your foot in the door? Are you a Practitioner finally hitting your stride? Are you a Master Practitioner whose been in the business for a while and feel like you’ve hit your ceiling? Are you in a hybrid stage between Master Practitioner and Team Leader and contemplating making the switch? Are you an Expansion Director working to grow your region? Are you a Business Owner trying to forecast a 5-year vision for your company?
No matter what stage you’re in, the next question to ask yourself is this: Who do you need to not only stay in business, but to crush it this next year? Who are you missing? Get clear on that. For a lot of people we can say, “You're missing three great strategic partnerships that account for x amount of business” or “You’re missing 12 great practitioners on these teams” and boom! We can get systematic and orchestrated around bringing that talent in.
So for you to shore up where you're at this next year… Who are you missing? Who do you need to grow from Team Leader to Expansion? Who do you need in your world to grow from Expansion to Business Owner? Because again, it's a “who” issue. After two decades in this business, I can confidently say without a doubt that the single, most powerful factor in any organization is the people who you are in business with. In order to bring in and get to the next level short where you're at, you're missing some people. It's that simple.
- Joe
Joe Arroyo is the expert on recruiting, selecting, training, and retaining world-class talent. As CEO of Vision Architect and Convert, him & his team have been "building business by building people” since 2001.
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