Homeostasis Inhibits Your Company’s Ability to Grow

Homeostasis

All organisms are resistant to change. It’s not that they don’t like change or want change. Rather, it’s they are programmed to maintain a state of equilibrium. This is called homeostasis.

Your body, by design, maintains a steady temperature and other vital conditions like water, salt, sugar, protein, fat, and oxygen. This equilibrium is integral to your survival and success.

For example, the average body temperature of adults is between 97°F (36.1°C) to 99°F (37.2°C). Your body self regulates to maintain this state of equilibrium, but imagine how disruptive it would be to your life if you had to manually maintain a normal body temperature.

Homeostasis is a very good thing, unless you want to make a change.

That’s why dieting can seem like a yo-yo. According to multiple studies, 95% of people who diet to lose weight regain it within a few months. This is the tyranny of homeostasis. Your body desires equilibrium more than you desire a beach body.

Organizations also suffer from homeostasis. Growth strategies are often derailed by an organization’s unstated desire to maintain equilibrium.

Your company has the systems, culture, and talent required to maintain the status quo — where you are right now:

  • Growth rate
  • Market positioning and brand
  • Level of innovation
  • Employee satisfaction, turnover and retention
  • Profitability

If you look at the past three years of data, you will find there is a state of equilibrium in your business. A good place to see this is in your sales performance metrics:

  • Average number of new sales per month
  • Average size sale
  • Customer churn

When you examine a three year block of sales performance data you start to see a rhythm. This is your company’s equilibrium.

Homeostasis only becomes a problem when you want to change. You have to build the habits and organizational capacity for the next level to get to the next level.

Revenue PlateausCompanies have predictable revenue plateaus: $1 million, $5 million, $10 million, $25 million, $100 million, and so on. Each plateau involves a major shift for the business. It requires different skills, management resources, talent, and systems to break through the plateau and reach the next level.

The Achilles’ heel to breaking through these plateaus is people. My mentor and friend, Jim Stewart, taught me, “A business’s ability to grow is dependent on the entrepreneur’s ability to change.”

Growth strategies derail when the entrepreneur, owner, CEO, or leader is unable to change to meet the requirements of the next plateau. For example, the CEO of a $10 million business has the leadership skills and habits to run a $10 million business. If he cannot develop the leadership habits to operate a $25 million business, the company won’t be able to break the $25 million revenue plateau.

No matter how good the strategy, a CEO’s inability to evolve will derail the company’s growth strategies.

It’s very difficult to overcome homeostasis internally, because you often can’t see or feel the systems and habits that are holding you and your team back. This is a big part of the consulting work I do with clients. I help ambitious teams grow their businesses and brands to the next level.

Working with dozens of clients over the years, I have found overcoming homeostasis requires a multi-pronged attack:

  1. Growth Strategy: Clear thinking drives results. The first step is to clearly define the branding and growth strategy for the business.
  2. Strategy Implementation: Strategy implementation is often misunderstood, because leadership teams build their plans around projects, tasks, and other investments that they deem as priorities to grow the business. The reality is strategy implementation is primarily about creating the organizational capacity to operate at the next level.
  3. Leadership Coaching: Leadership coaching is the best offense to overcoming homeostasis. When you develop the leadership capacity of the CEO and the management team, you greatly improve your prospects of achieving your growth objectives.

The 3 pronged attack is effective, because it empowers the team to work on the business and create the organizational capacity to operate at the next level.

The results are exciting. The current average growth rate of my clients is 27.4%.

If you’re facing homeostasis or working to grow your business to the next level, I’d welcome a conversation. Here’s a link to my calendar. Let’s schedule a time to chat.