Your business is growing. Your organisation isn't. Here's the difference nobody explains.

I once joined a small company. I was a fresh graduate at the time and couldn't be happier about the role - it combined my degree with my hobby, so it felt like a perfect fit.

The founder of the company that I joined had a strong vision. He knew exactly how everything should look and be done, and if it wasn't exactly as he envisioned, it wasn't good enough. I probably spent more time guessing what would get approved the quickest than actually doing the stuff I thought I was hired for.

The excitement for the role waned relatively quickly - I was kind of dreading the review meetings, as I learned that most of the things I'd done would probably need to be redone, no matter how much guessing I did. So when I was offered a promotion into a slightly different role, I took it in a heartbeat. I thought: anything that would move me away from the need to show every single thing I do to get the sign-off. Eventually, I gravitated more and more towards the more operational side of things because this seemed to be the only area he didn't have strong opinions about. He simply wanted the company to function and didn't seem to be that passionate about the how. I felt like I was finally able to breathe a little.

While my role changed and I gained much more autonomy and freedom, people who were hired to fill the roles I covered at the beginning still encountered the same issues. It wasn't frustrating just for them. It was frustrating for the founder.

Sometimes he'd come to work and say things like: "We need to scale; I can't be looking at these things anymore" or "It's 6 pm, and I haven't even started my work yet, because I was proofing everybody else's work." Everybody inside the company would nod their heads. They agreed. Everyone knew the company couldn't scale if the founder was still trying to touch almost every single area of the business. And I'm not saying it lightly - it wouldn't just be a quick check; sometimes it meant reworking it until it looked like something he'd have created himself.

I remembered this experience because I was reading a very old essay I wrote for uni about the difference between small business owners and entrepreneurs. This is when I noticed that a lot of articles writing about founder bottlenecks focus on their inability to delegate or them being too busy. I didn't come across anything that would focus on ownership in particular - the idea that sometimes founders simply can't let certain things go, because it can feel like letting go of some claim over how the final result turns out. The company is their baby, and they have a vision for not only where they want it to end up, but how exactly they want it to show up.

Growing a business and designing an organisation are not the same

Starting and growing a business is about creating and exchanging value. It can be any business and model you want as long as you have revenue coming in. To be successful, you just need to earn more than you spend so that you're profitable. A business can have several people running it, but it can also have just one person calling all the shots - doing the thinking and the delivering.

A business asks:

• What are we selling?

• Who is it for?

• How do we make money?

An organisation, on the other hand, is the system that lets people keep creating that value together, without every decision having to pass through the same person.

An organisation asks things like:

• Who decides what?

• Who's accountable for what?

• How does information move around?

• How do people learn and get better?

I assume all founders have thought hard about the first list. But I guess that not everyone thought about the second one - at least not until the company started to grow beyond what they can handle themselves, in a hurry, a little bit of panic, and probably with a ridiculous amount of caffeine and sleepless nights.

And I get that. In the early days, the founder is the organisation. Marketing, hiring, finance, product, customer support, strategy - all is held by their two hands. Whether they want it or not, there's no one else to hand it to yet. The problems start when the company keeps growing.

The middle stage nobody warns you about

In 1972, Larry Greiner mapped out how growing companies tend to evolve through crises:

Stage one (creative expansion). The founder does everything. Decisions happen fast, almost nothing gets written down, and all the knowledge lives in one head. This works well with two or three people. Here's your leadership crisis.

Stage two (directional expansion). The founder starts delegating tasks, but doesn't yet empower employees to make decisions. So they do the work, then check back in with: "Can I do this?" Sometimes that's due to capacity, sometimes it's also because founders want the work to feel like theirs. Greiner's research flagged this as the exact point where people start feeling overworked and under-recognised. This is also when the turnover starts, because people are being handed responsibility without any real authority to go with it. Apparently, plenty of companies live here for years, and some never even leave. This is called an autonomy crisis.

At the company I worked at, everyone was aware of the problem. It was voiced many times by multiple people. And yet, the change was very slow and very difficult. The pattern would just keep repeating. He'd let it go for a bit, but later come back with full force again. It did something strange to the culture. It felt like people working there the longest started to feel disengaged and increasingly frustrated. Many felt that they were treated as interns, not the experts or specialists in their fields.

I have to say that even when the time arrived for the founder to stand back and let things go, it felt a bit too late. People didn't trust it anymore. Even if they were entrusted to make decisions, call the shots, and lead, they knew that this wasn't really real.

Stage three (expansion through delegation). This is when the organisation itself starts creating the value, not just the founder's presence. Decisions get made by design, not by permission. Most businesses don't get here just by agreeing they should - they're either forced into it by a crisis, or they stay at stage two for longer than they'd like. This is called a control crisis.

So by now we can already see the difference. If you just want a small lifestyle business and have no intention to scale past yourself and maybe a couple of contractors, then these are not the problems you'll be thinking about solving. But if you're an entrepreneur and have the intention to scale it properly, then you better start thinking about the kind of organisation you'd like to design, or you risk getting a little bit stuck later.

I want to point out that the three stages above are really just me simplifying. Larry Greiner didn't stop there. His original model had five growth stages, and he even added a sixth one later.

To summarise the rest, as soon as you solve the control crisis, you don't just end up somewhere stable - you walk straight into a red tape crisis (stage four - expansion through coordination). This is when the beloved bureaucracy starts creeping in until it creates its own problems. You'll get frustrated and will reach a stage where all you'll want to do is create more flexible and versatile structures instead (stage five - expansion through collaboration). Finally, once you get past THAT, you're likely to notice that the organisation runs out of ideas inside and has to start looking outward to form alliances and partnerships to continue to grow (stage six - alliances).

Stages one and two are where most small companies live. What gets you out of them? When the organisation starts creating real value without the founder's presence in it. When decisions get made by design, not by permission. Everything Greiner mapped from stage three is what happens to a company that's managed to successfully make that shift, and keep growing.

Not one thing, but all five need to line up

When people hear "organisational design," they probably picture a consultant redrawing boxes on a chart. That's not a complete picture, though.

Jay Galbraith spent decades studying org design, and concluded that a company's design comes down to five things working together: what it's actually trying to do (strategy), who has the authority to decide what (structure), how information moves between people (processes), how people get rewarded (rewards), and whether people are sitting in the right seats (people). If you update only one of those, almost nothing changes, but if you line up all five of them together, the company should run like it's supposed to.

Believe it or not, every organisation already has answers to all five, whether anyone chose them or not. Many founders don't design their companies intentionally and then wonder why things are not working. When org design sort of just happens to you, it's a little hard to improve it, because you don't know where the problem sits exactly - apparently it's usually not where you think it sits.

This is also where the distinction between a small business owner and entrepreneur comes up from my old uni essay again - an entrepreneur is someone who builds something deliberately meant to grow, and keeps reshaping it to get there, whereas a small business owner builds something to run steadily so they can comfortably continue to work there. Many business owners don't really fancy growing their business more than they need to make a decent living themselves.

Neither of them is better than the other, but only one of them will ever need to worry about stages after the second one.

So if you're building something you intend to keep super small, you might never even hit the autonomy crisis at all. The catch here, though, is that "small" might be smaller than most people think, because it doesn't take much growth to trigger it. For example, you might hit it after hiring 5 full-time employees and a few contractors on top. And if there's any real intention to grow past what you can personally hold in your head, you should start asking what kind of organisation you'd like to build now rather than later, or it will be too late to think about it with your sanity intact.

Why this costs more than you think

Here's something interesting: Harvard Business School researcher Noam Wasserman followed thousands of startups and found that when they failed, the majority of the time it came down to people and organisational problems, not the product or the market. It might be just me, but I can't seem to hear people worried about the former that much - everyone looks way more focused on the latter.

This means that bad org design doesn't just slow things down. What it does is that it results in duplicate work, slow onboarding, lack of decision-making, and probably a founder who can't even take three days off work without thinking that the company will burn to the ground without them.

Now you might be thinking: what's the problem? Just hire an operations superstar and give the employees some courses and workshops. Well, the problem is that you can hire whoever you want, but no person dropped into an undesigned or poorly designed system will give you a star performance. They'll spend their work hours trying to navigate the faulty system to survive, not to show up presenting their best talents.

And here's an example I found to illustrate this: in the 1980s, Ricardo Semler took over his family's company, Semco. At the time, it was a rigid, hierarchical business that was struggling. He didn't hire better managers. Instead, he redesigned the whole company. He drastically cut the layers of management, opened the company's financial information to everyone, and gave people power to make decisions (even the ones that were exclusively made at the top before). It took a few years, of course, but revenue went from around four million dollars to over two hundred million. I think it's a pretty good outcome.

Scaling isn't about the headcount

Some founders think that scaling means hiring more people. It's a part of it, yes, but scaling is more about growing what the organisation is capable of without the founder (or a few key people). Which may mean hiring more people, but most importantly - getting your organisation properly designed and systemised so you don't need to be there.

And if you want to do a quick self-assessment to see if you're ready to scale, ask yourself:

• What would stop running if you disappeared for two weeks? A month?

• Which decisions only you can make, and why?

• Where does the key knowledge in your business live?

• What do new people always struggle to figure out?

Thanks for reading!

Lina