The Institutionalization

By: Miguel Galván

From the Founder to the Institutionalization of the Company

In our country and in Latin America, there’s a generation of big founder businessmen that for 40, 50 or more years, have grown until achieving a relevant impact to their industries and in the communities they operate on. Today, they are the role models of tenacity, compromise with society and hard work that generate a source of employment to millions of families.

The Founder Directors clearly see the following stage: institutionalization.  

This stage means going from a company centered centered in  their own person and decisions, to a company with an institutional management model, that is, that doesn’t depend on the people; a model that takes the best from what we call “intangible strengths of the company”, behaviors, styles and convictions of the founder, that, through the years have been key in growth and are permeated in a loyal group of collaborators; nevertheless, the challenge now is to translate them in a management and cultural model that encompasses the whole company and make it grow hand in hand with the new generations.

The journey to institutionalization.

To accompany the Founder director in this journey means to go through various phases that depend on an initial step, that may sound obvious and simple, but nothing further than that. The initial step is the decision to take action

Occasionally, the operative routine and the demand of the emergencies inhibit a pause in  Many times, the operational routine and the demand of the emergencies, prevent a halt on the way to prepare for the new stages; meanwhile the concern remains latent and time advances causing every day more stress as the company grows, the complexity increases, energy decreases and alternatives do not arrive.

Making this decision involves stopping and have a moment of reflection to analyze what are the medium-term strategic intentions for the Company;recognize the current capacities and capacities that are yet to be constructed; understand the talent currently available and talent that must be acquired or developed; the formality level used during the decision-making and  processes; last but not least, which are the behaviors that we need in collaborators to achieve the desired vision for the future of the Company. 

Based on years of accompaniment to different businessmen and executives, as well as the research made, we propose the following route to have a successful journey to institutionalization. Like any journey, it is done as it progresses and each story is unique, thus this accompaniment is quite effective when it is made ad-hoc to each company and the businessman.

1. Guide Team.  

The loneliness of the CEO that we have previously mentioned in other installments isn’t something that should be suffered indefinitely. In our methodology, the Transformation Architect and a Key Directive Team, together with the CEO, compose the Transformation Guide Team. They combine leadership, experience, credibility in the company and workplan for the Transformation. 

Forming this team has various relevant subtleties, from which, in this occasion, we would like to highlight one:give value to current talent. Sometimes people who know little about the company, may overlook the talent and experience that some players with many years in the company might have. Forming the Guiding Team, has to do with knowing how to listen, how to observe the particularities of the company and knowing how to detect that key talent. Those who at first seem detractors of change, can become the example and the core of it, once they are detected and accompanied opportunely .

2.  Operative processes and decision-making.  

As a second step in this journey, we have to tidy up or formalize a firstgroup of processes. Starting from the foundation of NOT organizing the whole house in one go. It’s more important to begin with a process group and a clear method to do so, one that involves many processes at the beginning. By organizing we are referring to some processes becoming institutionalized, meaning, documented, implemented, measured and preferably supported with technology. 

It is highly recommended for this job to be conducted by the Transformation Team and for a low scalable method to be done, that is to say, for processes to be allowed to be added, worked with the same methodology to connect with each other. 

There are different methods to do this; in BTC we consider that the Institutional Process Model is the most solid method to work little by little to construct the blueprints of the future home, while we finish organizing the current state of the company.

3. Communication and behaviors.  

The form is the base in a transformation process, and it’s more defining in an institutionalization process. What we mean by communication is to the efforts and formal media of the organization, but also what the leaders say and do. What speaks most are the actions, not the words. 

The founder’s company brings a strong baggage of explicit and tacit communication. Transparent, realistic, intentional effort should be constructed over this reality to invite collaborators to the effort of change. There has to be continuous, consistent and complete effort that transmits where we are, where we are going, why we are doing it and which are the benefits for the collaborators, clients and suppliers of the company. 

The most important thing to highlight in this communication agenda can’t be thin: this is the previously mentioned Guide Team’s agenda. Without a doubt, the area and communication experts are advisers relevant to the creation of this plan, but the authenticity will come from the Founder Director looking at the communication agenda as a vital gearshift, and therefore creates one of their own.

4. Game Plan.  

The Game Plan is an essential plan of the future Strategy of the company. It means: How is the future of the company envisioned? How are we going to be differentiated? How are we going to win the game? 

Why then appear until the fourth step? Experience indicates that starting with a strategy exercise in a company that is yet to have the basic institutionalized processes, doesn’t flow properly. Looking at some solved daily operative problems, seeing something “working” in the institutionalized company or even observing a group of collaborators living with the new behaviors, are coins of change for the trust of the General Direction that the effort is being guided on the correct path. Only then will the Founder Director allow a space to portray that conceptualized future for the company, even listening to various opinions and alternatives that complement their vision. 

A very important aspect to consider at this point is the selection of the invited people to the committee of strategic discussion. Beware with the “easy options” or the “pre-fabricated options”. These can come from external opinions without the sufficient knowledge of the peculiarities of the company, or even the people closer to the general direction that have never operated in the company and see everything from an outsider point of view. It’s a big risk for companies that have been made with the hand and art of the Founder Director, wanting to transform them into “one more” company of the industry; because “everyone does it like this”. Further than moving toward the differentiation, these options can lead the company to a standard of: the last thing the founder wants for their company in the future

The team that participates in this discussion has to be carefully selected with a critical profile and an expert on their respective topic, and more importantly, to actually be sensible to the reality and peculiarities of how the company has been constructed throughout time.

5. The New Structure

As a consequence of the game plan and institutionalization, it’s important to discuss the most adequate organizational structure for the new stage of the company. A wise phrase that reads: “a company is organized to have the results it has”. The transformation, in the majority of cases, demands change in the form of organization. Nevertheless, in a similar way to what was previously mentioned regarding the game plan, it’s important to not follow established patterns or copy structures, without clear conviction about how the changes will sum up to the strategy or commerce processes. Expanding the organization under the belief that institutional companies have “this level of positions” or “that type of structures”, is a big risk to make more expensive the unsustainably expense line. The serious part of the case is that, when it comes to correcting, comes delusion and damage that remains in the culture of the company.

6. Transition

Occasionally, institutionalization is accompanied by a transition to the direction of the company. It could be a generational change, or an incorporation that some might call General Professional Direction. On this occasion we will only note the previous steps, we see them as a necessary condition to get to this moment, but this topic will be the only motive of future surrender.

Becoming the Founder of an Institutionalized Company is a possible journey, one that may be enjoyable and even find pride once seeing it as formalizing the constructed legacy that has been in the works for so many years in an institutional company, ready for the next 50, 100 years.