Psychological Challenges related to the Business Cycle


Psychological Challenges related to the Business Cycle

  • By Ian Bradley
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A business goes through developmental stages very much like the cycles of human development.  Each business phase, from initial conceptualization to start-up, progressing through growth and culminating in an established ongoing enterprise, brings its own unique psychological challenges.

As an occupational psychologist addressing workplace challenges, I recently saw a business owner struggling with the transition from growth to maturity in his publishing business. At fist glance, you wouldn’t think that the transition would be difficult.  Now well established, the company has a solid management structure, a very positive cash flow and a more than dominant share of the market.  The owner is a long way from back of the envelope plans or visits to venture capital investors that characterized the stresses of the early seed and start-up phases.

Nonetheless, my client is stressed.  This stress however does not relate to the increased size or complexity of the organization.  The CEO has a good management and sales team with senior managers that he trusts and delegates.  Rather, the problem is contextual-something that goes beyond coping with the organizational changes responding to growth. Now, as a dominant player in the industry, the new game context is one of not losing.

This represents a tremendous psychological shift from the earlier days of growth and development.  At this stage, every new contract was a win.     The young upstart enjoyed the thrill of taking clients from the big boys through innovative marketing, good service and creative products.

Now, the CEO is playing defense.  The long work and effort required to re-sign a contract is the same, if not more, than the effort required for the initial sale. However, the joy of the success of the sale is muted.  Each successful re-sale only maintains the status quo, the thrill of exponential growth is gone, and the fear of losing predominates.

In psychological terms, the contingencies of reinforcement have shifted from reward training where effort brings results to avoidance training –a type of negative reinforcement where effort is required to avoid the occurrence of something negative.  One of the pioneers of modern behaviour psychology, BF Skinner, stated if one life has a preponderance of negative or positive reinforcement, then the result is stress.

Well, what can we do?

Firstly, I succeeded in helping my client understand that he wasn’t losing it or getting old.   Rather, his growing stress was a natural outcome of the development of the business.  In short, it happens to everyone at that stage.

Secondly, I made the point that positive reinforcement was present- it just wasn’t emphasized. In other words, the company still had to execute with good strategy, salesmanship and innovation.  The outcome might be negative.  Even with the best of products and service, existing clients might be lost.  However, the company needed to institute benchmarks of service the attainment.