Is too much growth a bad thing for a business? Growth is necessary for every business, but growth for the sake of growth, or just to reach some lofty goal, can be damaging to an organization that isn’t prepared to handle it. Remember: it wasn’t the hare that won the race against the turtle. Sometimes a slow and steady approach to growth allows for a more lasting, sustainable and profitable business.
I realize we live in a world where public companies are continuously judged on their ability to achieve short-term quarter over quarter growth. However, hyper focusing on short term growth often leads to poor decision making. For example, it's not uncommon to see headlines about organizations cutting corners or laying people off in order to meet the quarterly expectations of their investors or Wall Street. Instead, leaders should be making decisions that provide long-term, healthy progress.
While it might sound counterintuitive, this singular focus on growth and profit can actually have a negative impact on the culture and engagement of employees; ironically, that impact then ensures that the growth will not be sustainable. Now, you absolutely should have growth goals and profit projections to meet; however, these goals should not be made solely to demonstrate that you are growing. I have seen organizations experience rapid growth then suffer because their operations couldn’t handle the increased size and complexity. In turn, their product or service delivery suffered, ultimately making it harder for them to bring in new business.
None of this is to say an organization should ditch its growth goals and strive to remain static; every business must grow just to keep up with rising costs, salaries, new product/service development, etc. However, it's crucial to find a balance between growth and maintaining a stable foundation as the organization scales. Without that foundation, both the business and its growth become susceptible to collapse. Envision your team equally committed to growth and building a strong foundation. Tough decisions, such as saying no to new clients to focus on effectively serving current clients, are just as crucial to sustainable growth as increasing revenue.
For entrepreneurs, I think this is actually a hard concept to understand. As you start your business, you are trying to grab every client, expand your revenue, hire your team and grow your business. The thought of saying no to business is inconceivable. These entrepreneurs may have experienced fast growth early on in their venture, so they expect to continue to handle their expansion at the same pace. They are so focused on driving the growth of their business that they lose sight of the challenges and complexities that come with a larger organization. Communication issues arise, solving problems takes longer, and the quick resolutions that used to work become increasingly ineffective with a larger, more diverse team.
Without addressing this entrepreneurial mindset of ‘growth at all cost,’ these businesses often see a fast rise to the top and a fast decline to the bottom. Building a solid business takes time, there are no short cuts, and it is the steady growth organizations that typically win the race.
Lastly, as discussed in Simon Sinek’s book The Infinite Game, I think it is important to focus on long-term thinking when measuring success. If you are trying to build an organization, it is more important to see incremental, small improvements and growth than trying to do everything to hit a large goal by a specific time frame. Business success is commonly measured by achievement of one period’s goals but can be more accurately measured by looking for a positive, consistent trend of growth over time. Whether it takes a month or two longer than the original timeframe to get there doesn’t matter as much as maintaining a consistent pace of improvement.
Bottom Line
As a leader or entrepreneur, how are you focusing on growth? I personally prefer reaching for solid growth goals, but I also understand that slowing down to fine-tune operations can allow for faster growth in the future. Remember, it is the tortoise who won the race with steady pace. As Jim Collins, author of Good to Great, suggests, continue on that 20-mile march and watch as it paves the way to greatness.