Strategy

It’s easy to associate failure with a lack of growth, but too much growth is equally dangerous

Michel Hogan /

When a business closes up shop for good, the question of what happened often overlooks the role growth played in the failure.

Sure, you have to grow to survive. And it’s easy to ascribe failure to a lack of growth, but too much growth is equally dangerous.

Talk of unicorns and hyper-valuation of businesses yet to turn a profit aside, mere mortal organisations must consider the question of how and how much to grow if they want to be around for the long haul. Too many don’t. Instead, they embrace an ‘all growth is good’ mentality.

In 2008, Starbucks closed 600 stores, mostly in the US, after rapid expansion saw stores, sometimes barely a block apart, cannibalise each other and turn the initial community premise of relationships with customers into a commodity cup of coffee. And more than a decade later, the news Jamie Oliver’s UK restaurants are closing served up another tale of growth gone awry.

Brand is the result of the promises you keep. And ‘we’re open’ is the most fundamental promise an organisation makes. So why do so many get caught by more, leading to the sign saying ‘we’re closed’?

In the book Great by Choice, Jim Collins describes a concept called the ‘20 mile march’ where organisations embrace the discipline to choose and hit a specific performance mark year in and year out no matter the prevailing conditions.

 

“Imagine you’re standing with your feet in the Pacific Ocean in San Diego, California, looking inland. You’re about to embark on a three-thousand-mile walk, from San Diego to the tip of Maine. On the first day, you march 20 miles, making it out of town. On the second day, you march 20 miles. And again, on the third day, you march 20 miles, heading into the heat of the desert. It’s hot, more than a hundred degrees, and you want to rest in the cool of your tent. But you don’t. You get up and you march 20 miles. You keep the pace, 20 miles a day. 

Then the weather cools, and you’re in comfortable conditions with the wind at your back, and you could go much farther. But you hold back, modulating your effort. You stick with your 20 miles.”

 

I’m a big fan of discipline in organisations. Without it, you can’t consistently make promises you can keep, and while you might get away with a broken promise here and there, a business built on them will eventually collapse.

Do you have the resources in place to support growth — in areas such as people, technology and finance, to name a few? Have you reviewed and updated your policies to reflect the increased size and number of people, because what worked when you were 30 people and ten customers won’t work when there are 100 or 1000.

What’s going on out in the environment (not literally oceans and trees, though these days that’s not a bad place to start), industry, economy and general business landscape you operate in?

What does the data you collect say?

Should you listen for canaries singing down in the ‘mines’?

How you grow is more pivotal than getting bigger. So to further quote Jim Collins, better to start with “the disciplined pursuit of more” and keep marching. Because while growth is good, it can also kill you.

See you in two weeks.

NOW READ: Why did Shoes of Prey fail? Because it listened to customers

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Michel Hogan

Michel is an independent brand counsel advising organisations on the risk to their purpose and values of making promises they can’t keep — with a strong, resilient organisation and brand as the result. You can find Michel at michelhogan.com or you can follow her on Twitter at @michelhogan.

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