5 Business Growth Lessons I Learned the Hard Way
Early in my career, I assumed that all business growth was good; I assumed bigger was always better. After a $1 billion bankruptcy, it’s safe to say that I was wrong.
Looking back, I can see that we stumbled and fell over the same fundamental issues that I see growing companies tripping over today. The underlying tale is that we overreached because we weren’t prepared when fast-growth unleashed its fury.
We sought help from a variety of well-known management gurus and consulting firms, but they simply weren’t prepared to address the real challenges of a company that was speeding out of control.
You can avoid a high-speed crash of your own by learning these five business growth lessons I learned the hard way:
1. Growth Changes Everything
One of the chief reasons that companies have so much trouble as they attempt to scale is the continuous change that the company must undergo as it grows and develops.
Business growth is simply not possible without change. Ignoring this most basic law of business growth is like ignoring gravity. The very process of growing changes companies in fundamental ways.
Growth changes what the leader and management team must do; growth changes what many employees do; growth changes how the company must operate; growth requires different systems and processes; growth necessitates different people, skills, and capabilities; growth changes the market and the business model; and growth changes the culture and the dynamics of how people communicate and interact within a business. In other words, growth changes everything.
How well you adapt to the changing needs of your company as it grows will determine your long-term success. If you do so successfully, the company will continue to grow and flourish. However, if you do not adapt successfully, the company will experience difficulties and perhaps failure – regardless of how strong it appears at this moment.
2. Growth is More Than a Strategy
Most people mistakenly believe that success is inevitable, if you have a great product and a sound strategy. They are foundational, but they are not enough. Offering a great product in a growth market, backed by a smart strategy, is the minimum required to play the game. It’s certainly not enough to guarantee success.
To most leaders, developing products, markets, and strategies seems far more important compared with the more mundane tasks involved in the nuts and bolts of building a company. Unfortunately, although things like leadership, management, and organizational processes may not be exciting, they are vitally important as the company scales.
Leaders of growing companies must be prepared to manage an organization and devote substantial time towards time-consuming things like management systems and other business processes. A company’s survival depends on it.
3. You’re Not Alone
Growing a business to scale is difficult and risky. Leading a fast-growing company can seem a lot like traveling through uncharted territory. The right path may not always be clear. You don’t know what lies ahead.
Unfortunately, most leaders of growing businesses navigate their company’s growth through trial and error, constantly reacting to the challenges of growth instead of anticipating and preparing for them.
But it doesn’t have to be that way. You can take advantage of the success patterns of others who have successfully traveled the same path.
The most important issues that a leader needs to focus on change over time, and they do so in clearly defined stages. Businesses that seem to have nothing in common turn out to have the same challenges during these difficult passages.
Use these stages as a step-by-step blueprint to design and build a successful growth company. The stages will help you assess where you currently are, what needs to be done now, and prepare for what’s coming.
4. Growth Isn’t a Straight Line
Oftentimes our expectations about what growth looks like are not rooted in reality. The typical hockey-stick chart shows low revenue growth in the beginning, immediately followed by a continuous climb of extraordinary growth. But that view doesn’t begin to take into account the twisting and turning path that growth actually takes.
Growth doesn’t move in a straight line, and it rarely happens smoothly. Growth is a series of phases within stages, accompanied by mistakes, failures, instability, pitfalls, detours, ups, downs, transformations, and reinventions.
Business growth is a complex and difficult process that should be viewed both as an opportunity and a tremendous management challenge.
Growth is a very bumpy ride.
5. Success is a Trap
Long-term success eludes most entrepreneurs because they fail to understand a fundamental set of principles: Success eventually makes the very behavior that achieved it obsolete. Success creates new realities. And above all, success creates its own and different problems.
It’s hard to believe that the very behavior that leads to success at one stage can cause you to fail at the next. But it can, and it will. That’s the great irony of entrepreneurial leadership. No matter how successful your company is today, the same methods and approaches that got you to your current level will not be enough to get you to the next one.
When you’ve been successful in the past, it’s easy to cling to the illusion that you will be successful in the future. But that’s simply not true. Too many leaders are blinded by their success and fail to see that the world around them has changed.
The complexities of running a bigger and bigger business make the existing ways of managing and operating less and less effective, and many times, even become an obstacle to further growth. In other words, as companies grow, they come to certain points where the things that used to work, the things that created success, don’t work anymore.
You want to outgrow the competition, not your management approach and your organization’s capabilities.
What are some of your business growth lessons?