CEO Coaching: Is Growth Necessary?
There are many business growth axioms and metaphors, mostly about trees, rivers, or children. But does a business really need to grow? Can it just tread water? Can it stay in childhood? Must it keep moving like a shark or die?
I’ve run into a few business leaders who aren’t interesting in growing, all in privately held companies. Some can make a compelling argument for “staying the course” and continuing as is rather than expanding. I’ve always been surprised, maybe even shocked, but I’ve wondered: Is it just my DNA, or are there compelling reasons for growth versus treading water?
There are some reasons not to grow (revenue):
- You’re currently resource-constrained, and you cannot provide the product or service at a high level.
- You’re currently capital-constrained (though profitable) and need to get an operating line or equity infusion.
- You temporarily slipped into a non-profitable state on a per-unit basis. (No, you really can’t make it up in volume!)
- The only growth currently readily available doesn’t fit your strategy and is not a good long term play.
Note the qualifiers “currently” and “temporarily.”
I’m not about to undertake a large research project about the necessity of growth (there is little real data about the persistence of growth, see “Long-Term Firm Growth: An Empirical Analysis of US Manufacturers 1959-2015”) but rather memorialize what I’ve observed after four decades in business and believe to be true. If you disagree, drop me a note. Here is why you need to grow:
- Talent. Talented people want to achieve things, not tread water. They want increasing responsibility, not a lifetime of sameness. The larger you get—to a point—the better your ability to hire, develop and reward more talent.
- Scale. Scale creates efficiency (purchasing power, marketing spend, leveraging overhead over more units.) Unless you have locked-up intellectual property, you’ll be more immune to getting crushed by a large competitor if you can operate more efficiently.
- Larger impact. Increased employment means you can positively affect many lives. If you’re an abusive, small-minded leader, don’t grow. I hope you fail. If you believe in treating people well and letting them provide for their families, wouldn’t you like to influence more people? If you provide a valuable product or service, wouldn’t you like more people to have access?
- Innovation. A growth mindset keeps you looking for new ideas and makes you less vulnerable to competition. It also challenges you and your team to bring value to the world—be a maker, not a taker.
- Financial rewards. One of my favorite clients just sold his company and is starting a foundation. Many of my successful clients are very generous and do good things with the spoils of their efforts. Sure, buy a bigger boat, but change some lives as well! By the way, capitalism (with some controls!) has saved many lives, brought many people out of poverty, and advanced society. Is it messy? Damn straight! Show me something better. Growth is a part of it!
coaches CEOs to higher levels of success. He is a former CEO and has led teams as large as 7,000 people. Todd is the author of, Never Kick a Cow Chip On A Hot Day: Real Lessons for Real CEOs and Those Who Want To Be (Morgan James Publishing).