One of the delights of what I do is that I get to speak to so many fascinating people who are involved in interesting businesses. Many of them have growth as an “objective” but growth for growth’s sake is not a good idea. Nobody produces a product or service that is for everyone. When we start out if all goes well we hit our minimum viable customer base. These will almost exclusively be customers / clients who “get it”. In other words, they do business with us because we do what we do. So, let’s see why growth is a bad objective.
As we grow, we increasingly need to change the way we do things as we run out of customers who “get it” and in order to get more customers we will increasingly seek those who don’t share our real objective. We will have to offer discounts, lower quality, do things that we are not comfortable with and produce products and services that do not fit our original objective. Eventually we get to a stage, and that might be 10 customers or 10 million where the only thing on which we can compete is price.
Do you know what your minimum viable customer base is? If that number enables you to run a business or organisation that meets your objective then what is the purpose of moving the objective just to get more customers? That is of course unless your objective is world domination and I know a few people where that objective is a reality!!!
Politicians constantly talk about growth as being an objective and a good thing, but why? Surely become more effective is a better objective.
Great business and organisations find their minimum viable customer base and find better and better ways of satisfying those customers to achieve mutual objectives.
The race for growth has put the whole world in jeopardy and yet so many still pursue it as an objective. The banks and finance industry are among the worst offenders here. If you have a growing business and you want to obtain finance to grow more then they love you. Try raising finance not to grow but to just do things better for an existing but stable customer base in order to achieve an objective which is not based around growth – good luck.
Employees suffer burn out and worse in pursuit of growth. Business leaders are hailed as heroes, not because they have achieved a worthwhile objective, not because they have done something effective or worthwhile but because their business has “grown” and normally the measure used to assess success is turnover – it’s not even profit growth.
I have had the privilege of dealing with one particular business for over thirty years. It is the best business I have ever worked with. In that time their turnover has grown from just over £2million per annum to just under £4million. Just about keeping up with inflation. Not a success, even a failure in the eyes of the growth pushers. Throughout that period, they have never lost sight of their objective which is to be the “biggest fish a smallest pond”.
Their employees rarely work overtime, in fact they have recently introduced a four-day week where they still expect employees to spend no more than 80% of their time on the job to give them 20% of their time to think about and improve their job. They consistently pay between 10% and 20% above the market rate and they have never had a case of employee burn out since I have known them. They now encourage flexible working for those employees where it is effective for both the employee and the employer. With one exception they have made a net profit of between 10% and 30% every year. Now that’s what I call success.
I know what you are thinking. This must be a software company or some other such super profitable area. Well, it’s not. 60% of their income comes from manufacturing and most of the other 40% from supporting their product and by income, I mean profit, not sales.
I have even actively seen this company recommend competitors to their customers because they feel that they would be mutually better off by parting company. Objectives, not growth being important.
Next time you are sitting down planning you “growth strategy” have a think. Is that what you really want? Or do you have some other, better objective?
That objective may result or require growth but should not be growth itself.
Food for thought.
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