Can You Grow Too Fast? - (Part II - Cultural & Structural Considerations)
Updated: Nov 30, 2020
In the last article (Part I) we discussed the possible financial and cash flow complications associated with overly rapid growth. However, rapid growth can cause a host of cultural and structural problems too. Without careful panning, you risk losing sight of your company's mission, vision, and core values, or making hasty, improper decisions regarding your people and processes.
Imagine a small regional company that landed a huge, multi-year contract with a nationwide customer. The company has to more than double its workforce over the course of roughly 3 months to meet its obligations. To facilitate this massive need for new hires in a relatively short time frame, the interview process is parred down and finding an ideal candidate changes to finding any candidate who has the required certifications to perform the work. As a result, several hires do not fit well with the company culture and do not embody the firm's core values. Furthermore, they have to be put to work almost immediately to fulfill the contract obligations, leaving almost no time for training. The enormous amount of work stretches all employees too thin, leading to widespread burnout. Several key employees, a few that had been there for years, leave because they cannot handle the constant travel and long hours, and they complain that the company does not feel like the same company - the culture has drastically changed and they feel like they do not belong there anymore. The combination of these factors results in a reduction in the quality of work and customer experience, two things the firm prided itself on and enabled it to win the contract in the first place. This scenario may seem like a stretch, but I have seen similar situations play out in the past. It can happen to anyone if you do not have a well laid out plan for growth.
During rapid growth, especially at small companies, management may have to step in to help with the day to day operations. They must be careful to still make time to step back and consider the big picture implications of the rapid growth on their business. Consider asking questions like: is this growth sustainable, where should future growth come from (same customers, markets, etc), how can we effectively and efficiently scale internal processes, what investments (in people, equipment, software) do we need and how do we fund those. If you do not step back to review these strategic items, you may risk losing your identity or your brand as you grow.
Another issue with fast growth is it can hide inefficiencies. Fat times enable companies to run fat, while lean times force them to run lean. Have a plan for growth that ensures you are investing intelligently in your people, property, plant, equipment, and software. Make realistic forecasts about the future - do not get caught up in the exuberance resulting from your recent rapid growth. You do not want to enter into a multi-year lease agreement for an office space that is far too big, build a factory with far too much capacity, or over hire for overly-optimistic expected future growth that does not materialize. Decisions like these can have long-term ramifications, and are extremely difficult or painful to alter. Over expanding can lead to years of lackluster performance, lay-offs, cash flow issues, and/or bankruptcy.
To summarize, during a period of high growth be sure to:
Take care to hire only who you need. Make sure they are the right people, and provide them with adequate training
Make time to step back and work on the business, not just in the business. Look at the big picture. You decisions should always tie back to your mission, vision, and core values.
Scale your systems so you do not loose your core competencies, and scale according to rational forecasts of future growth.
Adhering to these guidelines not only facilitates your current growth, but ensures your business will continue successfully for years to come.
Growth is good for a business, but only if you have the necessary plan in place to ensure it happens profitably and sustainably. Rapid growth without planning can have disastrous results potentially bankrupting your company or leaving it stumbling for years to come.