Everyone wants growth.
We want growth in our personal lives, as parents, and in our friendships. We want to grow in our professional lives, as business leaders, entrepreneurs, and front-line employees.
The desire for growth lies deep down in each of us. It just makes sense that it is a key goal for most businesses. But growth, in and of itself, is not without its challenges. Chris Zook, partner at Bain & Co. and co-author of The Founder’s Mentality put it this way:
“Growth creates complexity, and complexity is the silent killer of growth.”
Zook and co-author James Allen’s basic argument is this: The more your business grows, the more employees you hire. You create departments focused on specific areas. Market share becomes a priority. Executive leadership teams make all the calls even as they lose connection with customers, the product, and front-line employees.
Then suddenly the organization stops growing. Leaders are confused. “Nothing’s changed,” they think. In fact, as the company found success, everything changed.
Successful companies grow when people believe in something.
That belief usually comes from connection. Connection with customers or passionate leaders or coworkers. Solving problems with these small, committed groups of people is where the best ideas come from. It’s the source of the passion and hard work that brings these ideas to life. As companies grow, the connections weaken. So does engagement, innovation, and grit.
In an interview with Wharton on UPenn’s podcast Zook points out the following findings from 10+ years of research on growth and decline:
- 94% of growth barriers for companies are internal;
- “only 13% of people in the world say they have any emotional commitment to the company that they spend half their waking lives with;” and
- two-thirds of Bain and Co.’s strategy studies show that “companies failed to see the full potential in their core and often needed to shrink to grow.“
I love that last finding – companies often must shrink to grow. Why?
Because connection is the most important part of business.
Connection with the team and the customers. The product, the mission, and the strategy. When leaders lose that connection companies become lost. People stop talking. They stop caring. The life that built the organization begins to die.
How can leaders keep that connection? By being approachable. This builds connection to front-line employees, who are directly connected to customers. This is the only place where perfect knowledge of the organization exists. And if you don’t know what your customers and employees experience day-to-day, how can you lead?
This is what The Founders Mentality is all about. It takes you back to the beginnings of the business, when there is only one leader, the founder, who is as engaged as everyone else.
Zook tells the story of Vikram Oberoi, CEO of Oberoi Hotels, voted “the best luxury hotels in the world” for many years. Zook says:
“Even at the age of 94, he [Oberoi] would be holding customer comment cards in front of his eyes when he could barely see, scratching notes about the temperature of the tea for customer complaints. To me, that gets lost often in big companies.”
He’s right.
Can you think of any examples where growth actually lead to the downfall of a company? Any examples from places you’ve worked? Have you seen problems caused by leaders moving further and further away from the day-to-day customer and employee experience? Have you ever experienced this loss of connection?
