Recently, a friend told me how he recently became engaged in a heated debate with a client. The topic of controversy: Whether the grow or die axiom, so popular in corporate America, was a binary choice. Here’s how he related it to me.
I was urging my client, a senior partner in a well-established accounting firm, to embrace more growth-oriented strategies than he was comfortable with. In doing so, I am embarrassed to admit, I resorted to a cliché.
“You always make things binary,” my client chided me. “It’s not one or the other. A company can grow and still die. It can fail to grow, and yet not die. It does not have to be grow or die.”
As a management consultant helping companies improve business performance, I teach clients new ways of solving old problems. But I am always amazed at how much I learn from my clients, for which I am grateful.
My client was right. The names of some companies that had spectacular growth, right up to the moment they died, came to mind. And I conjured up examples of companies that have never grown, but enjoy year-after-year steady profits.
So a deeper dive on the “grow or die” mandate became necessary. After pondering the topic, here are my conclusions:
1. Grow or die is about improvement, not literal growth. Taken literally, it is true that growing companies die, and that non-growing companies enjoy longevity. The phrase “grow or die” does not refer to literal growth, such as increased sales, margins, or profits. It refers to continuous improvement of business strategy, processes, and execution.
2. Improvement produces literal growth. In The Power of Habit, author Charles Duhigg tells the story of how Paul O’Neill turned Alcoa around by getting everyone to focus on improvement in just one area: worker safety. The result was not only a safer workplace, but a company that improved in other areas, resulting in dramatically increased sales, margins, profits, and shareholder value.
3. Grow or die should not be blind to quality of growth. Not all growth is created equal. Quick or sporadic growth, or growth resulting from quirks of fate or happenstance, are not of the same quality as growth resulting from a company’s unrelenting quest to do a better job. Growth resulting from a process of continual improvement is the kind of growth that can be expected to be lasting, making companies sustainable for the long-term, and thus less vulnerable and more valuable.
4. Death is not always about heaven or hell: Sometimes it means purgatory. Not all companies that die go to heaven or hell. Some simply linger in a state of perpetual stagnation. Employees become stale, dull, and disinterested. Product offerings fail to keep pace with changing times. Owners and managers become complacent, confident that doing what they have always done will assure future success. These companies are dead, and do not even know it.
Perhaps the foremost expert on the subject of growth, (at least biological and evolutionary growth,) was naturalist Charles Darwin. It was Darwin who said that it was not the strongest who survived, but those most adaptable to changing environments. And, after all, isn’t adaptive change what improvement is all about?
So, perhaps instead of preaching grow or die, he should have advised his client to improve or die.
What do you think of his approach?
To learn how Integrated Growth Advisors can help you solve your business challenges, contact David Landrum, Partner, at 860.295.1459 or 312.882.3266, or firstname.lastname@example.org.