In a world where too many businesses seems locked in a take-no-prisoners struggle to super size, it is time to reconsider what viable growth really entails. Too often it has become confused with one of its by-products, expansion. Getting bigger may be a by-product of growth, but it is not its main feature. A business that takes the short-cut of pursuing size increase directly instead of realizing it through the hard work of real growth is like an athlete taking the steroid route to muscle building.
Bigness is like self-esteem. It is a wonderful feeling when acquired as a by-product of doing well and achieving one's goals. When gotten this way, it can even serve as a flywheel to generate more success. But the kind of self-esteem that comes from blind optimism and putting a happy face on failure is brittle and unanchored. It tends to do more harm than good.
Peter Pan companies are those that substitute getting big for growing up. They become blinded by grandiosity, and fall victim to the five horsemen of the business world apocalypse: ego centrism, invulnerability, omnipotence, omniscience, and unrealistic optimism.
Bigger is not necessarily better. Bigness begets business bubbles and bullies. It bites back, too. A single-minded focus on getting bigger usually has the opposite effect. Companies that successfully seek it soon find their surroundings become less hospitable, resources less abundant and organizations less functional. At some point it is important for every rapidly expanding organization to ask: where does real business-building end and counterproductive empire-building take its place?
Growth is about forward movement, stretching beyond the limits that currently define and constrain. It is not about getting bigger or holding a record of unbroken success. Real growth involves reaching full potential, not maximum size. It happens when old dominating ideas are challenged, and new ones displace them. Growth means progress, not excess; it is fueled by imagination, not expansion.
Bigger Isn't Always Better: The New Mindset for Real Business Growth,
By Robert M. Tomasko (AMACOM, 2006)
A few months ago I finished writing Bigger Isn't Always Better. Most surveyors can safely ignore the book's first two chapters. These warn of the pitfalls of going after bigness instead of real growth. That's how business bubbles and bullies are created. It's the kind of growth that doesn't last, either. It bites back, blurring a business' focus and creating a beacon for aggressive regulators like Eliot Spitzer. What surveyors will find more useful is the subject of the book's next 10 chapters what smart growth really is and what's needed to bring it about.
A more useful definition of growth is one built around becoming "better," not bigger. A business grows whenever it moves beyond the self-imposed limits that define and constrain it. Growth is about forward movement. It is not about getting bigger or holding a record of unbroken success. Getting bigger may be a by-product of growth, but it is not its main feature. A business that takes the short-cut of pursuing size increase directly instead of realizing it through the hard work of real growth is like an athlete taking the steroid route to muscle building.
Real growth involves reaching full potential, not maximum size. It happens when old dominating ideas are challenged, and new ones displace them. Growth means progress, not excess; it is fueled by imagination, not expansion.
- When Howard Schultz focused on selling his customers an experience, not just a good cup of coffee, Starbucks grew.
- When Darcy Winslow championed a range of products for women that did not fit into the testosterone-defined market segments that had come to define her employer, Nike grew.
- When Bill Greenwood found a way to turn truckers, his railroad's most troublesome competitors, into its best customers by putting their trailers on his trains, the Burlington Northern grew.
- When Roger Enrico set his company on its own course, rather than defining it by its rivalry with Coca-Cola, Pepsico grew.
- When Al Bru, one of Enrico's managers, spent $57 million to eliminate trans fats from Frito-Lay's snack foods, its owner, Pepsico, grew.
- When Arkadi Kuhlmann created a bank with no fees, minimum deposits nor branches, a narrow range of handpicked products, and a willingness to reject customers if they were looking for services he did not want to provide, his company, ING Direct, showed it was possible to grow by challenging the central pillars of its industry's conventional wisdom.
- When Yvon Chouinard dropped 30% of his clothing line, as runaway demand threatened to turn his outdoor sports apparel company into something he did not want it to be, a mass marketer, Patagonia simultaneously got smaller and grew.
Each of these growers gave attention to:
1. Disintegrating an old way of perceiving their situation.
2. Assimilating, first within themselves and then in their operation, a new perspective.
3. Building the capabilities needed to support it.
4. Reorienting their organization, and its surroundings, around this new possibility.
If you want to grow - not just expand - your business or practice, you need to do the same.
Fix the Status
Quo or Surpass It?
occupied in both perpetuating itself
"If all it does is maintain itself, then living is only not dying."
Some people seem to have a special mindset for the surpassing part of this equation - an ability to move things forward, generate effective action, and take a situation beyond what was there before. They are lighters-of-candles, not cursers of darkness.
I like to call people who are especially good at employing this mindset growers. By looking closely at how they think and act we all can become better at making new things happen and creating the kind of business we most want to see. If growers were better appreciated and understood, more recognized and cultivated, then the organizations where they work would accomplish more.
Cultivating a growth mindset certainly beats the alternative: a life, or career, spent being whipsawed by forces we can only resist, respond to, or react against. If all we do is maintain ourselves, Beauvoir observed, then living is only "not dying." Resistance, response and reaction are ways of coping, of getting-by. They are escalating commitments to the status quo. Many situations call for these behaviors; short-term survival in the face of immediate danger, in fact, depends on them. But growth doesn't.
Business is not just about fixing what is broken. It is about taking what is best in your enterprise and nurturing its further development. Leading this kind of growth requires a very different mentality than needed to manage ongoing activities. The best growth champions in the business world are often not the people in charge of today's successful organizations. Often what makes best sense to sustain the status quo is irrelevant or counterproductive to surpassing it.
Not everyone has the special talent needed to create a new future. For many of us, our efforts are better directed at reacting and responding to events as they unfold. At times the growing and maintaining orientations seem in conflict with each other; other times they are mutually supportive. This is understandable. Creating the world that we most want to have necessitates a mindset very different from that required to react to the one we do. The logic behind avoiding unpleasant and feared consequences is not the same as that which guides a builder of something better.
Game of Growth
What is a mindset? It is how you think about what you are doing. It's your internal logic system, the model of the world you carry around in your head. Your mindset gives birth to your beliefs and assumptions. It determines what facts you notice and what you make of them. And, even more important, what you do as a result.
when new challenges are taken on and new capabilities are created
or added to meet them. For this to take place in an organization,
the same process must be going on in the people working within
it. Businesses seldom experience sustainable growth unless those
within them do also. The desire to acquire new skills and face
tougher challenges motivates growth just as greed and grandiosity
are the drivers of bigness. People wanting to grow a business
need an urge to grow themselves as persons first. Growers are
people who need challenge the way we all need air. Without it
they are restless and bored; with it they are gratified because
they have an opportunity to show what they are made of by using
or expanding their potential.
The inner game of growth is different. It's a mindset game. It is where the real leverage is. This is a game whose moves have to do with noticing opportunities where others see only obstacles, turning these openings into growth goals, and then rallying support around them. It's a game that feeds on brutal candor about your business' current situation, and emotional ardor about its future prospects. It's a game of momentum and resilience, one whose best players also know when it's time to shift gears and share the wealth.
Growers are people skilled in both games. They want more than maintaining equilibrium. They are people who want to bring new things into being. Some start revolutions. Others nudge evolution along. These are people with a healthy measure of discomfort with the status quo, usually because they are able to foresee something better - something they are able to move toward and encourage others to want. What they do, and how they do it, is a subject worthy of close examination.
Step back from themselves. Growth is a narcissism-free zone. Being able to step back from yourself, from your ego, your self-image, is the best way to stay open to new opportunities and to change course as circumstances require. It's an ability Herb Kelleher, of Southwest Airlines had, GE's Jack Welch flirted with, and Enron's Ken Lay lacked. Wise growers have the ability to see things as others see them, allowing them to anticipate the reactions others will have to their moves. They are as sensitive to their surroundings as they are to their intentions. They know they are part of a broader marketplace that may not necessarily revolve around them and their immediate needs.
Avoid letting their memory block their vision. Growers notice changes in their surroundings that others miss because they see what's really there, not just what they expected to find before they looked. They know the topography of their minds isn't always an accurate map of the contours of the marketplace. Growers spot new opportunities by looking at what they do from the outside-in. They turn off their brain's autopilot and put themselves in the shoes of their clients when they seek opportunities to grow.
Cultivate positive emotions. Growers focus on the hopeful features in their environment. Their glasses are always half full. They make use of a positive mood to jolt their thinking. Positive emotions make us more open to the forest, not the trees. They are a source of "cognitive glue." We are more creative when we are happy because that's when new information is more likely to connect with what's already in our knowledge base that's how our brain is wired. Negative emotions do the opposite. They drive us to hunker down and block our peripheral vision. We end up just reacting to immediate circumstances rather than creating new ones.
Set clear, medium-range goals. Growers know what they want. They know about the power a goal has to change what is noticed, and to move people from possibility to action. Going from an opportunity to an objective is what gives a grower's vision its practical shape. The best goals walk the tight rope between being too vague and too specific, too soon and too far away, and too sterile and too cute.
Tell the truth. Growers generate energy to move forward by keeping the gap between where they want to be and where they are constantly in mind. It's amazing how paying attention to the gap ends up making it smaller. But this only works when there is complete candor about what the current state of reality really is. This is not just a matter of veracity; our minds are often hard wired to distort reality. Growers know how to work around this pitfall.
Master momentum and bounce. Momentum starts through a series of small wins. Get started by doing something anything in the direction of your growth goal. Fail early and often: motivation comes from action, it doesn't proceed it. Growers know how to snap-back, not snap, from setbacks by stepping back and learning from their errors. They don't bury them. When stymied, leaping-before-they-look is often the grower's best way to get to a place where the visibility is better.
Know when to let go. The world, and the marketplace, is always changing. Every growth initiative eventually runs its course. That's when it's time to let go and move on to something else. Quitting while you are ahead is an underrated virtue. But it's the key to keeping yesterday's success from becoming today's millstone.
Limits actually play a big part in guiding growth. When they are self-imposed by a business' outdated dominating ideas, moving beyond them is a marker of progress. When constraints come from outside the business, they are not hurdles to overcome as much as guideposts to channel action. At times, they may serve to limit unwise actions just as the discipline of paying dividends makes it more difficult to launch uneconomic business expansions. Few growers go out to seek constraints, but all successful ones learn how to live with them, and especially effective growers learn to extract some benefit from them.
Constraints, not freedom, drive creativity. They push us to think differently about our situation. We search for substitutes for resources in short supply. We invent alternatives that did not exist before the constraint emerged. Most constraints arise outside the business and are unwanted. But sometimes the most powerful driving forces for growth emerge when constraints are voluntarily imposed. Consider the contrasting situations of the lobster fishers in New England and Australia.
Some New England fishing communities have tried to put limits on the amount of fishing taking place, resorting to social pressure and occasional ("hardball"-style) violence to implement them. These tend to be enforceable only close to the communities' shoreline, and most of the lobsters have migrated farther out into the open ocean, areas controlled by the state and federal governments. Government agencies, facing electoral pressure from the fishers, have been reluctant to impose strict limits on the size of the catch. Instead their policies of giving struggling fishermen subsidies, tax breaks and financing for bigger boats have served to accelerate the over-fishing problem. One longtime fisher lamented that his only incentive is to go out and kill as many fish as he can. He has no motivation to conserve the fishery any lobsters he leaves behind to grow bigger for next year's catch are likely to be immediately taken by his fellow boatmen.
Forty years ago he Australians shared the plight of today's New Englanders. Their lives changed when government limits were set on the total number of traps that could be used by each port's fishing fleet. Each working fisherman was assigned a license for his share of the traps, and from then on anyone who wanted to fish lobsters in the waters around that port had to acquire a license from someone already holding one. This is the same approach that governs seats on the New York Stock as well as the fixed number of taxi medallion licenses available in that city. Lobster trap licenses that traded for $2000 each twenty-five years ago now frequently sell for $35,000, making many of their holders millionaires. Why the sharp price appreciation? When given control over an asset that might appreciate in value, the lobsterman learned how to be conservationists.
The Australians started to take a long view when they saw the prices start to rise for their traps. Now they had two ways to make money: sell their catch and take action to increase the value of their licenses. Realizing the resale value of the licenses would determine how soon and how comfortably they could retire, they took steps above and beyond the government regulations to insure lobsters would be plentiful in the future. The Australian fishers hire scientists to monitor the size of the fishery, they self-imposed strict limits on the size of lobsters that could be caught. In some ports the lobstermen limited themselves to 60 traps each the New Englanders needed up to 800 to yield a similar harvest. Obviously, the Australians had a much easier workday and see a lot more of their families. Rick McGarvey, a marine biologist, observed that the nature of fishing is such that more money can be made by doing less work. By fishing less intensively, more lobsters remain in the ocean to produce eggs for future catches, and those that remain get bigger so when they are eventually caught they yield a better price.
What do the down under lobstermen do with all their spare time? Some invest in thoroughbred racehorses or build bigger mansions. Others, though, have taken the growth lessons learned from lobsters and applied them to other types of fishing. In the 1980s the tuna fisheries of the Australian coast were nearly depleted. The government took action again, assigning each fisherman a transferable share of each year's catch. This constrained their ability to kill as many as they could catch, so they looked harder for ways they could make the most money from each tuna. Some came up with the idea of putting the tuna into large floating pens instead of killing them as soon as they were caught. The pens were then towed to their home harbor, where they became sashimi farms. The fish were fed special diets of herring and anchovies, cattle feedlot-style, to add to their oil content and improve their color. Eventually, depending on the fish's weight and the number of upward price ticks in the Tokyo tuna market, they would be taken out of the pens and flown to sushi-crazy Japan where they would command top dollar because of their appearance and farm-acquired high fat content.
What would it
take for this situation to move in a better direction? The New
Englanders would have to do more than just ameliorate their immediate
pain. That is what they have already done by using their political
power to get government subsidizes to allow them to continue
their old practices.
Growth and loss are intertwined. Letting go is easier to do if something is being offered in return for giving up old ways and ideas. The Australian lobster fishers lost freedom to fish as they wished, but they gained, after a time lag, a valuable appreciating property right. They "let come" let something new come to them that then put them in a position to make best advantage of the changing dynamics of their fisheries. The opposite of letting go is "momentum thinking" assuming what prevailed in the past will continue. Sometimes it does. If the current formula works well, and the world in which the business operates shows no sign of changing anytime soon, it is time to optimize the formula, not to set out in quest of a new direction in which to grow. But when dominating ideas are out of sync with reality, all the operational improvement in the world will not help things. And an escalating commitment to the status quo, in that circumstance, only puts the future at risk.
Bigger Isn't Always Better: The New Mindset for Real Business Growth,
By Robert M. Tomasko (AMACOM, 2006)
- business, government or nonprofit - has two essential missions.
It must maintain and preserve what it already does. It also must
lay the groundwork for moving beyond the boundaries of its current
activities. The first mission keeps the organization efficient
and successful in today's world. The second ensures it will survive
and thrive in tomorrows. One perfects the existing business formula;
the other leads the charge to change it. Both missions are vital.
Few companies can survive for long by paying attention to only
one and ignoring the other, though in the short run they are
rivals for attention and resources.
To make it easier to contrast the mindsets required by the twin-missions, let's give each a name. A "fixer" mindset is concerned with what needs to be done to maintain and preserve the business as it is, within the logic of its current dominating ideas. The "grower" perspective, in contrast, is focused on what is necessary to move beyond what currently exists. When the grower's mindset is employed, the business advances; when the fixer's is used, it keeps afloat. Both are worthy objectives.
Fixers like to see themselves as realists, practical people. They like to quantify things and feel there is an objective, measurable reality that may be apart from how some people perceive (or misperceive) the world. They deal with events as they come. The status quo is something they usually accept and try hard to work with, though they at times may feel skeptical or cynical about it. Sometimes they feel resigned to "muddle through" difficult situations, knowing that at best their efforts are likely to produce only incremental change. Fixers like to keep up with the latest management trends. They benchmark a lot, and are diligent seminar goers, constantly looking for new techniques that show promise to improve the working of the business.
Fixers think linearly - their world is one of proximate causes and immediate effects. Fixers often feel uncomfortable in times of chaotic change. They are more content when all going on around them seems well under control. Future happenings, from their perspective, are largely determined by what has already occurred. They predict the future by looking at the past, always trying hard to stay keenly aware of the trends that are driving today's marketplace.
Growers have a similar perspective about the organizations in which they work. They value their ability to discover openings and leverage points in these structures. They believe that many internal rigidities and conflicts are rooted in misperceptions, which are correctable. Change, growers maintain, can arise from inside the organization. It does not always need to be imposed externally.
Goals; Contrasting Worldviews
Growers have a conviction that they can shape their own destiny, while fixers are more inclined to see themselves on the receiving end of circumstances outside their control. One is proactive, the other reactive. The fixer's environment provides the stimuli for their actions, as they react against or respond to their circumstances. Growers are more internally energized by what they want to bring into reality, what they want to add to their circumstances rather than take away.
Have a conversation with a fixer and soon you will notice much of the discussion revolves around tactics, techniques and technology. Mention the future and you will soon hear the fixer's thoughts about forecasts and predictions. Discuss the same issues with a grower and you will find less said about what is likely to be and the mechanics needed to bring it about, and more about alternative ways things might work out and what would be required for each to occur. Growers like being on the initiating, the shaping end of change. They believe the best way to predict the future is to invent it.
"Fixer" and "grower" are labels for mindsets, not people. But people are the creators and carriers of a mindset. Jack Welch frequently favored the fixer mentality. His successor at GE, Jeffrey Immelt, is more of a grower. Nissan's Carlos Ghosn is a switch-hitter.
Better than Fixers?
Bigger Isn't Always Better: The New Mindset for Real Business Growth,
By Robert M. Tomasko (AMACOM, 2006)