Skip to main content

Paradox of Growth

Recently, I've been burning through the HBR Ideacast. It's a podcast. As an MBA and constant learner, it's one of my favorite. If you have time and are curious about why so many companies experience stellar growth and then stall this episode of the HBR Ideacast is for you.

If you don't have time to listen to the 18:05 podcast here's the notes I took...

All businesses and most people want to experience growth. We want to grow our knowledge and our finances. However, growth creates complexity. Growth creates internal complexity. Growth creates external complexity. The ideas that fuel growth generate complexity, and lots of it. Paradoxically, the accumulation of complexity is the silent killer of growth.

Organizations that have experienced growth often have the passing luxury of building complex decision processes. Organizational layers of management start to distort information so much that senior leaders in the company no longer know what's actually going on. Growth organizations often get more matrix. A matrix organization often allows accountability to hide and without accountability quality and efficiency suffer.

With the above pre-text, Chris Zook dives dip into the paradox of growth in his book, The Founder's Mentality. How can we cut down on complexity that is actually hurting our ability to grow?

  1. Create a very clear and insurgent mission that inspires and attracts talent to stay on-board and focused on objectives. An example of this approach might be Netflix's decision to elevate the team focused on their small streaming business while their DVD business was still dominating and driving revenue.
  2. Focus on the customer experience. Think about the CBS show Undercover Boss. In every episode, the senior leader quickly identifies opportunities to improve the customer experience by spending time in the operation.
  3. Foster an owner's mindset. Even if you have a matrix organization, someone needs to be accountable and everyone should be responsible. I see this most at Starbucks, where employees seem empowered to quickly resolve issues.

As I was listening to this HBR podcast, the topic reminded me how some founders choose not to take on much debt. When Apple began to stabilize after Steve Jobs returned to the company, he refused to take on debt. He simply didn't need any debt as the company had strong cash flows. Today Apple's cash flows are still great, but they also carry roughly $75 billion in long-term debt. Why? My guess is that it was a relatively easy way to grow by adding just a bit of finance complexity.


Popular posts from this blog

MoviePass, First Impression

About three weeks after signing up for MoviePass, I received my MoviePass card in the mail last week. MoviePass enables the subscriber to attend one standard movie per day for just under $10 per month. In other words as a MoviePass subscriber, I can go to a theatre and see a non-3D movie everyday. If I see one movie per month, my MoviePass subscription seems like a nearly break-even financial decision.

Last Friday night with my recently received MoviePass card in hand, I decided to go see Lego Ninjango with my son. I briefly skimmed the packet that came with my card, but I didn't download the MoviePass app or take any special action. I just went to a self-service kiosk to purchase my ticket and my MoviePass card was declined. Without much additional consideration, I went to the ticket window and tried again. The transaction failed but the theatre employee asked, "did you check-in on the app?" She then added, "but if it doesn't work that's a MoviePass problem…

New Product Introduction Inspiration

Innovation and new product introduction isn't glamorous. Here are three quotes I often reference to inspire innovation when times get tough.

"To change something, build a new model that makes the existing model obsolete."
~Buckminster Fuller, American Architect (1895 - 1983)

"A new idea is first condemned as ridiculous and then dismissed as trivial, until finally, it becomes what everybody knows."
~William James, American Philosopher (1842 - 1910)

"It ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily bel…

31 Days of July

A few days before July started I had a realization that I was destined to be in an unhealthy state well into the future unless I tried something different. An idea came to mind to try and really push myself for 31 consecutive days to be healthier. For the month of July (including a week of vacation at the beach), I was going to focus on three tactics to improve my health.

My idea was pretty simple. One, I wanted to track my caloric intake with a goal of less than 2,000 net calories per day. Net calories for me was caloric intake minus exercise. My second goal was to drink 100 ounces of water daily. The third and final goal was to walk more than 10,000 steps every day. Let me say that I'm relatively healthy. I didn't consult a doctor before I started this program, and I'm not providing any health advice. Before you start any program you should consult your primary care physician.

In addition to the three goals above, I also decided to go to battle against sugar. I started r…