This course focuses on challenges faced by existing private businesses when they attempt to grow substantially.
Myths About Growth
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Из курса от партнера University of Virginia
Grow to Greatness: Smart Growth for Private Businesses, Part I
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The Truth About Growth
This module presents an overview of growth in business with common myths and truths. There is a required reading: Edward D. Hess, "Growth is the
Dynamic Confluence of Strategy, Entrepreneurship, and Values." An option case study reading on Eyebobs Eyeware, Inc is also available. Please visit the Eyebobs website at https://www.eyebobs.com and think about whether Julie's vision and customer value proposition connects with you. What do you like about the site? What do you dislike? Why is her website so important to her
business? What should Julie do to keep her website "fresh"?
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Edward D. HessProfessor of Business Administration
Darden School of Business
Welcome to Grow to Greatness. Thank you very much for your interest in
this course, I will try during this course to make it interesting and
educational for you. Let me set the stage first in this first
class about how each week is going to go. I'm going to start each week and do a
short introduction, try to lay out the key points that we're going to cover.
We're going to then move to the case. And as you saw in Week One,
the cases are real, life stories about entrepreneurs who have been there and
done that. This is basically bringing the
entrepreneurs into the classroom for you. And three times during this course, we're
going to have filmed interviews with the entrepreneurs, including, we'll do a film
with Julie Allinson later in the class, the founder of Eyebobs.
Now, after the case discussion, we'll go back
and go through the key points again. Why?
Well, if you think about it, I'm going to tell you what we're going to talk about,
we're going to talk about it, and we're going to review it because the research
says that's how people learn, and that's the purpose of this, to learn.
Also during the course, there's going to be small tests.
Every once in a while, four or five times during each class, we're going to stop,
and you're going to have a, take a little test. Two, three, four questions,
multiple choice, fill in the blank. Those tests are not for me, they're for
you. They're to help you learn.
They help you gauge how you're doing, okay?
They will not count towards your final grade.
Your final grade is a final exam at the end of the class.
Now, how does,
how do you best learn during this course? First, you've got to prepare and do the
readings. Second, this course is all about giving
meaning. Meaning, if you will, to what you're
reading and what we're talking about. By that I mean, play it out in your head.
What does it mean to you? Visualize it if you can.
Make sense of it. And verbalize it to yourself as to what
are the key learnings. Now, one last point.
Class forums. The class forums are for you.
In business school, we call them learning teams.
But since there's over 40,000 of you, we call them groups, alright?
You have the chance and you've got it now to join a group by geography, by type of
business you're interested in. What's the benefit?
You can ask each other questions. You can learn from each other. And you'll
find, during the workshops, you can post your work and people can learn from each
other. Because the purpose of that is, is to
give you another resource. Because in this course, we've got students, we've
got entrepreneurs, we've got business builders, we've got people of all ages,
all backgrounds, and everybody brings something to the game.
Alright. Week One, the truth about growth, the
truth about growth. Now,
what my research shows is that when you say the word, what do you, what do you
think about business growth? Most people have these common beliefs and common
assumptions. Number one,
all growth is good, of course.
Number two, getting bigger is always better.
And number three, businesses must grow or die.
And remember, this grow or die thing is very important,
alright? It's very important.
Grow or die. Because that's what people believe.
Now, do you know what the research shows, ladies and gentlemen?
Surprisingly, surprisingly, there's no scientific basis.
There's no scientific research for those common beliefs.
At best, they're half truths. What does that mean?
They maybe right, and they're just as likely to be wrong in many cases.
In some cases, they're pure fiction. Now, what does fiction mean?
It's made up. It's not true.
These beliefs, if you will, are underly what most people think about growth.
Now, what do we know about growth? What's the truth about growth?
Growth can be good, and growth can be bad.
Growth can be bad when it overwhelms people, processes, or control.
Growth can be like a tsunami, overwhelming, overtaking a business.
And what happens when that occurs? Growth can destroy value.
In fact, in my research, many successful entrepreneurs were successful on their
second try. What happened on the first try?
Growth overwhelmed them. They grew too fast.
They grew too quickly. They grew too much at any given time.
Well, this thing about growth, well, growth can stress quality controls.
What's that mean? Well, what do all customers want?
They want 99% defect free product on time.
And if you make a mistake, they want loving care, loving care.
Growth can stress financial controls. What does that mean?
Well, in many cases, to grow, you have to pay out money before you receive money.
If you do that and pay out too much money before you receive money, you can go
broke. Growth can dilute one's customer value
proposition. What does that mean?
You can dilute and diminish the customer experience by taking on too much and
becoming sloppy, by making too many mistakes.
Growth can dilute one's culture, one internal rules of the game.
Growing too fast brings too many people in the business, and, if you will, it
dilutes your culture and you become something you don't want to be.
Growth can also put you in a different competetive space.
What does that mean? The bigger you grow, the bigger your
competition will be. And in some cases, as you grow bigger,
your competition will become bigger than you, and they'll be more better financed,
and they can operate more efficiently than you.
So you have to think about. Yes, I'm growing.
Will my competition change? The bigger concept.
Bigger's not always better. What we know is, the bigger the business
gets, the more bureaucratic and complex it
becomes to manage. Well, this has a couple of impacts.
Number one, the question is, can you manage a bigger
business? Many entrepreneurs find they're not
qualified to manage the business as it grows.
Number two, the bigger you get, alright?
The more complex, the more rules you need. The more bureaucracy you need, the
more administrative people you need. And what's the risk?
The risk is, the bigger you get, you lose that entrepreneurial spirit and you
become a bigger company, slower, and non-entrepreneurial.
Now, my favorite belief, my favorite belief out there, alright?
That is completely pure fiction, grow or die.
Grow or die is not based in any science or business reality.
When I was doing research for one of my earlier books, I, first time I found the
grow or die concept was in a U.S. Congressional testimony in the 1940's on
antitrust law. Well, that doesn't have anything to do
with starting a business. Then, in 1954, Time Magazine, which at
that time was a local weekly news magazine in the United States, published
an article which said, grow or die is a chief axiom of business.
And axiom it means law, principle, since 1954, alright?
Almost 60 years. That rule has sort of been adopted
without anybody saying, what's the basis of it?
What's the support? What's the scientific foundation?
Is it rigorously? Has it been proven?
And guess what? It hasn't.
There is no basis in any science, whether it's Economics or Business Finance,
Business Accounting, there is no basis for the concept grow or die.
You are just as likely, if you grow the wrong way or if you grow imprudently, to
grow and die as you are to grow or die. Grow or die, I suggest to you is the
false goal. Much better than grow or die is the
reality that every business, every business has to improve.
To stay in business, ladies and gentlemen, you have to improve your
customer value proposition better than the competition.
So, it's because business is really a competition.
It's a little bit like that story, okay? If my cameraman Kyle here, who is doing a
great job. If he and I are walking into woods, and we're up here in the
Shenandoah National Forest and he says, Ed, there's a bear. We got to run real
fast. And I say to Kyle, Kyle, no we don't.
I've just got to outrun you. That's what business is all about, ladies
and gentlemen. You just have to outrun the competition.
And how do you do that? By constantly improving what you deliver
and the value you deliver to your customer.
Alright. Let's take a break.
Take this quiz. This quiz is going to test you on what we
just talked about. Three, four questions.
Take your time. It'll show you your answers.
And when you're done, come back because I'll be waiting here for you.
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