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.
Edward D. HessProfessor of Business Administration
