The Paradox of Continuous Growth?
Profitable growth is likely the most universal goal for businesses. Employees see better opportunities for development and rewards in fast-growing companies, while suppliers favor growing firms to boost their own growth. It’s clear that a growth strategy is highly appealing for any company.
In a study by Harvard Business School, 680 companies were evaluated, and the 170 most reliably growing firms were selected for a 34-year follow-up. Unsurprisingly, almost all companies lost their growth momentum at some point, with only 7 achieving growth every single year (HBR, Mar-Apr 2024).
The study found that, when environmental factors like markets, technological advancements, or disruptive innovations were removed, most companies caused their growth problems themselves.
Highly reactive strategies and opportunistic thinking often led to scalability issues in systems or processes due to overly rapid growth. However, the bigger issue was the impact of growth on company culture and employees. Temporary scalability challenges became permanent, employees became fatigued and cynical, and the number of errors increased. This could result in long-term or even permanent damage to reputation or company culture.
When crafting a growth strategy, companies should decide:
- 📈 How quickly the company can grow sustainably
- 🌍 Where growth will come from
- 💰 How the necessary resources for growth will be secured (funding, personnel, organizational capacity)
For many companies, the right strategy may be to decide not to pursue faster growth, no matter how tempting it seems. Instead, long-term success is best ensured by identifying which markets offer a unique competitive advantage and maintaining steady growth in those areas.
A skilled growth strategy considers the company’s current capabilities and develops them continually toward future growth. Most importantly, it ensures the company’s most valuable growth potential—its employees—remains at the core of the strategy.
