Companies are praised for growth, touting stats like the number of jobs created or the amount of funding raised as the be-all and end-all of success metrics. But there's a difference between growth and sustainable growth -- a lesson that The LEGO Group recently learned.
Back in September, LEGO announced a major cut to its workforce, citing unsustainable growth. In this article, the chairman of LEGO is quoted as saying, "We have added complexity into the organization, which now, in turn, makes it harder for us to grow further. As a result, we have now pressed the reset button."
Unfortunately, it's a fairly common occurrence these days for companies to face such massive setbacks. As a result, I've sought to learn more about the challenge of attaining sustainable growth. Through my talks with experts in a range of industries, a few points rose to the top:
1. Balance long-term planning with temporary fixes.
Preparation is essential, but it isn't everything. "Rapid growth can make or break a company, especially smaller companies and startups," says Jeff Winters, CEO of Sapper Consulting. "If you spend all your time planning processes that will be effective at scale, you will likely lose customers in the interim by not providing temporary solutions to issues you plan on resolving in the future. That said, if you spend all your time putting Band-Aids on major process issues, you'll end up building your company without a solid foundation to support growth."
It's a tricky tightrope to walk, but one that Winters' team at Sapper has experienced firsthand. "In the last year, our customer base has grown by 370 percent, which took us from five to almost 50 employees almost instantly. We have attempted to build processes for five employees that will also scale to 100 employees, but that simply doesn't happen all the time. We spend a lot of time considering how we can satisfy clients in the short term while preparing for success in the long term."
2. Keep growth rooted in your values.
Mark Thompson, an executive coach who has seen the struggles of juggernauts up close, has a more inward-facing approach to growth. "To grow sustainably means that you, as a leader, are the change agent -- you're driving transformation rather than waiting for it to run you over."
Thompson explains that some of the biggest names in recent times have also had the most dramatic shifts. "I've been coaching the founding team at Uber's fastest-growing competitor, Lyft. Co-founders Logan Green and John Zimmer are winning the race by focusing on transformational growth -- not at any cost, but rather based on strong values to support customers and drivers. The leaders of a sustainable growth business, by definition, need a mission to anchor the transformation in lasting values."
3. Stop expecting perfection.
In some of my talks, the conversation veered away from battle plans and toward setting better expectations. Richard Gottlieb of Global Toy Experts was one such leader who touched on this; he noted that LEGO's 13 years of consecutive growth were "a bit like Joe DiMaggio getting a hit in 56 consecutive games. We are not looking at a season of rapid growth, but an astonishing and steady growth pattern. Rather, we are seeing that even in the best-run companies (and LEGO is one), the laws of gravity eventually come into play."
4. Know when to get out of the way.
"One of the most difficult decisions for business leaders to make during periods of rapid growth is to know when to step aside and allow other individuals to steer the company," explains Peter Gasca from the CoBE Institute at Coastal Carolina University. "It is not necessarily that these early-stage leaders are incapable, but rather that their skills are better applied to looking forward and maintaining the vision of the company instead of focusing on daily activities as it scales."
What advice do you have for founders looking to ensure sustainable growth?