The Dangerous Results Of Enterprise Progress

The harmful effects of business growth

As businesses grow, often making mistakes and building up debris that ultimately kills them. Nowhere is this more evident than in the setting. When successful insurgents try to cope with their burgeoning complexity, they make mistakes in personnel. At the highest level, they hire professionals with experience in large companies that are dramatically and disruptively changing the start-up culture. They work at great speed across the company, often sacrificing the quality of the employees for the quantity. Soon the employees lose touch with the original mission and principles of the company, turn their gaze inward and lose focus on the front line and become more thinkers than doers.

Many executives seem confused about the painful slowdown that comes with tenure. But they have no problem describing the symptoms:

We lost contact with customers. We have become too bureaucratic. We're drowning in process and powerpoint presentations. We have the resources and no shortage of opportunity, but somehow we have lost the ability or will to make the most of it. Everything is complicated and everyone is tired. Competitors seem to be faster than they used to be, and we can't make decisions or mobilize quickly enough. In the past, a good day in the office meant making decisions and taking action. Now that means attending a major meeting of department heads who may focus on "aligning with strategy" or getting a quarter point higher return on weighted average capital.

Running the business – once such a personal, energetic ride – now feels like flying a huge, sluggish airliner. We have lost touch with what got us into the business in the first place and we no longer know where to go beyond the annual budget, nor do we know where new growth will come from.

These effects create internal complexity, they weaken and slow down decision-making, they depersonalize the customer experience and they undermine or obscure the core task, which leads to disillusionment and a lack of employee engagement.

Together, these forces can turn the power of tenure into the vulnerability of bureaucracy and destroy the life of a company and the energy of its employees. They are threatening to stall it.

The mandate to reduce complexity

Complexity, a key villain in business, is obviously not homogeneous. It differs within and between organizations and needs to be attacked at different levels. But here's the point: in order to survive these forces, organizations must make reducing complexity a way of life.

Companies that do this have flatter organizations that bring leadership closer to customers, better retain the founder mindset, and achieve more sustainable profitability. Steve Jobs recognized that. Because of this, on his return to rejuvenating Apple, he initially focused on reducing complexity in the organization (he consolidated some departments), the product line (he eliminated 70 percent), research (reduced to a handful of projects) and in design (simplicity became a mantra again) and in the supply base (the number of suppliers was reduced from a hundred to twenty-four). "People think being focused means saying yes to something that needs to be focused on," he said in 1997 at Apple's annual developer conference, which is held annually by Apple. "But it's not at all. It means saying no to the hundreds of other good ideas out there. You have to choose carefully. I'm just as proud of the things we haven't done as the things we do have done. "

Contributed to Branding Strategy Insider by: Chris Zook with permission from Harvard Business Review Press. Excerpt and adaptation from the mentality of the founder: How to overcome the foreseeable growth crises.

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