I was recently invited to join an expert panel who were addressing the challenges of strategic initiatives. This question was asked, and what follows is my response:
What is your best advice for avoiding common pitfalls during rapid growth?
#1. Adding complexity by reacting to demand. First, consider a manageable growth pattern. Consider the challenge of a franchisor seeking to replicate a business model over a larger geography. Scale up is relatively straight forward. That doesn’t add much as complexity as this more-common pitfall of following the demand of large accounts to expand the footprint to get a bigger share of the business. Let’s say you to well selling products to a customer, but now they want you to provide services and consulting. That’s an entirely different business model that will add a lot of complexity.
#2. Confusing the aspiration of growth with strategy. A statement that “our strategy is to grow” is an aspiration which may motivate you or others, but won’t fool an astute investor. Always remember that growth is a consequence of a strategy. Strategy is not vision and mission, but a design of resources and actions that advances the organization’s interests. If the interest is to grow, then what specific actions will you take (and sacrifices will you make) to focus on the right things?
#3. Running out of money before you have a workable business model that can make the payments to your creditors, and sustains a return to your investors.
#4. Only planning for success (or not planning at all). Everyone makes mistakes, and every firm makes mistakes. Sure, you want to avoid the ones that you can. But there will always be unavoidable mistakes. Too, there will be disruption. Can you sense, recognize, and robustly respond to those unpredictable forces? Here’s one bit of advice: Imagine yourself 15 years from now, and you have regrets over the decisions you made or didn’t make. As you contemplate this scenario, consider the mistakes that you or others have made that led to those imaginary regrets.
What other pitfalls are present?