By Anna Muoio
(From the Association Newsletter Jan-Feb 2000)
Everyone wants to grow: more customers, more employees, more revenue, more profit.
But breakneck growth triggers new questions: How do you maintain a close-knit culture and find good people to bring into it? How do you keep the agility of a small company and develop the strength of a big one?
We asked 7 businesspeople to answer these and other questions. Howard Schultz, Starbucks CEO, explains how to get big while still acting small. Michael Bloomberg, CEO of Bloomberg LP, cautions against the seductive power of growth. And Terri Lonier, president of Working Solo Inc. asks, “Just how much is enough?”
Read through their contributions-then apply their cures to your own growing pains.
Michael Bloomberg Founder and CEO Bloomberg LP
New York, New York
Don’t let growth seduce you.
When you’re growing fast, the temptation is to keep increasing your growth rate— to double your bet while you are winning. You get euphoric. You think you can walk on water. You think you’re smarter than everyone else. This is exactly when companies get into trouble. It’s hard to say, “Let’s slow down.” But that’s what you’ve got to do. Trends always stop; the curve always straightens out. I worry about my firm growing out of control. But by worrying, I achieve a degree of control.
I stress to everyone on my team that the time to think about the downside of growth is when we’re doing well. Each day, I think about the disasters that could happen tomorrow: Our sales plummet to zero, my best manager gets hit by a bus, my best reporter leaves to work for a competitor. The job of management is less to manage growth while you’re going strong than to know exactly what you’d do if – or when – you get into trouble.
On a more personal side, I’ve found that as the firm grows, work becomes less fun. Now I spend the bulk of my time on administrative duties, rather than on the creative side of product development. When you get big, the government requires you to be more structured. There are more laws and more forms to fill out, and the environment becomes more litigious. Excuses like “Oh, I forgot to pay my nanny taxes” don’t work anymore.
Howard Schultz Chairman and CEO Starbucks Corp.
How does a company get big and stay small? That’s the real challenge of growth. We open a new store everyday and hire 500 people every month. In a little more than a decade, we’ve gone from 100 employees to almost 30,000. You can’t grow if you’re driven only by process, or only by the creative spirit. You’ve got to achieve a fragile balance between the two sides of the corporate brain. The balance is what lets a Starbucks district manager experiment in California with a coffee drink without permission from the top. That drink, Frappuccino, was such a local hit that we marketed it nationwide. It generated $100 million in revenues during its first year.
Growing successfully also means knowing when not to grow. For example, the business of artificially flavored coffee is growing dramatically. Each year, we have the opportunity to embrace that segment of the coffee market, which would translate into a 40% revenue increase. But for 27 years, we haven’t sold a drop of artificially flavored coffee, and we’re not going to start now – no matter how profitable it would be.
As you grow, you have to deal with the perception that what gets big gets bad. For example, some people believe that Starbucks represents homogenization. But we won’t let ourselves be put in a box that says “corporate behemoth.” In fact, we’re one of the only companies in America that gives equity and comprehensive health care to all of its employees, even part-time workers. At the same time, we have to guard against arrogance and cynicism, which would push us to embrace growth for growth’s sake.
Terri Lonier President Working Solo Inc.
New Paltz, New York
The most important question you can ask yourself about growth is, “How much is enough?” How much money? How much power? How much information? For me, the big decision about growth was whether to hire employees. The workplace changes when there’s no longer a one-to-one relationship between people. I wanted to remain a key contributor to the business – not to become just a manager of it. You have to ask yourself; am I controlling my growth, or is it controlling me?
Here’s an exercise I like to use: Visualize walking into a room three years from now and shaking hands with yourself. Who are you? What is your life like? What is your business like? Don’t let yourself wake up in three years and say, “I’m three years older, and I just happened to get here.”
Clarify your vision, so that you can grow into it.
William Tragos Cofounder and Chairman TBWA Worldwide
New York, New York
Don’t let growth grow your head. Don’t let it change your personality. Too often, you see people start to smoke big cigars and drive fancy cars – and they fail to see that they haven’t really arrived. No matter how fast they’re growing, people inside and entrepreneurial startup need to keep their street-fighting attitude.
How often have you seen a company become consumed by its own growth? It cruises at a 40% growth rate per year, adds hundreds of people in a matter of months, creates mission statements, brings in gurus and consultants, starts acting like the big boys – and grows away from everything that made its success possible.
Two things in particular have helped us to steer clear of that fate. First, it was our good fortune not to have a lot of money when we started. Our first 16 offices were built, not bought. We started from scratch – and that forced us to cooperate with each other. We weren’t owned by some big entity in London or New York, with a headquarters that had all the answers. Second, we’ve been able to strike a balance between growing internally, on the one hand, and expanding through healthy mergers and acquisitions on the other. If your growth comes just through buying other companies, you’re not growing – you’re acquiring. This might seem like semantic gymnastics, but it’s an important distinction. We measure our success by how well we do at growing on our own.
Jeffrey Miller President and CEO Documentum Inc. Pleasanton, California
To me, growth is about pace. In a high-growth environment, there is always too much work to do and not enough time to do it. So I tell people who work for me that in order to prevent insanity, frustration and burnout, they need to find their own pace and then develop a laser like focus on their priorities.
I learned this from one of my mentors at Intel. Each year, as I moved up through the organization, I noticed I was working one hour longer. I realized that if I ever became a vice president, I’d never get home! I also noticed that my mentor (a vice president at the time) worked fewer hours than I did. I asked him what his secret was. He suggested figuring out a pace that I could keep up over the long term. I might have to sprint occasionally, but if I found the right overall pace, I’d be golden.
After finding your own pace, your job as a leader is to establish a pace for the company. In 1996, I gave a presentation to the entire company. I called it the Millennium Mission. The purpose was to give people a sense of where we are going, what we would look like when we got there, and what changes they should anticipate along the way. The vision allows people to establish their own pace for achieving a larger goal. It let people know that somebody is thinking about growth – that there is a plan and some sense of control. I always tell everyone in the company, “It might not be the right plan, but at least we’re not confused.”
James Sims President and CEO
Cambridge Technology Partners Inc. Cambridge, Massachusetts
At every stage of growth, you’ll face different challenges. The glue that has held us together through our fast and sustained growth spree has been our core value system. We could not have succeeded without it.
Two years ago, our main challenge was hiring. Top-quality people were coming through the door, but we couldn’t hire them fast enough. We solved that problem by decentralizing the process. All of a sudden, we had no problem hiring the kind of people we wanted. I felt confident about this decentralization because I knew we had a core value system in place. To make sure that system continues, we’ve started something called Reboot, in which experienced employees return to our main office in Cambridge and we revisit our core values. If we can train people in a common set of beliefs, then clients will receive service of a consistent quality, regardless of where our people are working.
Our aim is to face these challenges of growth in advance, before they become obstacles.