Alongside profitability, growth is seen as a cornerstone of organisational success. Growth implies market fit — it indicates that the world wants more of what you do. Growth is generally seen as a desirable objective for CEOs and business leaders but there is an underlying paradox to business growth: the more you grow the harder it becomes to grow.
Initially, growth makes things easier. Organisations gain certain benefits as they scale (sometimes referred to as economies of scale). For example, materials can be bought cheaper, machinery and people can be better used, and overhead costs such as rent and utilities can be spread across greater output. All these factors serve to lower the cost of doing work, which in turn makes an organisation more competitive and, as a result, improves profitability.
These benefits generally kick in quickly but then slowly dissipate (you might get a 20% discount if you double an order but you don’t get a 40% discount if you quadruple it). On the other hand, the challenges of growth start slowly but then rise rapidly. These challenges (sometimes referred to as diseconomies of scale) include maintaining communication as an organisation grows, the problems of coordinating the work of more people, more layers of management and slower decision making, and the need for more reporting, checks and balances to ensure the right work is being done in the right way.
Research suggests that as organisations grow, they reach a tipping point where complexity starts growing faster than revenue which leads to decreasing productivity, falling profits, overworked employees, and growing frustration for business owners. Eventually, they reach a point where the cost is greater than what people will pay and there is no point in the organisation growing further.
…it can push out the point where things get harder. Obviously some organisations grow very big and very profitable, but they don’t achieve this using the same systems and processes they used when they were small. If an organisation wants to grow to its full potential it will eventually need to rethink how it does its work. Key to this renewal is bringing in the technology solutions that automate, simplify, and streamline work, allowing for further growth without increased headcount and the complexity and challenges it brings with it.
Ideally, this isn’t done when everything is already broken but done on a continual basis. Rather than identifying and fixing the things that are already broken, a continuous approach allows organisations to prepare in advance for the processes and tools they might need in the future. Perhaps the biggest challenges for growing organisations is finding the time and resources to do this proactively. This can be a real challenge when people are already feeling stretched, but committing the time up front is almost always less costly than dealing with the consequences later.
If your organisation is experiencing growing pains and you want to do something about it, consider the benefits of joining The Digital Champions Club, a community of practice that shows you all the tools you need to leverage growth through better technology use.