Chapter 4

MOVING FROM QUANTITATIVE GROWTH TO QUALITATIVE EVOLUTION

BIG-VISION SMALL-BUSINESS owners seek a definition of growth perhaps more aligned with evolution than quantitative expansion, focusing more on questions such as “How?” and “Why?” (versus “How big?”). Requirements for ongoing qualitative growth and mastery include having a clear, idealistic vision; a bridge between vision and action; an emphasis on creating right relationships; and a strong “supporting cast” of wisdom and mastery practices that both inspire and sustain.

But how do we begin to challenge our limited perception about the ways an organization can grow, much less challenge society by embracing a definition of growth or entrepreneurship that is outside the celebrated norm? We can start with a few prevailing definitions, strip them of common associations with size, and adapt them to meet the needs of a big-vision small-business owner—an entrepreneur who opts for deep refinement in the tradition of the master craftsman.

For example, in his 1999 Leader to Leader article, “The Growth Imperative,” author and University of Michigan professor Noel Tichy emphasizes that leaders can find opportunities for growth in several areas: finding new ways to serve existing companies, finding new customers for existing products and services, or identifying new products or services for a new set of customers.¹⁴ Though Tichy is talking mainly about large corporations that might routinely create new divisions to accommodate such growth, these categories are relevant to the big-vision small-business owner, who can plot out an evolutionary pathway to introduce these new ways of thinking and working.

Contributing another perspective on quantitative growth, Larry Greiner, in his classic 1972 Harvard Business Review article, “Evolution and Revolution as Organizations Grow,” said that management, eager for quantitative growth, “overlooks critical development questions such as: Where has our organization been? Where is it now? And what do the answers to these questions mean for where we are going?” Instead of asking the necessary introspective questions, argued Greiner, organizational leaders are inclined to focus on external factors such as market performance, which are less relevant to an organization’s guiding vision.¹⁵ Small-business owners can certainly ask these very questions, among others, for a deeper understanding when they find themselves talking about numerical expansion.

Another assumption many business owners make is that growth is something that can be meticulously planned and managed. Not so, according to London Business School economist Paul Geroski. Based on Geroski’s studies, growth in companies large and small is erratic and random, a pattern he calls a “random walk.” In reviewing a variety of available data on company growth, Geroski challenged the popular notion that company growth can be analytically studied and predicted. In addition to the theory of random growth, Geroski found that growth is not so much affected by the general strength or weakness of the economy or the company’s industry niche as it is by innovation.¹⁶

Unfortunately, these and other assumptions about growth lead some business owners right over the cliff. For instance, they may succumb to pressure applied by advisers and investors to expand the enterprise in order to survive and stay competitive. Such was the case of John Peterman, founder of the J. Peter-man Company and proud owner of what is now a cautionary tale about the pitfalls of quantitative growth.

Peterman founded his retail company in 1987, after stumbling across a cowboy-style duster coat that he loved and thought others would as well. He was right. The J. Peterman Company, guided by Peterman’s vision of retailing the romance of another era, became known for its creative inventory and readable catalog, which the company called its Owner’s Manual. By the end of 1990, the company had grown quickly to more than 75 employees and nearly $20 million in revenues. The fast-growth path had also set the stage for the company’s ultimate fall from grace into bankruptcy not 10 years later.

“But it’s never a good idea to grow just because you’re desperate, where you’re hiring people who may not be right for your environment. It’s better sometimes to call and reschedule clients so that when they do come in, they get the quality service that your reputation has been built on.”

NINA UMMEL

In hindsight, Peterman tracked the problem to the elements inherent in the rapid expansion, including hiring for numbers rather than fit; recruiting executives from outside the company while systems and processes were changing; shifting from the original vision and intuitive marketing style to a revenue-generating model preferred by financiers; and adopting other expansion-mode practices like more frequent direct mailings, the proliferation of J. Peter-man retail stores, and a broadening of the inventory away from the company’s original focus. Where the emphasis had once been on the romantic image, unique inventory, and creative style, it had been refocused on new ways to expand reach and grow revenues. The company collapsed under the pressure, and J. Peterman Company went into bankruptcy in 1999 and was purchased by Paul Harris Stores. The company’s founder found himself without a company, and out of a job.¹⁷

In other cases, our choices regarding the size and evolution of our businesses are reactive—a result of unexpected and often unwelcome crises such as employee turnover, canceled projects or accounts, market fluctuations, or cash flow shortages. In the face of these types of common challenges, some business owners close shop or claim bankruptcy, while others dig deep to reconnect with their originating vision, find resolve, put together a turnaround plan, and begin a transformative journey that may require them to be more deliberate and aware regarding their expectations about—and options for—growth.

Kevin Owens agrees, and offers a perspective about growth that has been hewn from personal experience. Owens cofounded Select Design, Ltd., in Burlington, Vermont, and quickly grew the enterprise from a two-person partnership to a company of 50 employees. His firm’s growth spurt had its rewards but also created unforeseen problems that led Owens to new insights:

It’s a simple point, but easy to miss: We were so focused on capitalistic growth that we forgot ourselves and our families. It’s a lot nicer feeling when we remind ourselves that we don’t have to buy that new piece of equipment or hire 10 new people over the next year. We can, but we used to do that because we thought that’s what everyone does, that’s what a business is supposed to do. But that’s not the way it has to be. The only reason to grow a business or make it different is if it makes our lives better, and if it affects us and our families positively.

Transformative Small-Business Journeys

Unfortunately, many business owners view organizational growth too narrowly, perceiving far fewer options than in fact exist. So it isn’t until a crisis forces a decision that they review potential avenues for action. While we can certainly be creative in the face of crisis, if we wait until then our choices are often more limited. By looking at the experiences of other business owners regarding the journeys through which they and their companies have evolved, perhaps more of us will reflect on these options for growth before a crisis forces our hand or will choose more purposefully in the face of challenge.

What follows are honest profiles of the journeys taken by four big-vision small-business owners as their assumptions about business, growth, success, and meaning were challenged by recessions, booms, employee turnover, intellectual property theft, and a variety of other circumstances common in running a business. Each of these company owners has had frontline experience with quantitative growth and has found that the meaning of growth is far richer than they might have ever imagined. Their journeys became their teachers, and they share what they’ve learned. In reading the vignettes from these four big-vision enterprise leaders, you may recognize patterns and learn from their experiences, so that their stories can inform your own perceptions and decisions about growth as it relates to you and your business.