Many companies take an impatient attitude to expansion. They are adamant on entering new markets, forever expanding their services and products in an attempt to get bigger and generate greater turnover. The danger is that, if not managed properly, growth can stress people, processes and quality controls. It can lead to bad management decisions and even dilute a company’s culture, customer value proposition and brand.
Back in 2010, Toyota experienced at first hand the devastating consequences of growing too fast. Akio Toyoda admitted that Toyota’s growth “may have been too quick” following the problems they had with accelerator peddles getting stuck. He added that "priorities became confused" as the carmaker grew larger and larger. Toyota had grown so rapidly that manufacturing processes, communications and safety processes were neglected resulting in four fatalities. Thousands of vehicles had to be recalled and the reputation of Toyota was severely damaged.
But how exactly should companies grow in a way that is sustainable? Edward Hess suggests an approach to “smart growth” in an article he wrote for Forbes.com. Smart growth rejects the assumptions that all growth is good and that bigger is always better. Smart growth is sustainable, applies innovative thinking and puts the customer at the heart of what it’s trying to achieve.
Apple is a great example of how to achieve “smart growth”: Steve Jobs made Apple great by ignoring profits and constantly looking to create innovative products in markets that didn't even exist. The iPod was the first indication that they were thinking differently. Apple was accustomed to selling £1500 computers but was willing to take a risk on a gadget that would sell for a fraction of the price. Most companies would not bother investing the time and energy into an item that is nowhere nearly as profitable as their existing products.
Apple’s approach differed in other ways as well. The company took a big risk of introducing the iPad in terms of threatening the sales of its other product lines – for example, the Mac. In a way, by introducing the iPad they not only disrupted the PC industry, but also inadvertently threatened the growth of their other product lines. Most companies would usually not make decisions that could jeopardize their ‘core products’.
What is clear from this is that companies must focus on improvement and innovation by improving the customer experience. If a business improves, it will likely have the opportunity to grow. Apple’s focus on making truly great products – products that its own employees are proud to use – is paying off. In fact, this philosophy of focusing on smart growth, rather than on profit margins, has made Apple one of the most innovative and rapidly growing companies in the world.
To me, growth seems to be a complex change process that is dependent upon the behaviors of individuals, who like markets, do not always act efficiently or rationally. Luckily, Apple was in great hands with Steve Jobs at the helm. Growth can be good, but it also can be harmful if the risks of growth are not properly managed. Business leaders must acknowledge that putting the needs of customers first will lead to healthy, sustainable growth.