Having started and managed a business that went through more than one phase of rapid growth, I recently read a short Zen story that resonated, this time from Buddhaimonia.com
“A horse suddenly came galloping quickly down the road. It seemed as though the man had somewhere important to go.
Another man, who was standing alongside the road, shouted, “Where are you going?” and the man on the horse replied,
“I don’t know! Ask the horse!”
During our 20 years from startup to exit, we twice went through several years of 40%+ compound annual growth as we built a multi-million Pound business. During those years, it was often all one could do to ‘keep up’ by problem solving and fire-fighting. This was especially during the second growth spurt that took us from £10 million in sales to £35 million in just four years. Management time was largely spent trying to keep the systems working, cost controls weakened, hiring was less methodical. The temptation is always to ‘make hay whilst the sun shines’ and feel very smart about ‘our strategy’ that was delivering such tremendous results. However, we knew we should still remain disciplined about analysing what was happening in the business and in the markets we served.
Corporate culture pushes against those who warn that ‘it can’t last’ and yet the one thing you can be sure of in life is that everything changes. However, I know from my time managing in Fortune 100 companies, noone ever wants to believe that ‘the music is going to stop’. Luckily, both myself and my business partner, who was ‘even older’ than me had been around the block a few times and so were always cautious about how sustainable the growth would prove to be and ‘what would happen next.’ Consequently, when it did slow suddenly, we were quick to adjust our cost structure to the ‘new reality’. We had always managed our finances very conservatively so we had plenty of reserves to make sure we could manage the strategic transition without undue stress. Nevertheless, no matter how big your umbrella rainy days are always difficult when you have them.
Senior management should always make time for a regular strategy review that challenges even the most fundamentally held assumptions about the business, even when all appears to be going well. Ironically challenging such strategic reviews are most often only held when growth stops. It’s exciting and we feel very smart whilst riding the horse at speed but if it comes to a sudden halt in front of a cliff, you could be in trouble! Best to know where you are going!