Over the past couple of weeks I’ve enjoyed reading our recently published profiles about people at Belatrix, and the stories of their careers. These are stories of personal and professional growth, and they are very inspiring. This growth has, in part, also been possible due to the growth of Belatrix – as we as a company grow, then it opens up new opportunities for people. This got me thinking about the importance of growth – it sounds like a simple question, but in reality masks greater complexity.
I remember distinctly at the end of one of our annual executive planning sessions, when after discussing how we would sustain our growth for the whole week, one of our executives, Jose Gramaglia, stood up and asked “But why do we want to grow?” It’s a great question. While many people may instinctively think that growth is always good, it also brings with it its own challenges, particularly with regard to maintaining a company culture.
One of the key points to consider, is that in the technology industry, as the saying goes, if you’re “not growing, you are dying.” We’ve seen this occur with well-known tech companies, that have been achieving success, but then they have problems, perhaps with some of their key clients, their growth slows, and then they are quickly acquired. It gets to the heart of the matter- than in tech, you have to grow. In other industries, maintaining this growth is still important, but in technology it takes on a different level of significance because the pace of change is so fast.
For many years I’ve worked closely with high-tech startups. I particularly enjoy the discussions with them, to understand how they approach their growth, and in many cases the pressures on these companies to see aggressive growth following taking investment. However, such rapid growth can cause as many problems, as a company that’s not growing at all.
At Belatrix, early on when we were just starting, we had years of 50% or 60% growth, but in all honesty, they were not great years. For a company like ours in the services business, where our culture and our people play a huge role in what makes us different, it’s really hard to assimilate and pass on the culture and values of the business, when you have more new people, than existing people. This pace of growth was also too fast for us to handle at that stage, and the founders and management team quickly became focused solely on day-to-day management and handling situations, rather than having the ability to think long-term, strategically about the business.
At the same time, we’ve also experienced years of slower growth. When that happens, it actually becomes harder to manage a company that is stale and not growing fast. Your margins can quickly start to come under pressure from wage increases and other costs. You can sense the frustration among people who are used to growing quickly and having budget quickly approved for initiatives. It becomes harder to provide people with new opportunities, and so your attrition can start to pick-up, which in turn has an impact on client relationships. It quickly becomes difficult to start growing again.
Furthermore, depending on your personal background or on who gives you advice you could end up making matters worse because when margins get tight it’s very tempting to “save money” by lowering your sales and marketing expenses, or not growing them according to the original plans. This produces a “spiral of death” as Alok Mohan, our senior adviser, has called it before, all while keeping “healthy” margins.
In my experience, and the advice I provide to other entrepreneurs based on what we went through with Belatrix, is the importance of fine-tuning growth. Over the past five years we’ve averaged around 30% year-over-year growth, which is aggressive, but manageable. This means you avoid the problems of growing too quickly or struggling with a stale business, all while still creating lots of new professional development opportunities to our people. Putting this into practice means not just finding any client willing to work with you, but rather finding the “right” clients – those that have a similar vision, that are looking for a long-term relationship, and with whom you can grow alongside. It means being willing to reject business that is not the right fit. It means making the right strategic investments to grow your business for the long-term.
What are your thoughts about growth and what have been your challenges? As always, I look forward to reading your comments.
July 31 / 2020
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