Four Priniciples For Growth
By Canadian Vending
By Canadian Vending
Ed Hess’s solution for overcoming the risks associated with growth is a
concept he calls “smart growth.” The professor at the University of
Virginia’s Darden Graduate School of Business and author of the new
book Smart Growth:
Ed Hess’s solution for overcoming the risks associated with growth is a concept he calls “smart growth.” The professor at the University of Virginia’s Darden Graduate School of Business and author of the new book Smart Growth: Building an Enduring Business by Managing the Risks of Growth says smart growth accounts for the complexity of growth from the perspective of organization, process, change, leadership, cognition, risk management, employee engagement, and human dynamics. It recognizes that authentic growth is a process characterized by complex change, entrepreneurial action, experimental learning, and the management of risk.
It is a strategy that requires companies of all sizes to follow what Hess calls the “4Ps of Growth”:
- Plan for growth before kicking the strategy into gear. Think about how growth will change what you need to do. What new processes, controls, and people will be needed at what cost?
- Prioritize what changes or additions to the business have to be made to accommodate the growth. This is a way to make the essential investments first, so as not to deplete cash reserves before new income starts rolling in.
- Processes must be put in place to ensure there are adequate financial, operational, personnel, and quality controls for a bigger business. These are like dams on a river: if the water starts flowing faster and with more volume, those dams need to be reengineered to handle it.
- Pace growth so as not to overwhelm yourself, your people, and your processes. Growth can be exciting, but it is also almost always stressful. If you underestimate the need for effective change management, and for a phased approach to implementation, you increase chances for failure.
Growth can create new business risks. Growth is a business strategy that can require investments in people, equipment, raw materials, space, and supplies. As these cash outlays occur before new revenues kick in, many businesses find themselves exhausting their cash reserves – a risky tightrope to walk.