Six ways to stunt your growth

By Dutch Holland

CEO, Holland & Davis


Twenty years ago, a retiring CEO pulled me aside and told me in no uncertain terms, "Running a business is like riding an elevator — you’re either going up or you’re going down. If you’re not growing your firm, you’re doing something wrong!" Sage advice and a valuable perspective. Unfortunately, what you have to do to grow a business may not be so simple or clear-cut . . . or sell as many books on what it takes to provide healthy growth.

We’ve been helping companies grow for 25 years, and we agree there is no one clear game plan. However, there are some things we are clear on — at least six of them — that you don’t want to do if growth is your goal. We’ve seen many companies move toward what seemed like good ideas at the time, but which wound up being big mistakes.

The growth emphasis has come to health care as a part of the new economics. Our challenge may be to look out for some classic mistakes made in other industries.

So here are the six biggest mistakes we’ve seen in organizations attempting to grow:

Failure to define growth before turning the organization loose to go do it.

Managers and employees alike can and do get excited about growth. We’ve all had enough experience with restructuring and cost management; we’re lean and mean and ready to make something happen. So people are ready to roll — just let them know the company wants to grow and they will get excited and move.

But they are not likely to move in the right direction without a clear definition and rationale. They need to know how we intend to define growth. Do we want to grow the breadth of our physician services? Does growth mean increasing shareholder value — at the risk of saying "no" to some customers — and decreasing the top line and market share? Does growth mean adding the capabilities and resources we will need to be stronger as a hospital system over the long haul? Leadership must define growth, and provide a rationale for it, for the hospital’s managers to be on the same page for the actions they must take.

Failure to place growth responsibility where it belongs — with executive management.

Leaders build the business; managers run it. Many argue that growing a business is the toughest part of business, and therefore calls for the most skills, experience, drive, and horsepower. Administrators who delegate growth responsibility while they continue to run the business should not be surprised when growth fails to happen in the direction and amount expected. Growth is not a spectator sport.

Expecting to increase growth rate without changing what executives and managers do on a day-to-day basis.

Having senior management accept the responsibility for growth is a necessary first step, but only changed actions will produce growth results. Growth-oriented executives spend their time very differently from senior managers who are running the business. Growth-oriented executives work on growth every day, and for a significant part of the day. Asking your new business development person to give you a weekly update on how he or she is doing isn’t exactly what we have in mind as growth-causing executive behavior. You don’t just see the fire, you are the fire.

Planning to grow by strengthening staff, rather than strengthening line management.

While staff resources are important in the growth process, it is line management who will manage the growing organization. A sure way to put a kink in the growth rope is to grow the company beyond the capability of its line management.

Yes, strengthening the cast is critical, but we need strength in both line and staff.

Planning to grow through that "one big elephant deal" or "hitting a home run."

Hitting a home run produces a run scored, but at a high price — unusually high strikeouts. Growth will be far more predictable and manageable if there is a systematic growth process that looks at and evaluates many opportunities, including several possible elephant deals. The idea of the "funnel" still seems to be crucial to the arsenals of most successful growth companies. Trying to bypass the funnel, and systematic evaluation of a variety of reasonable prospects and approaches, may be akin to playing the lottery as a growth strategy.

Planning to grow without a sound growth plan that key players can understand and support.

Your organization needs to know how much growth is wanted. That calls for growth objectives that let employees understand the "scale of operation" being targeted.

In addition, organizations must understand which of the many possible growth paths to pursue.

Growth paths could be internal:

— fielding new services (adding home health as part of your continuum of care, for example);

— expanding into new markets (such as holistic medicine);

— devising new distribution routes.

Growth paths could be external:

— merger and/or acquisition (Columbia/HCA);

— strategic alliances;

— joint ventures (have you seen McDonald’s in a hospital?).

One thing’s for sure — it takes a lot of time, energy, and expertise to make any one growth path pay off. Trying to travel down many growth paths at once is not a highly-recommended recipe for success.

So best of luck as you try to grow your business. Do as many right things as you can, and try to avoid the mistakes.