animated the Gospel of growth -- Must firm Grow to Survive?

animated the Gospel of growth -- Must firm Grow to Survive?

A cherished firm philosophy is that increase must be a primary firm purpose: "grow or perish" is a mostly unquestioned truth. At South Mountain we favor inevitable kinds of growth, but not expansion for its own sake, which author Edward Abbey described as "the ideology of the cancer cell." We embrace increase to achieve definite goals, but all the time with observation of the consequences: it may disrupt and endanger treasured qualities. We look for ways to make and thrive without enlarging, thereby retention to diminutive growth. When we grow, it is by intention rather than in response to demand. We think about "enough" rather than "more"--enough profits to hold and share, adequate compensation for all, adequate condition and well-being, adequate time to give our work the attention it deserves, adequate communication, adequate to manage, adequate headaches.

Retained Profits

Years ago we were designing a house for new clients. The process was going poorly. Our clients wanted to build at a beautiful spot on top of a hill. We proposed to site the house beside the hilltop, so that the lovely area on top, capped with a huge glacial rock formation with a view, would be preserved. They did not share our perspective. They could not believe, even after we presented convincing photographic evidence, that there was a make explication that would, at once, hold the cherished hilltop scenery and derive the view they desired. I wondered whether we should end the engagement. Given such a underlying make discrepancy and lack of trust so early in the process, it was doubtful the process would go well. On the other hand, this was a big project, and we were counting on it to supply a vital chunk of our workload for the following year to keep our growing workforce busy.

I brought my partners to the site. We sat on the big rock and determined the problem. They shared my view that our make explication combined responsible use of a beautiful site and sensitivity to our clients' needs. We understood that if we withdrew from the task at such a late date, we might not be able to replace the work speedily adequate and might run short of work sometime the next year.

We mused a bit. The silence was broken by my oldest partner, who speaks bluntly.

"Let's shitcan it," he said.

The next day I met with our clients and said, "You know, this isn't working the way we anticipated. Before we dig the hole deeper, let's just call it quits." They were surprised, but after some conference we agreed that it would be best to part company.

As it turned out, we were lucky, and an additional one chance speedily filled the gap. We learned to trust our intuition when it told us not to risk the capability of our work in favor of security and growth.

Until that time we had responded directly to demand. When work was offered, we approved it, and when the volume of work required wide capacity, we grew. This was approved operating course and we had no infer to question it. It was thrilling to have the opportunity. But this incident helped us peruse the effects of growth, and we began to wonder whether this passive arrival made sense for us. We began to peruse increase rigorously and rate the benefits and detriments.

It may seem odd for a firm with thirty employees to have a self-conscious concern about growth. Maybe it's why we've remained so small. While the potential to enlarge has been steady, we have scrutinized it carefully.

I do not know, from experience, what it would be like if our firm were any times--or many times--larger than it is, so it's hard to talk with certainty about the value of smallness. But I have suspicions. I infer that we could not hold many of the qualities we value if we were significantly larger. Many ecologists and a few intrepid economists question whether the planet can hold a global cheaper that enjoys perpetual growth, but the idea of private firm increase is rarely challenged in the world of business. I have searched firm literature and found surprisingly diminutive that questions the advantages of growth, or that considers optimization of size. In fact, conventional wisdom implies that small businesses are those that just haven't had greater success yet.

Not that we don't favor some kinds of expansion--we do. But we do not embrace unrestrained increase for its own sake. We grow to achieve definite goals, but we are aware that when we pick to increase in size, we may disrupt and endanger treasured qualities. Such concerns do not imply that we must limit development. Economist Herman Daly makes the discrepancy by explaining that to grow means to increase in size by the assimilation or accretion of materials, while to make means to enlarge or comprehend the potentialities of; to bring to a fuller, greater, or best state. Our planet, he explains, develops over time without growing, while our economy, a subsystem of the finite and nongrowing earth, must eventually adapt to a similar pattern.

If we apply Daly's understanding to our clubs and look at the implications of increase and the possibilities for improvement without expansion, we might desist that remaining small, manageable, and familial has concrete value.

One of the few proponents I have found for limiting firm increase is Jamie Walters, the author of a book called Big Vision, Small Business. She compares the thought to costly jewels: "It's more a matter of polishing a gem and perfecting its facets, if you will, than of acquiring an ever- expanding amount of gems regardless of capability or despite the fact that they might be enduringly depleting the mine."2

The apparent lack of questioning about the nature and benefits of firm growth, however, may simply indicate that the literature lags behind a changing conventional wisdom. In the lead record in a recent issue of Inc. Magazine titled "America's favorite Hometown Businesses," the magazine's editor-in-chief, George Gendron, says:

Wherever I go these days I run into founders who say that getting big fast is not a part of their firm plan. They care about financial performance, but they're equally devoted to building a firm that promotes personal and professional development, that fosters close relationships with their community, and that gives them pride and satisfaction they haven't been able to find elsewhere. . . . What they lack is firm legitimacy. There's genuinely no reinforcement for such thinking in the mainstream culture, and costly few role models for founders who pick such a path.

There is intense turn over within the movement for socially responsible firm about a parallel growth-related issue: how to keep control of socially responsible businesses as they grow, and how to keep their primary values intact. Scale is a vital issue. Many clubs that start off with a mission and find early success feel that they must go collective to finance expansion. Once they do, they are vulnerable to buyouts by larger clubs and field to corporate law that requires a publicly held firm to prioritize profits for shareholders. The takeover of Ben and Jerry's by Unilever is the most well-known example, but there are countless others. Many small natural and organic food companies, like Stonyfield Farm, Odwalla, and Cascadian Farm--which have been emblematic of independent, live-your-beliefs-no-matter-the-consequences commerce--are now owned by the likes of Coca-Cola, Groupe Danone, and general Mills. The extent to which their freedom to embed their values in their firm and their brand may be compromised by their increase is a question.

Faced with such issues, some clubs have taken a different approach. Seventh Generation, the Vermont purveyor of environmentally kindly household products, went collective in 1993 but saw where that path was foremost and was in a position six years later to begin to buy back its stock. The firm returned to private rights and is now charting its own destiny. Patagonia, a pathbreaking environmentally and socially responsible company, has all the time been secretly and very closely held, so when they decided to make a costly shift to organic cotton to satisfy their mission, they were free to take the plunge.

There are no surface investors and no non-employee board members at South Mountain. Each owner is an employee. We settle what kind of firm ours will be. The decisions are partly economic and partly philosophical, and the people development them have well-aligned interests. Our considerations have led us to believe that if our firm institution is not governed by an unquestioned increase imperative, we will have greater flexibility and freedom and the character of the firm will best match our aspirations.

I am not suggesting that every workplace should be modest in scale. An unquestioning attachment to smallness seems as careless as an equivalent affinity for unconsidered expansion. In our case we believe that inordinate increase may narrow our horizons and limit good things like invention, personal fulfillment, and the uncut capability of our workplace and our products. Most people I talk to want these good things in their work but find it hard to resist the tug of other military more persistent. Too often we tend to grow for increased profits rather than to stabilize and enhance proficiency. I am profoundly grateful to have partners who are committed to helping one an additional one resist those forces, in favor of a different direction with other rewards.

Why Grow?

Sometimes frantic growth, I think, becomes a purpose in itself, or the perversion of other purpose. For example, our purpose might be to make the finest bagel or supply the best mortgage. But why do we need to yield all of either? Why not make just enough? The wish to make the best of a product and the wish to make all of a product may each forestall the possibility of the other. It may be impossible to satisfy all the question for your perfect product without compromising vital elements of product quality. A different arrival would be to learn how to do it, share the studying with others, and thereby encourage the preparing of small bakeries and banks embedded in their locale, well positioned to make the best bagels and mortgages for the people they serve.

Some say that to argue about increase in manufactures is spurious. Of course you have to grow, they say: "Nature demands increase just as firm does." I say, "That's debatable." Wall street demands growth; firm does not. Neither does nature. Nature seeks optimized increase and imposes limits. In the book Upsizing, author Gunter Pauli points out that if an oak tree grows to 150 feet, it is strong adequate to resist wind, wear, and tear. But it doesn't grow to 1,500 feet, even when nature provides adequate nutrients. Instead, it provides room for ten other trees. If it grew to 1,500 feet, it would become too brittle and lose its resilience and stability.

Nature has many potential limits that recognize optimal size for different organisms, and we may be best off if we do the same in our organizations and businesses. As firm ecologist Paul Hawken once remarked, "Do you want to be a mushroom or an oak tree? Spores beat out acorns every time in increase rates, but never in longevity or durability."

Why do most businesses want to grow? Sometimes there are legitimate reasons that make it vital in order for a firm to survive. Chroma Technology Corp., an employee-owned firm in Vermont that manufactures and supplies specialized optic filters for microscopes, must acknowledge to the manufactures it serves. As the microscope manufacturers grow, they question more filters. If Chroma can't supply them, they will lose their accounts. Their position in the supply chain requires growth.

The Weaver street Market, placed in suburban Washington, D.C., had no intention of expanding, but a large improvement that combined residential, commercial, and sell uses was completed colse to and its residents wanted a market. They tried to get a major chain to open a store in their area, but none was interested. So the neighborhood asked Weaver street to open a second market, and six hundred subscribers signed up to finance the start-up. The residents of the society put their money where their mouth was. How could Weaver street refuse to offer the service?

More often, however, it seems that the race of happiness has become, for many, synonymous with the accumulation of wealth and power. Maybe it's just because we've been led to believe that we're supposed to grow, supposed to win in the competition of the survival of the fittest.

Our inquiry need not be about increase versus no growth; it best serves us to think about the capability of growth. Some things we want to grow and some we do not. We want to increase our responsiveness, our satisfaction, our effectiveness, our reputation, our legacy, our sense of accomplishment, our relevance, our capacity to enhance the capability of our products, and our contributions to good lives for our employees and our community. We do not want to increase our waste, our pollution, our unfulfilled commitments, our stress levels, or our callbacks.

Charles Handy thinks broadly about expansion. He believes that increase can mean not more of the same but "leaner or deeper," supporting revising rather than expansion. Bigness, he maintains, can lead to reduced focus, inordinate complexity, and less sufficient control. He goes on to say:

Once big adequate [businesses] can grow better, not bigger. It is a formula which Germany's mittelstander (small family firms) have tried and tested to great advantage, article to projection and dominate one small niche market, through constant revising and innovation. Rich enough, and big enough, they couple on the race of excellence, for its own sake as much as anything.7

Handy's assessment is consistent with Daly's discrepancy between improvement and growth. Opportunities for improvement without increase are legion.

Rule of 150

Growth can be an extreme sport. When a firm is growing speedily there's a thrill a minute. It's the same type of sensation many people seek by climbing a mountain or soaring off a cliff clinging to a hang glider. Some of us are willing to forgo such thrills in our work in change for familiarity and stability. Some try to get the best of both, and these people have made foremost discoveries.

When organizations become large, there is often the concurrent inclination to make small units within the larger buildings to contend qualities like conviviality, sufficient communication, and flexibility. Malcolm Gladwell's The Tipping Point explores how diminutive changes can have big effects and turn ideas, products, messages, and behaviors into major trends. In the book Gladwell writes about the theories of anthropologist Robin Dunbar, who, in the interest of studying about optimal size, has studied how groups of varying numbers work. A stunning range of examples supports his end that there is a Rule of 150, which says that 150 is the maximum amount of people who can share a collective relationship with each other. Therefore, organizations work best if they remain within that rough limit.

The amount reveals itself in a range of appealing settings. Dunbar looked at twenty-one different hunter-gatherer societies colse to the world and found that the midpoint amount of people in each settlement was right colse to 150. The pattern holds true for military organizations, whose planners have a rule of thumb for the size of a functional fighting unit: 150 to 200 soldiers. Reduced hierarchy, fewer rules, and fewer formalities are required for the group to function as a team if it remains at that size. Group behavior operates on the basis of personal loyalties and relationships in a way that is impossible with larger groups.

I cannot envision our firm with 150 or more people. I can approximately fantasize it with fifty, or maybe sixty. Even now I don't all the time remember the names of all the kids of my workmates. Since many people are scattered at different job sites, I may not see man for weeks. Occasionally it takes months or years to have follow-up conversations to the mutually probing exchanges we had colse to the time of a person's hiring. I wish I knew everybody better. I wish I made more time to catch up on people's lives, and shared more of mine. I wish there were more chances to peruse the intricacies--the hips and valleys, the copes and scribes, the successes and failures--of the projects they're doing.

The race of concentrated power and wealth may be like chasing a porcupine--if you're not careful, you just might catch it. I've come to believe that there are optimal scales for different businesses and organizations, that we need to think more broadly about the meaning of growth, and that the thought of "enough" has a place in our internal debates. As our rights pool grows, we may have to enlarge our capability to originate private equity as the larger numbers dilute the distributions. If one of our goals is to enlarge our influence through growth, we may have to find inventive new forms of growth, like observing the Rule of 150 or implementing new forms of franchising. Specific examination and control of increase has become a foremost link South Mountain's chain of values. It's a tug on the sleeve that has our full attention; the gospel of unrestrained increase is not the right philosophy for us.

There's a story about a fisherman who was sitting on the beach with his wife one afternoon enjoying the surf and the sun. He had enjoyed a big catch that morning, so he came in for the day. A wealthy businessman heard about his success and approached him.

"Why didn't you keep fishing and bring in twice as much?" he asked.

"Why?" said the fisherman.

"Because you could make more money. Maybe buy an additional one boat and hire some employees."

"Why?" the fisherman asked again.

"You could keep growing, increase profits, and buy more boats. If you worked long and hard at it after some years you'd grow rich."

"Why would I want to do that?"

"Because then you and your wife could retire and relax on the beach," said the businessman.

"But that's what I'm doing now."