How growth can ruin a business

Growth is a good thing for businesses, no doubt. Then why are we saying just the opposite? Because, it may happen.

In many instances, small organizations develop cultures that dominate their thoughts and actions. In many mom and pop companies (small organizations run by few family members), or a medium sized company having centralized and non-delegated management structure, things can go wrong when there is an unplanned or sudden spur of growth for any reason. Sometimes, big corporations can also fall prey to this phenomenon. Well, this is not totally “unplanned” per se, because every organization, small or big, attempts their best to do better tomorrow than what they did yesterday. However, by the term “unplanned”, we meant the organization(s) was more concerned about making growth happen, rather than making growth sustain afterward. Managing the consequence of growth is more difficult than initiating the growth itself. A growing business, for example, a restaurant, must calculate how many customers would be flocking in after their promotion in the area. Whether the restaurant would be able to maintain the “order-to-serve lead time” at the same level as it was in the pre-growth period. Too much increase in lead time due to failure in service planning would only add to dissatisfaction of customers, making customers stop coming to the restaurant. Mobile service providers, by the same token, must calculate how many incoming calls would be expected to its call centers everyday. Any cost saving measures leading to increase in response time will only add to dissatisfaction of customers.

Specifically, in our country, Teletalk could be cited as a brand that had shown such a phenomenon in the past. With huge demand in the market, they restricted consumers’ access to buying that service by introducing lottery among potential buyers. Later, lottery system was withdrawn and anybody could buy a sim card. Then, after experiencing growth, it could not hold up to the growth figures because timely investment in network coverage did not happen! They had more and more customers who were upset with the poor network coverage, and finally lost many of them.

It turns out that, we need to take care of an integrated plan where both the initiation plan and management of growth should co-exist. Otherwise, growing more would mean loosing more. Can you cite more examples?

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About 1mmarketing

Working as Associate Professor, School of Business, United International University, Bangladesh; a North-American graduate, with doctoral studies from UUM, Malaysia; cherishing a wide-view of the world, with multiple interests in culture, people, traveling, and specifically marketing science. I have a colorful and diversified background with a blend of corporate experience, research, consulting, training, public speaking and teaching. I love to write about marketing issues that affect our lives, and talk about its direction that would promote the greatest human welfare.
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4 Responses to How growth can ruin a business

  1. Audity Roy says:

    I think most companies learn the hard way. They make mistakes and then learn. I believe there are easier routes, gain some knowledge and do not go for trial and error with growth factors. Thanks for sharing your thoughts on growth. We have seen this practically even in large corporations.

  2. rahat24*7 says:

    really…to sustain growth,capacity buillding in accordance with the growth is important.

  3. Saad says:

    I am a sufferer of this phenomenon. Qubee (the wimax xompany) started their business with huge promotional activities which lured hundreds of customers like me. They continued their promotional activities and many others joined their consumer group. Now a days, the growth is so high that Qubee can’t provide enough band width after 11 p.m. Internet is too slow after 11 p.m. and I am considering of switching to another wimax provider. 😦

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