Wise Growth

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37signals is a very unusual company. It started out as a web design company and transformed itself into a software company, almost by accident, when the project management software product it developed for internal use (called Basecamp) became extremely popular outside of the company. Without a single salesperson, 37signals had soon signed up thousands of customers. Unlike most software companies, 37signals is based in Chicago, not Silicon Valley, and it frequently turns down extravagant buy-out offers from venture capital firms and private equity groups.

The uniqueness and unusualness of the company is a direct result of its very unique and unusual leader, Jason Fried. Fried is well known for his unconventional thinking and the seriousness with which he takes leadership, values, and culture. Fried lets most of his 45 employees work remotely from cities across the world. He recommends throwing customer requests for new features in the trash can (the best suggestions will keep cropping up again and again.) He thinks that making financial projections is a waste of time. He says that meetings are toxic. He fires workaholics.

But in February, Fried made an announcement that surprised even those familiar with him and his company:

“Moving forward, we will be a one product company. That product will be Basecamp. Our entire company will rally around Basecamp. Basecamp is our best idea and our biggest winner. We’ve had other big hits, but nothing quite like Basecamp.”

He went on to explain why they made this decision.

 “We’ve released so many products over the years, we’ve become a bit scattered, a bit diluted. Nobody does their best work when they’re spread too thin. We do our best work when we’re all focused on one thing. Further, we’ve always enjoyed being a small company. So while we could hire a bunch more people to do a bunch more things, that kind of rapid expansion is at odds with our culture. We want to maintain the kind of company where everyone knows everyone’s name. That’s one of the reasons why so many of the people who work at 37signals stay at 37signals. Last August we conducted a thorough review of our products, our customer base, our passions, and our visions of the company for the next 20 years. When we put it all on the table, everything lined up and pointed at one clear conclusion. “

There’s an important lesson here. Jason Fried is still interested in growing his company, but he’s just as interested in how he grows it. Fried knows what many leaders don’t, which is just how difficult “good growth” is. From a quality and cash flow perspective, rapid growth is tough. Things start slipping between the cracks and many a fast-growing company has come to a screeching halt when, suddenly, the amount of money going out exceeds the money coming in.

Rapid and thoughtless growth can destroy your company in more subtle ways too. The siren song of huge potential and rapid growth has a way of causing leaders to lose sight of their vision and lead their organizations far from the original path they set out on. Once the vision and path are lost, people begin to burn themselves out running in circles. Soon they turn against one another.

Contrary to what most people think, growth is not inherently good.  Before you blindly pursue an opportunity for growth, ask yourself the following questions:

  1. Does this opportunity bring us closer to our vision?
  2. Can we pursue this opportunity and still protect our organization’s culture?
  3. How does this opportunity fit into our organization’s overall strategy?
  4. Do we have the necessary people, resources, and time to pull it off?

If you had unlimited resources, you could pursue every opportunity for growth. But you don’t, and so you can’t. Choosing one path will preclude you from taking another. So, choose wisely which way you will go. A decision framework, like the series of questions above, will help your organization to grow wisely, which is much more important than growing fast or growing big.


Image courtesy of samuiblue at FreeDigitalPhotos.net

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