Some businesses have growth in their DNA. Others feel forced to gain weight in order to satisfy a vision that is not theirs. There are also those who wanted to grow too quickly before running into a wall. To better understand the challenges of growth, we talk with Louis Hébert, professor of strategy at HEC Montréal.
Is growth the ultimate goal?
This is an unavoidable fundamental objective. It’s not just about enriching the owner or shareholders, but also about achievements. Staff and suppliers also have expectations in terms of development.
Do the majority of entrepreneurs want to grow?
Generalizations must be avoided. Entrepreneurs will seek growth at all costs and this results in companies like Apple and Microsoft, where growth is part of the DNA. But growth comes with internal and external tensions.
Which ones?
Some SMEs will reach a comfortable, reasonable and efficient size, and management will be correct with that. It will want to maintain certain parameters in terms of corporate identity, consistency and workload. Its objective then becomes the sustainability of the organization as it is. On the other hand, with the issues of sustainable development, social responsibility and sustainability, we now wonder if there is a limit to growth.
How do you determine if it’s the right time to grow?
Growth can be an unsolicited opportunity presented to us. We’d be surprised how often this happens. You then have to ask yourself if this is the right type of opportunity and if it’s the right time. In other contexts, growth is a planned process with goals. In order to achieve our ambitions (increase wealth, grow, develop a new market, etc.), we need a more structured approach. We must then ask ourselves if we have the right people in the right places and the support of our financial stakeholders.
What should we never forget in the process of growth?
Beyond the internal and external imperatives of the organization, an entrepreneur must ask himself if he is interested. It takes a will and a commitment to these growth ambitions. Does it match their goals, desires and parameters? Every entrepreneur is unique. They are humans, not just calculating machines. There can be different types of ambitions and contexts. Some entrepreneurs will seek to grow to a certain plateau, then they will ensure that the situation is sustainable. Others build businesses to sell them.
What are the pitfalls?
Studies have identified two very common cognitive biases in business: overoptimism, which consists of overestimating the opportunity that presents itself, as well as overconfidence, when we overestimate our abilities. The danger is not in embarking on a growth initiative, but in not stopping to evaluate what you are doing and not thinking strategically about the trajectory of the organization.