Why You Shouldn’t Rely on Business Growth as the Sole Measure of Success

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Why You Shouldn’t Rely on Business Growth as the Sole Measure of Success

Business growth is often seen as the ultimate goal of entrepreneurship, with the expectation that more revenue, customers, or locations will lead to more profit and prestige. However, relying on business growth as the sole measure of success can be misleading, unsustainable, and even harmful to the long-term health and happiness of the business owners, employees, customers, and society as a whole. In this article, we will explore why growth is not always great, why non-financial metrics matter, and how to balance growth with other values.

Why Growth is Not Always Great

Many successful entrepreneurs have shared their stories of how they started small, stayed focused, and gradually built their businesses into empires. However, not all businesses can or should follow this path, depending on their nature, market, or mission. Some businesses may thrive better by staying niche, agile, or purpose-driven, rather than chasing every opportunity or trend that comes along. Some businesses may face external constraints such as regulations, competitors, or crises that limit their growth potential or pose risks and uncertainties. Some businesses may even harm themselves or others by growing too fast or too big, beyond their capacity, control, or values.

For example, WeWork, the flexible workspace company that once valued itself at $47 billion, now struggles to survive and faces criticism for its aggressive expansion, questionable governance, and unrealistic projections. Uber, the ride-sharing app that disrupted the taxi industry, faces scrutiny for its negative impact on drivers, riders, and cities, as well as its lack of profitability. These cases illustrate the pitfalls of relying on growth as the sole measure of success, and the importance of considering other factors such as sustainability, social responsibility, and stakeholder satisfaction.

Why Non-Financial Metrics Matter

While financial metrics such as revenue, profit, and return on investment are important indicators of business performance, they are not sufficient or satisfactory for measuring the full range of benefits and costs that businesses create for themselves and their stakeholders. Non-financial metrics such as employee engagement, customer satisfaction, environmental impact, and social value, can provide insights and feedback on how well a business is fulfilling its purpose, values, and reputation. These metrics can also help businesses attract and retain talent, build customer loyalty, reduce risk, and enhance innovation and resilience.

For example, Patagonia, the outdoor clothing company, has built a reputation for sustainability, advocacy, and quality, by using non-financial metrics to guide its decisions and communicate its impact. Patagonia measures its environmental footprint, supports grassroots activism, and provides fair wages and benefits for its employees and suppliers. Patagonia also encourages customers to buy less, repair more, and donate to environmental causes, rather than maximizing sales or profits. These practices have helped Patagonia become a leader in its industry and a role model for businesses that want to combine growth with meaning.

How to Balance Growth with Other Values

Balancing growth with other values requires a holistic approach that integrates financial and non-financial metrics, as well as the values and visions of the business owners, employees, customers, and society. To achieve this, businesses need to define their purpose, prioritize their stakeholders, measure their impact, and align their strategy and operations accordingly. Some ways to do this include:

– Aligning financial incentives with non-financial goals, such as rewarding employees for customer satisfaction, innovation, or sustainability.
– Engaging stakeholders in co-creating values and goals, such as involving customers in product design or communities in social impact assessment.
– Measuring and reporting both financial and non-financial performance, such as using a balanced scorecard or a sustainability report.
– Innovating and adapting to changing conditions, such as using technology to reduce waste or enhance diversity.

By balancing growth with other values, businesses can not only improve their performance, but also enhance their resilience, relevance, and reputation in a changing world. They can also contribute to a more sustainable and equitable economy that benefits all stakeholders, not just the shareholders.

Conclusion

Business growth is not a bad thing, but it’s not a good thing either, unless it’s aligned with the purpose, values, and impact of the business. Relying on business growth as the sole measure of success can be misleading, unsustainable, and even harmful to the long-term well-being of the business and its stakeholders. To avoid this trap, businesses need to use a balanced approach that considers both financial and non-financial metrics, and that values not only growth, but also sustainability, social responsibility, and stakeholder satisfaction. By doing so, businesses can not only survive, but thrive in a complex and uncertain world.