Published on [Permalink]
Reading time: 3 minutes

Why should every company have to grow?

I am generally not much of a Cal Newport fan; I find that much of his advice seems like the “2. ???” step of the Underpants Gnomes’ business plan. However, this bit from his recent New Yorker piece caught my eye:

A few years ago, a former editor of mine sent me a book manuscript that he thought I might enjoy, written by a corporate Web designer turned self-employed consultant named Paul Jarvis. The book was titled “Company of One: Why Staying Small Is the Next Big Thing for Business,” and Jarvis argued that, instead of trying to grow your business to produce more revenue, you should purposefully keep it small in order to reduce stress and increase leisure time. This idea presented such a striking countercultural contrast to the hustle-and-grow books that dominated the business-advice genre that I read it eagerly and offered a blurb for the book jacket.

A company that I used to work for competed in a market where there were lots of other companies offering the same service we offered. Some of the competitors were bigger than us, and some were smaller.

We had started out as a small, shoestring type of company and—pre-pandemic, at least—were growing steadily.

However, what we were not seeing was any sort of meaningful economies of scale. As our business grew, we had to keep adding more employees to support it—our revenue was going up, but so were our costs. The founders and leaders of the company were perpetually frustrated by this pattern. There were regular strategy sessions about our lack of scale, periodically guided by a consultant who was supposed to help us figure out what we were doing wrong, what we were missing.

We spent quite a bit of time looking for efficiencies. What could we change that would allow the same number or people to do exponentially more work, be more productive, and help start bending the revenue line more sharply upward? It is a completely understandable question to ask, since that’s what basically every management consultant tell you, and what all the management books say.

The trick is that we competed in our market against a bunch of other companies offering essentially the same service by centering humans in the process. Prospective customers had an individual person talking to them from the time they entered the top of the funnel all the way through the entire sales process, and then on through engaging with our service and its outputs. This process typically lasted months, and was highly complex, but what most customers told is that the main reason they went with us over our competitors was that they felt like we were with them the whole way and cared about them as individuals.

You see the problem here, right?

If we were going to break the lockstep between increasing revenue and increasing costs, we would have to change our model. The efficiencies we would gain by reducing our reliance on human interactions. But those human interactions were the core of our business model. Without the intense, dedicated interactions between our staff and our customers, we would have nothing to set us apart from our competition.

Then the pandemic hit, and the entire board was thrown off the table, scattering pieces hither and nigh.

I wish that businesses could stay small, that there was not the constant pressure to increase growth and increase profit, but that seems nearly impossible to do in our market economy. Consultants shout at us at the need to scale, scale, scale, and as we head down that path, we lose the ability to treat customers and employees like the real human beings they are.

✍️ Reply by email another weblog