These are among some of the questions asked by Forbes magazine Contributor, Mike Myatt in an article on company growth and size.
It’s a given that an enterprise that is not growing is declining. And it is well understood that businesses are not maintained – they either grow or fall into decline. Growth prevents irrelevance and obsolescence, growth affords opportunity, growth attracts and retains talent, and growth is the most certain path to sustainability.
But there’s a caveat to the aforementioned statements. According to Myatt, they assume healthy growth. The flip side to that is growth for the sake of growth, growth by default and not by design, growth for the wrong reasons or at the wrong times, and growth in the wrong areas can create corporate ruin.
An interesting observation about this subject is that as a company grows, it tends to become slower and less able to do many of the things that made it successful in the first place. Additional layers of management and more formalized systems can slow the decision-making process to the point where it becomes unable to respond quickly to changes in its environment. Another common characteristic of companies as they grow is a tendency to become more risk averse in an effort to meet conservative financial targets or protect share price.
So what is the optimum size for a company? Does it depend on industry? There are obviously some industries like consumer electronics where, no matter how large a company is, it can’t survive without the ability to quickly adapt to, or drive, changes in the market.