Years ago, I asked a business leader who was responsible for several subsidiary companies a simple question: “What is your strategy for these two companies?” Her answer came quickly: “Simple: grow both companies.”
There are times when I hear an answer, accept it in the moment, and take some time afterward to think through the right response. This was not one of those times. I replied, “Growth isn’t a strategy. That’s an outcome that every company should expect. What I want to know is what the strategy for achieving that growth is going to be. What specifically do you intend to do to get us there?”
That stopped the conversation cold, because there was no answer.
Growth sounds strategic because it feels ambitious, measurable, and positive. You can have revenue increased, or customer counts increased. You can improve your margins, expand your market share, and have everyone point to a graph that’s moving in the right direction. In effect, you can do almost anything to make the needles on your dashboard point in the right direction so that everyone can triumphantly say, “we’re growing!” The problem is that none of those things explains what the organization is actually going to do differently.
A company can say it wants to grow by 20% in the next fiscal year, but that still leaves every important question unanswered. Which customers will create that growth? What value will the company provide that makes those customers choose it? Which products or services deserve more attention? What capabilities need to improve? Which markets are worth entering, and which ones should be ignored? What needs to change operationally so the company can support the additional demand without damaging service, quality, or profitability?
Those answers are where strategy takes on real form, and it’s one of the reasons I separate Strategic Direction from Goals in the Strategy Model. Strategic Direction defines where the organization intends to go over the next several years, while annual Goals represent the commitments that move it there. Growth may appear somewhere in both, but it needs enough context to explain what kind of growth the organization actually wants and why that growth matters.
The distinction becomes even more important because growth can occasionally make a company worse.
Revenue can increase while margins collapse. Customer counts can rise while service deteriorates. A business can hire aggressively, expand into new markets, add products, and become substantially more complicated while producing less value for everyone involved, and long-term sustainability becomes a critical risk. Growth can also expose weaknesses that were manageable at a smaller scale, but not under a larger model. Processes that worked with twenty customers may fall apart with two hundred, and leadership habits that worked with ten employees may become massive bottlenecks with fifty.
Sometimes the better strategic choice is to strengthen what already exists before trying to make it larger.
A company may need to improve profitability, reduce dependence on a small number of customers, simplify its service offering, strengthen leadership, improve delivery consistency, or build operational capacity before pursuing another period of expansion. In those situations, staying roughly the same size for a year while making the business substantially healthier may represent far more strategic progress than adding another 15% in revenue.
The same principle applies when leaders define annual Goals. “Grow revenue by 20%” can certainly be measured, but the number becomes much more useful when leadership understands what should produce it. Perhaps the real commitment is to enter a new market, increase recurring revenue, expand an existing customer segment, improve retention, or develop a new service offering. The growth becomes evidence that the strategy is working instead of becoming the strategy itself.
That also creates much better decisions downstream. Projects can be evaluated against a clearer direction, resources can be allocated intentionally, and leaders can explain why one opportunity deserves attention while another does not. As I wrote in What Actually Changes Because of Your Strategy?, a useful strategy should eventually change what gets funded, prioritized, and acted upon.
“Grow the company” does not provide much help when those decisions become difficult. There is nothing wrong with wanting growth. Healthy organizations usually do want to create more value, reach more customers, improve financial performance, and increase their influence over time. The important part is understanding what growth represents and identifying the deliberate choices that are expected to produce it.
If growth is the outcome you want, describe the strategy that makes that outcome believable, achievable, and sustainable.
A company should know what it intends to become before it decides how much bigger it wants to be.