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  Managing the Dark Side of Growth  Premium

Prats, Mª Julia; Sosna, Marc
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Growth is not linear, but a rollercoaster ride of adrenaline highs and stomach-churning lows. Business leaders need both the stamina and ability to shift their approach when necessary to keep their companies on a sustainable growth path in the long term. The authors tracked more than 110 CEOs of young, innovative companies from more than 20 different countries and several industries for more than five years. Their research highlights an important paradox in managing growth: The same behaviors that are necessary or beneficial to grow a firm in the good times can easily become traps in the bad. Being aware of this, and having the capabilities to manage it, notably increases the probability of success. Specifically, the authors identify four shifts of mindset that leaders in volatile work environments need to make if they are to be effective: from sticking to their guns, to collaborating with their critics; from being the protagonist, to becoming an enabler; from always being one step ahead, to making sure everyone is on the same page; from living with extremes, to staying firmly on track. Above all, CEOs need to remain grounded in a strong set of personal values, such as humility, kindness, patience and fair treatment, which will ultimately help organizations deal better with the storms and bounce back more rapidly to the sunny days of growth.

Tools and Frameworks:

The authors identify four shifts of mindset that leaders in volatile work environments need to make if they are to be effective.

Examples Cited:

Elpmax Technologies (name changed at the company’s request), a start-up in the telecommunications industry, along with other young, innovative, high-growth companies at the frontiers of technology and innovation.

Research Basis:

Based on two research projects involving 112 innovative, high-growth firms, with in-depth analysis on a subsample of 15 firms. Over the past five years, the authors spent several days every three to four months with the CEOs/founders of all those firms, conducting interviews, collecting financial data, discussing the main challenges they were facing at the time, and recording the actions taken and subsequent outcomes. In parallel, they worked closely with another 23 firms for three months each, to understand the strategic challenges they were facing. Through quantitative and qualitative data analysis, clear patterns were identified.

About the Authors:

M. Julia Prats is assistant professor in the Entrepreneurship Department of IESE Business School.

Marc Sosna is a research fellow in the Entrepreneurship Department of IESE Business School, and a Ph.D. student at the Technical University of Berlin.
This article is based on:  Managing the Dark Side of Growth
Publisher:  Estudios y Ediciones IESE
Year:  2010
Language:  English

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