29 August 2017

Chasing Growth

Our society seems to be obsessed with growth. Often you will hear people talking about companies’ headcount as a measure of their success. The bigger the better! “Wow, last year they were just 450 and now they’re nearly 800! They are on their way to being really successful!” In fact, we seem to apply the same metrics to most things today. “They have 5 million active users now!” “They’re valued at $2 billion now!”

Let’s be honest, most companies don’t hire more people unless they actually need to and making more money surely can’t be a bad thing, right? So what’s wrong with praising growth?

The underpinning tenet of chasing exponential growth is that anything less than “all of it” is never enough. If there’s more possible, more out there, then it’s your gawd damn duty to hunt it down and make it yours. -DHH

Growth is good if it’s balanced by demand and driven out of a strategy. But more often than not today, it seems as if growth is just the assumed path forward. Bigger is assumed to equal better and even though they may not be happier customers, at least there’s more of them. That is the goal, right? I’m not sure. Apple, for one, should know.

The Paradox of Demand

Apple, today valued as the world’s largest company, has experienced some of the biggest growth ever seen with a product. The iPhone, as we all know, is a massive success. Let’s start by painting a mental picture about the specifics of the iPhone’s production line.

During the most recent Xmas quarter, Apple sold slightly fewer than 80 million iPhones, about 900,000 a day. Obligingly, a day has 86,400 seconds, so we round up to 90,000 to get a production yield of ten iPhones per second.

But producing a phone isn’t instantaneous, it isn’t like the click of the shutter in a high-speed camera. Let’s assume that it takes about 15 minutes (rounded up to 1,000 seconds) to assemble a single iPhone. How many parallel production pipes need to accumulate ten phones a second? 1,000 divided by 1/10 equals… 10,000!

Ten thousand parallel pipes in order to output ten phones per second. -Jean-Louis Gassée

Selling 80 million iPhones every quarter sure is great for your quarterly results, but the logistics of a production line that produces 10,000 iPhones simultaneously? Huge nightmare. Similarly, adding new components to an iPhone is no easy task. There’s only a handful of suppliers that are able to meet their demands of supplying parts that can fulfill their intense production line.

The iPhone is so popular a product that Apple can’t include any technology or source any part if it can’t be made more than 200 million times a year. If the supplier of a cutting-edge part Apple wants can only provide the company with 50 million per year, it simply can’t be used in the iPhone. Apple sells too many, too fast.

Contrast that to Apple’s competition. On the smaller end, former Android chief Andy Rubin announced the Essential phone, but even Rubin admitted that he’d only be able to sell in thousands, not millions. -Jason Snell

Decisions by committee can slow the work…

Some of the companies I’ve worked for have had, to say the least, a fascination for holding meetings. As soon as a question arose, a meeting was called. The more important the question was, the more people “needed” to be there. Most weren’t sure what the meeting was about or, even worse, why they were called. Ironically, more often than not, the person with a mandate to decide didn’t show up making the meeting completely pointless and wasting 10-15 people’s time. But it sure feels important to gather a bunch of people in a room, right? If you’ve ever worked in a large organization, I’m sure you can relate to this. In fact, this is what most companies still do! Inc. argues that 99% of all meetings are a waste of time.

Basecamp, a company I often reference, have found that three is their magic number.

Nearly all product work is done by teams of three people. A team of three is usually composed of two programmers and one designer. And if it’s not three, it’s two or one — not four or five. We don’t throw more people at problems, we chisel problems down until they can be tackled by three people, at most.

This past spring I’ve worked on a large redesign project for E.ON. While the entire team consists of about 15 people, most of the work that we did this spring was between 2 or 3 people. It’s been great! We’d been able to move forward at a far faster pace. Whenever we’d felt that there’s one decision that we need help moving forward with, we’d isolate the question and asked one of the other team members. Not everyone, just one.

You can do big things with small teams, but it’s a whole hell of a lot harder to do small things with big teams.

So before you head out there, chasing more of that precious ‘growth’, perhaps take a step back and consider the potential downsides of it. What growth is worth pursuing and when is enough… just enough?

The longest lived businesses in the world aren’t the ones that were biggest in their day. Many of them are family firms, or small to mid-sized enterprises content with steady evolvement of their niche. Content with enough.-DHH

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