Why You Are Responsible for Your Flatlining Business (and what you can do about it)

Stall Points, by Matthew S. Olson and Derek Van Bever © 2008

These guys did a deep dive into the data of Fortune 100-sized firms over 50 years to determine the causes of stalled growth.

What They Say: They say that most growth stalls are based on internal, controllable factors that can be traced to what amounts to executive “Groupthink.” 

Basically, the executives all operate under a shared set of strategic assumptions that help them make decisions effectively and quickly during a growth period (we have the best technology, our customers are willing to pay more for our brand, we can charge a premium price, we are the low-cost leader, low-end rivals can’t touch us, etc.). 

Unfortunately, these assumptions inevitably become incorrect over time, but the executives are locked into them, which leads to a stall.

It is important to note that only a small minority of businesses stalled due to external factors such as economic downturn, regulatory constraints, etc.

In Other Words: The only reason most companies stop growing is that they believe their assumptions about what works beyond the point of usefulness.

What This Means For You: As a small business owner, you undoubtedly walk around with your own assumptions about why you have achieved what you have achieved to date. These assumptions can make you blind to growth opportunities and lead you to over-estimate your business strengths. They will ultimately lead to stalled growth.  

What to Do: Take a critical look at the assumptions you are making about your business and get an outsider to (kindly but firmly) douse you with the cold reality of the reality you face today.

The Good News: You have the power to change this!   

Virginia Ginsburg is founder and chief consultant at Swell Strategies. She is passionate about supporting small business owners and entrepreneurs in starting and running successful enterprises. An avid reader, in this blog she reviews books and articles and relates specific learning points back to entrepreneurial businesses.