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Smart Growth: Building an Enduring Business by Managing the Risks of Growth resources

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Smart Growth BUILDING AN ENDURING COMPANY BY MANAGING THE RISKS OF GROWTH Osee that good companies can self- destruct or self- infl ict serious wounds nancial crisis in the United States to to look at the recent fiNE ONLY HAS by pursuing poor quality growth or by failing to manage the risks of growth. Examples are Merrill Lynch, Citicorp, AIG, Washington Mutual, and Lehman Brothers. Outside the fi nd good com- nancial ser vices industry, one can also fi panies that have created serious problems for the same reasons. In this book, I challenge some commonly held business beliefs about growth. First, I challenge the commonly held business beliefs (“Growth Men- tal Model”) that 1. businesses must continuously grow or they will die; 2. growth is always good; 3. public company growth should occur continuously and smoothly; and 4. quarterly earnings should be a primary mea sure of public company success. Th ese beliefs drive short- term business behaviors that in too many cases defer or destroy long- term value creation, decrease competitiveness, and can lead to premature corporate demise. Adherence to these beliefs can also result in the creation and manufacture of earnings that have no business purpose other than to help companies meet quarterly earnings estimates. Th ese earnings neither are evidence of a company’s future earning power nor provide meaningful information regarding a company’s economic and strategic health and competitiveness.

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