What Does it Mean for a Business to Grow Sustainably?

Short term thinking results in collapse 😮‍💨

With the launch of my Sustainable Growth Playbook coming in May, I wanted to share more about what it means for a business to grow sustainably. My course is unlike any other, it’s not pure growth hacking like Reforge or Growth.Design, but it’s also not purely about sustainable practices either. I’m teaching an integration — how to make sustainable growth the default.

If you’re not familiar with growth hacking check out my primer.

What does it mean for a business to grow sustainably?

Traditionally, sustainable growth means a business growing at a rate where it can scale without having to borrow additional debt or equity. This means a company needs to pay its own bills, get paid, and make a profit year over year. Companies can reach a saturation point with its products over time. As a result, to maintain the growth rate, companies need to expand into new products, or perhaps even acquire new companies. Look at Amazon or Meta’s product suite. As they reached saturation with their core product, they started to expand into new verticals. The orientation historically has always been:

“How can we grow more?”

The problem with growth for the sake of growth

If you’re a business that exists only to expand in profit, you should not be in business.

Businesses need to serve a purpose and have a clear mission. If you’ve read my piece on growth, you’ll know that every company on the planet pushing towards endless growth results in a global collapse. It’s literally, NOT sustainable. There are a finite amount of resources on the planet.

Even when businesses have good intentions, they can face pressures to perform. According to Harvard Business Review, there are 2 common pressures:

1. Grow in a way that loses the focus on the customer. Examples include adding products and services to their offerings that are out of sync with their value propositions or increasing prices or adding hidden fees to grow margins.

2. Grow more quickly than their organizational capabilities allow. Examples include picking suboptimal new locations or opening new units when they can’t staff them with strong managers.

Data shows a halt in economic growth is inevitable, so it’s up to us how to manage it. According to Herrington,

A decade from now we will see a halt in economic growth. Period.

In a study, “Herrington focused on 2 scenarios using a range of variables, or markers, including population, fertility rates, mortality rates, industrial output, food production, services, non-renewable resources, persistent pollution, human welfare, and ecological footprint.¹

1. Business as usual - stalled economic growth + social collapse. ❌

2. Comprehensive technology - stalled economic growth - social collapse. ✅

Both scenarios “show a halt in growth within a decade or so from now,” the study says, adding, that “pursuing continuous growth, is not possible.”² Companies will not continue to succeed if earth’s ecosystems collapse, societies fail, and the economy collapses.

Profit > People

How do we flip this around in the right direction? ↔️

Companies need a clear purpose. Growth for the sake of growth should never be the main goal. This means the best alternative is for us is to consciously decenter growth from our process. And when I say, growth, what we’re really taking about is the endless pursuit of profit, right? A company’s north star should never be profit. Ultimately, who stands the most to benefit from that?

Unsustainable growth leads to collapse

80% of startups fail within their first 2 years. Rapid growth can exacerbate this. Some people seem to think rapid growth is a sure fire sign of future success. 💥 Guess what, it’s not. 🫣 In fact, startups that grow too quickly face collapse. Most companies and startups that are in hyper growth mode fail. A study found that 2/3rds of the firms that made Inc. magazine’s 5,000 fastest-growing companies list “had gotten smaller, been disadvantageously sold or gone out of business entirely” five to eight years later.²

That’s especially true when you’re raising money from venture capitalists to fund your startup (not saying this is bad in every scenario). In the current market we’ve seen thousands of layoffs and some VCs are even closing down. Companies in hyper growth are the first to lay people off in the event of an economic downturn. This could reveal 2 things, either an abundance of caution, or more likely, short term planning. It’s a quick cost cutting measure when company lacks financial stability and stable demand. The antidote to the endless drive for profit is sustainable growth.

Expanding our definition of sustainable growth

How do we recenter our companies and technology around serving society?