In This Issue:
Can Evolutionary Small Steps Lead to Really Fast Business Growth?
Too much too fast often hampers success. That's why my 20+ years researching Winning Moves for business success shows that business growth via evolution, where the steps are smaller and risk is not excessive, generally leads to greater success than growth via revolutionary, radical change.
Yet, verbiage like "small evolutionary steps" and "small bets" might convey the impression of incremental change too minor to fuel extremely rapid growth. Thus, an evolutionary approach to building a business might be viewed by some as being capable of producing at best only gradual growth.
This raises the question: can really fast business growth result from a small step, small bet evolutionary approach?
To answer this question, we must recognize that not all fast growth is created equal. Sometimes, fast growth is successful. But, many times, really fast growth merely sends a company down the path to the disastrous consequences associated with too much too soon. Such ill-fated fast growth typically is not evolutionary. That's why it fares so poorly, since my research finds that evolutionary growth is what brings success. An evolutionary approach entails making Winning Moves.
In some cases, however, an evolutionary approach not only brings successful growth, but it also produces really fast growth. And, fast growth that occurs via evolution is the fast growth that generally succeeds.
An evolutionary approach to growth shares similarities with other well known business strategy concepts. As I have said in my previous writings, whether it's small evolutionary steps, small bets, or other well known concepts like pursuing adjacencies or sticking to your knitting, all are about avoiding huge jumps into the unknown. All are about not spreading yourself too thin. And, all of them are about avoiding situations where the strengths required to succeed are not only lacking, but are also extremely difficult to readily obtain.
In contrast to an evolutionary approach, fast growth via revolutionary change can move a company into areas where there is not enough time to develop and hone the required expertise. Then, the fast growth can easily multiply the learning errors to the point of dire consequences. On the other hand, if fast growth is evolutionary, building upon prior strengths, and replicating what the company already knows how to do, success is much more likely.
An example of impressive rapid growth via an evolutionary approach is Wal-Mart. Wal-Mart's rapid growth is described in founder Sam Walton's autobiography titled Sam Walton Made in America: My Story. The book reports that Wal-Mart was opening 50 stores annually while several other discount chains opened just three to six stores per year. According to the book, Wal-Mart's revenue rose from $31 million in 1970 to $1.2 billion in 1980 to $26 billion in 1990, and during that time, profit went from $1.2 million (1970) to $41 million (1980) to $1 billion (1990).
Yet, when what the book presents is analyzed to evaluate Wal-Mart's approach to growth, it is apparent that Wal-Mart's rapid growth was evolutionary. For example, when expanding rapidly, Wal-Mart stuck to what had worked before, but implemented it in new locations that had similarities to current markets. The rapid expansion typically did not entail experimenting with markets like the biggest cities, which were very different from what Wal-Mart knew and understood. Essentially, Wal-Mart's rapid expansion succeeded by replicating what they already knew in environments similar to the ones they knew.
Despite this, however, Wal-Mart did have a reputation for experimenting with innovative ideas. In fact, Sam Walton was constantly looking for and trying out new ideas. But, when rapidly rolling out new stores, Wal-Mart typically relied upon the same retailing formats that had already worked well for it in the past.
Furthermore, Wal-Mart's rapid expansion was not widely dispersed geographically. Several new stores were quickly opened within geographic proximity of a distribution center--no farther than one day's drive. So, while the number of stores and the resulting revenue grew rapidly, the geographic area in which Wal-Mart had a presence increased at a more gradual, small step pace.
Additionally, Wal-Mart set up methods for monitoring the business, and Sam Walton was a big believer in paying attention to the numbers. So, not only was Wal-Mart's rapid expansion in the kinds of areas that they understood well, but it was also closely monitored to see whether it was working. This helps guard against potentially devastating consequences that are often associated with too fast too soon.
In conclusion, Wal-Mart's rapid expansion illustrates that fast growth can be evolutionary. And, evolutionary growth is what succeeds. It entails making Winning Moves.
La Grange Park, IL