The Founder’s Mentality: How to Overcome the Predictable Crises of Growth

The Founder’s Mentality: How to Overcome the Predictable Crises of Growth

Growing a company is hard. And it is even harder to keep growing. Only one out of nine companies sustain
profitable growth for 10 years or more. If you ask the others why they stopped growing,
they don’t usually blame external market forces. 85% of the problems they cite are internal. This is the growth paradox. Growth creates complexity, and complexity kills growth. Bain believes that this is predictable and preventable,
wherever companies are on their growth journey, if they understand what goes wrong and how to respond. Most fast-growing companies are at war with their
industry on behalf of underserved customers. They are insurgents, with a bold mission to
serve those customers better than anyone else. For that reason, they are obsessed with the front line. And these companies have a strong owner’s mindset. They hate complexity and watch every dollar. These are the elements of what we
call the “Founder’s Mentality.” And research by Bain & Company shows that
the most sustainably profitable companies are those that nurture and maintain these traits. All insurgents start with a strong Founder’s Mentality. Their goal is to grow and also gain the
benefits of size, to become scale insurgents. Bain research shows that only about 7% of companies
achieve scale insurgency, but they represent more than 50% of the net value created in the stock market each year. Most successful companies don’t achieve scale insurgency. As they grow, they allow their Founder’s Mentality to fade. They gain the size they wanted, but they become overloaded
and vulnerable to forces that blow them off course. Instead of becoming scale insurgents, they grow into incumbents. They are big and successful, but without their
Founder’s Mentality, they become complex and slow, and their growth eventually stalls out. They are no longer nimble or flexible
enough to respond to another set of forces that threaten to push them down into a struggling
bureaucracy, or send them into complete free fall. Bain research shows that 80% of all swings in value,
negative and positive, occur as a result of decisions made during these three crises of growth:
overload, stall-out and free fall. But companies can avoid or survive these crises if
they maintain or recover their Founder’s Mentality. Insurgents can grow to scale without losing their way. And incumbents, even struggling bureaucracies,
can rediscover their Founder’s Mentality. They too can become insurgents again, and take advantage
of size and scale, without succumbing to complexity. Founder’s Mentality is one of your
greatest assets, if you use it. Where’s your company on this journey?


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