The Crises of Growth

Companies that have made it successfully through their start-up and early-growth phases face three predictable crises of growth: Overload, Stall-out and Free Fall.

Overload refers to the internal dysfunction and loss of external momentum that management teams of young, fast-growing companies experience as they try to rapidly scale their businesses—when they are moving up from the bottom-right quadrant of our Founder’s Mentality map and aiming to reach to the upper-right quadrant. As companies scale, their leaders tend to undermanage or take the elements of the founder’s mentality for granted, which can result in those companies losing what made them great in the first place. Overload afflicts growing companies that have failed to prepare adequately on the inside for the strains of size and complexity.

Stall-out refers to the sudden slowdown that many successful companies suffer as their rapid growth gives rise to layers of organizational complexity and a dilution of the clear mission that once gave the company its focus and energy. Stall-out is a disorienting time for a company: The accelerator pedal of growth no longer responds as it used to, and faster, younger competitors are starting to gain ground. Most companies that stall out never fully recover.

Free fall is the most existentially threatening crisis. A company in free fall has completely stopped growing in its core market, and its business model, until recently the reason for its success, suddenly no longer seems viable. Time feels scarce for a company in free fall. The management team often feels it has lost control. It can’t identify the root causes of the crisis, and it doesn’t know what levers to pull to escape it.