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What Is The 'Sustainable Growth Cycle'?

Systems tend to have a natural size, and exceeding this size can cause many problems. Systems that grow typically have a Sustainable Growth Cycle that ensures the system doesn't get out of control.

Businesses move through three distinct phases:

1. In an Expansion cycle: the company is focused on growing.
2. In a Maintenance cycle, the company is focused on executing the current plan.
3. In a Consolidation cycle, the company is focused on analysis and pruning waste and inefficiency.

Josh Kaufman Explains The 'Sustainable Growth Cycle'

It’s a mistake to assume any system can grow indefinitely, without limit. Systems tend to have a natural size, and exceeding this size can cause many problems. Elements of a system that are out of control need to be eliminated.

Take cell growth, for example. The cells in your body tend to grow to a certain size, and multiply at a rate that ensures new cells replace cells that die. When these proportions are in balance, your body works quite well. When cells grow or multiply out of control, the situation can threaten the existence of the system. Cancerous cells need to be removed to ensure the health of the entire body.

Businesses and biological organisms have many things in common: they’re made up of many interrelated parts and systems that change and grow over time. If the Five Parts of Every Business grow out of control or proportion to each other, the situation can threaten the health of the organization.

The Sustainable Growth Cycle is a pattern I’ve noticed in businesses that are able to grow year-after-year without major difficulties. This cycle has three distinct phases: expansion, maintenance, and consolidation.

In an Expansion cycle, the company is focused on growing. New offers are created and tested. New markets are explored. New business units are built and staffed, and future plans are created. Early data about what works is collected for later use.

In a Maintenance cycle, the company is focused on executing the current plan. The Marketing, Sales, and Value-Delivery parts of the business are in full swing, and emphasis is placed on fully exploring the potential of the current business structure. Systems are put in place to ensure the execution

In a Consolidation cycle, the company is focused on analysis. Information about the performance of the business is examined in detail in an attempt to figure out what’s working and what’s not. Things that aren’t working are cut back or eliminated, and things that are working are given more resources.

Think of plant cultivation: the best gardeners allow plants to grow, ensure they have enough resources to thrive, then cut back the plants that don’t. This cycle repeats, season after season. Every cycle is essential.

Many entrepreneurs become frustrated when their business seems to hit a “plateau,” and growth appears to stop. Spending time on maintenance or consolidation seems like a waste, or a flaw in the business idea. That’s not the case at all: these phases are necessary to ensure the business succeeds, and should be respected.

A business that fixates on expansion, but shortchanges maintenance and consolidation, will experience the commercial equivalent of cancerous growth. Parts of the business will grow out of control, consuming too much time, energy, and resources compared to what they contribute to the health of the business. New opportunities will be explored while proven opportunities are ignored or forgotten.

Maintenance and consolidation are necessary to bring the system into balance. Once the system is humming along, the growth cycle kicks in automatically.

A healthy business cycles between expansion, maintenance, and consolidation often. No matter which part of the cycle you’re in, it’s important to recognize that it’s necessary and essential to the health of the business. By giving each cycle the appropriate time and attention, you’ll ensure the long-term success of the business.

Questions About The 'Sustainable Growth Cycle'

• What cycle is your business in right now?
• Do you respect these cycles and allow them to run their course?

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"After victory, tighten the straps on your helmet."

Tokugawa Ieyasu, first shogun of the Tokugawa shogunate, 1600-1616

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