#ebbfmember Salim Afshar , Surgeon | Founder | Venture Capitalist. Passionate about Global Health, Innovation, Equity & the Oneness of Mankind often shares his insights on the present and future of companies and what can make them worth existing. Here he shares a recent article of his:
“The world of corporate startups is inundated with conversation around scaling up — achieving massive growth, from unicorn status to dragon status to a status so fantastically behemoth it’s yet to be named. But if you lose sight of your company’s initial purpose and values in the race to scale as quickly and exponentially as possible, is it even worth it?
When corporate hubris replaces humanity
According to the scale-oriented school of thought, a successful startup’s trajectory goes something like this:
- Brilliant idea
- Rampant investor interest
- Ever-growing momentum
…until eventually, the startup becomes an enormous company with hundreds of employees executing operations on a massive scale and delivering exponential ROI for its initial investors. After all, a brilliant idea that can only be successfully realized on a relatively small scale and buckles under the weight of a wider application, is no longer a brilliant idea — in the world of business, it’s merely a naive fantasy.
This mindset, along with investors’ expectations for returns, can create pressure to grow, even when it doesn’t always make sense. And being surrounded by such unfettered optimism and ambition can give founders and CEOs a misplaced sense of infallibility — which can quickly alchemize into their company’s downfall. Massive growth may be impressive, but cautionary tales abound about startups whose scaling breached containment, becoming uncontrollable and directionless and eventually bringing about their doom. Companies like WeWork, whose determination to establish a truly global presence and to expand their business model rapidly took the company from a scrappy, well-intentioned group selling a service for other scrappy start-ups to an Icarus-level disaster.
And, as is often the case in ancient myths, these corporate cautionary tales tend to come down, in the end, to hubris. And to be fair, a certain amount of hubris is arguably necessary in the business world, especially in the fast-paced and highly competitive world of startups. But I’ve also noticed something more complex — and insidious — at play within larger corporations that have single-mindedly narrowed their focus to growth, and that’s a certain corporate moral murkiness.
This toxic combination of shaky morality and inflated ego has led to some of the biggest business disasters of our era. It must be avoided by any company seeking to scale responsibly. That’s why some of the best advice I’ve ever seen in the startup field is that for true growth to occur, scaling must happen incrementally, and in line with explicit values. Sometimes, this happens more slowly, with less excitement — but always, this approach means it happens more sustainably, too.
Whether or not you know it — whether or not they know it — all institutions, all companies are organized around certain values, and these values affect all areas of business, from investors, to leadership and rank-and-file employees, through to the end customers. What’s more, research indicates that today’s consumers prefer companies with clear values that imbue their operations.
As an entrepreneur and venture capitalist, I believe that the best companies are started by those who have a novel solution to an important problem, and are excited to share their ideas with the world. They’ve seen a need in the world, and they have strived to address it — they have strived to make people’s lives better. You don’t undertake this kind of work — often messy, risky, and stressful — without a firm basis of belief in what you are doing and why. In other words, we wouldn’t do this if we didn’t believe in something.
Unfortunately, that something can be the first thing to go when we turn our attention to scaling, without prioritizing moderation. Sometimes, the consequences are staggering financial failure. Sometimes, they are much worse.
The devastating cost of lost moral clarity
In some cases, a corporation’s forsaking its values can have a substantial impact on the larger world.
The Boeing airplane-building company was founded in 1916, and for nearly a century, it grew ever more prosperous, flourishing in large part thanks to its organizing values. Filmmaker Rory Kennedy, whose work includes a documentary focused on the company, said, “There were many decades when Boeing did extraordinary things by focusing on excellence and safety and ingenuity. Those three virtues were seen as the key to profit. It could work, and beautifully.”
But as Boeing’s leadership became more and more focused on growth, the focus was less and less on organizing values like the integrity Kennedy alludes to. When growth advances but leaves a company’s organizing values behind, you can be certain it is happening not to continue uplifting the original idea, and the morals that create that idea’s bedrock, with the world. Rather, these are cases of growth for growth’s sake alone.
Priorities shifted from building reliable, safe aircraft that could open access to the world, to fast-tracking new models of airplanes in response to market demands and profit incentives. This was done at all costs: including the cost of safety. This growth-focused endeavor, which pushed for “bigger and better” without incorporating the values that gave Boeing its identity, led to the creation of the Boeing 737 Max. And eventually, the Boeing 737 Max led to the deaths of 346 passengers in two separate plane crashes.
The company’s disappointing response to these catastrophic failures further highlighted how far it had fallen, even as its profits had skyrocketed. Rather than taking responsibility, Boeing attempted to place the blame for the crashes on the pilots, heavily and falsely implying that as non-Americans they had received inferior training, and that their training — rather than the planes — was the cause of the catastrophes.
When I look at these entirely preventable tragedies, I see a company that lost its moral clarity, and chose growth over its long-held values.
Successful companies keep sight of their values
Of course, there’s nothing wrong with growth when it enables stronger or further adherence to the company’s organizational values. Growth is key. For one thing, the larger companies become, the more they are able to implement crucial diversity, equity, and inclusion initiatives that allow them to expand hiring opportunities as widely as possible and truly find the best candidates for each position.
What’s more, growing demand for products and services can put strain on the company’s employees and potentially make customers feel like they aren’t being prioritized — for companies that have built in the infrastructure to grow, scaling up can benefit all parties. New employees can be brought in and effectively trained, demand for products and services can be met, and growth can be sustainable.
But growing for the sake of it can be toxic and harmful.
To companies looking to grow — to scale up — I offer the following advice: Don’t. Or at least, don’t until you’ve clearly and explicitly defined your company’s values, talked through how those values are expressed in every move the company makes, and ensured you have a plan in place to preserve those values as you expand. Ask yourself:
- How will we stick to our values in decisions about investment, hiring, marketing, and payment structures?
- Have we developed a culture at all levels of the organization of meaningful discussions and reflection, and ensured that culture influences our decision-making?
- Do we have policies and processes in place to support the mindful, reflective and honest culture we are trying to promote?
Consider why you’re scaling — what are the actual goals? If there’s truly an existing need that justifies growing, then take into consideration the local realities of your possible expansion — the realities of both the physical locale and the business context the company would be entering into. Scaling seems like a linear action, but it’s much less predictable; treating it like a linear change can have unintended consequences along the way.
