When Slow Growth Means Smart Growth
Slow growth in a recessionary economy suggests an anemic business environment. But for some companies focused on the quality of their service or product and work life, it means smart growth.LLamasoft
, a software company that takes its name from the woolly work animal found in the Andes Mountains and used by Himalayan monks, means organic growth. Unlike other companies that grew rapidly with infusions of venture capital – often based on the illusion of maturation – LLamasoft has developed its products slowly, feeding its infrastructure based on market growth. As a result, it's become an international company.Trent Design
began with a graphic designer in an ad agency who was troubled that creatives didn't have enough contact with clients. Marilyn Trent set out to create a company that empowered a staff of designers to create good design and engage clients – while maintaining her vision for design quality. For Trent, it's about quality of work life, client selection, and having the right complement of talent to meet needs.
Farmington Hills-based architect and interior designer Jim Meredith has maintained a sole proprietorship, Meredith Strategy & Design, LLC
, but engages associates to help him on specific projects. He shares Trent's concern for finding clients interested in thoughtful design solutions. For him, growth is in the satisfaction of solving creative problems and contributing to a client's success through workplace design.
These companies speak more about developing capabilities and products to meet customer needs and growing into areas of need than about the typical rapid growth strategies that dominate business talk. The economy in Southeast Michigan may have forced most companies into a slow or no-growth cycle in recent years, but these companies continue to develop during the recession and have a positive outlook for the future.
In 1998, when other start-up software outfits lived on infusions of venture capital and promises of product delivery, LLamasoft was a moonlight business for entrepreneurs interested in doing things a different way. "When we launched LLamasoft, it was the exact opposite approach," explains Toby Brzoznowski, executive vice president of sales and marketing for LLamasoft. "We knew we had some value and that people were actually investing in the technology." The Ann Arbor company's growth strategy was to add one customer at a time. "As we bring on the next customer, that gives us a little more income to do a little marketing and a little more development to acquire the next customer."
Donald A. Hicks, founder, president, and CEO of LLamasoft, says he pursued "organic growth versus an accelerated or hyped funded approach from large pools of external money." Hicks says he has witnessed the rise of an entrepreneurial class "that fantasizes about getting people to give them money for them to go spend it. You don't see that kind of talk with people who love their industry, love their business. They're focused on an activity, something that is a mission for them, something that they want to do, that they're pleased to do, and they get customers to pay them for doing those things. You really have a substantial divide now between a professional entrepreneurial class that mirrors the venture industry and this other class of entrepreneurs who start making pottery and make it a business; they love making bread and pretty soon they have a thriving restaurant. People like us love solving problems, and more importantly we love helping other people learn and solve their own problems. We write software and do some coaching and people get value out of that, so we grow. That's what businesses do if you don't screw with them. They deliver value and grow."
LLamasoft grew 20 percent during the recession and expects 60 percent growth in 2010. The company has 35 employees and a worldwide client base. It expects to grow to 50 employees this year, says Brzoznowski.
Marilyn Trent launched her Rochester business in 1992 with one freelance designer as an extension of her artistic vision. The company grew through client demand and the evolution of online graphic design. She attends educational conferences regularly to augment her specialty in brand management and web design. Her firm has reached what she believes is the right size – seven designers, each with specific capabilities and the ability to engage the client without an account rep.
Her personal and business mien embraces the philosophy of "gross national happiness," in which profit and productivity are related to work life quality. "That is wrapped around small growth. To grow quickly, I would have to look at things differently – more for profit, rather than what I feel is more quality of life and quality of product. I wouldn't be able to work with the non-profits I work with. I believe in corporate social responsibility. That really doesn't lend itself to growing big, quickly."
Trent says she manages her firm's quality, clients, and business growth "by carefully nurturing my best client relationships so that they continue working with us. I have turned down projects because of size and ones that just aren't a good fit in terms of creative differences." The firm has avoided debt and is acquiring national clients. Trent expects her firm to grow 10 to 15 percent this year.
The recession has been devastating to the regional economy, but has presented for-profit and non-profit organizations a challenge to rethink their purpose and expectations of growth, Meredith says. He views the recession not just as economic malaise, but as a "collapse" of the "old structures," replaced by "a yearning for new institutions." Specifically, for this architect and interior designer, it resulted in a change in how people work.
"As work and life have begun to merge and become intertwined, there begins to be a change in profile of who we are and the way we do our work. That informs the conventional workplace and (is) changing the nature of the context in which work is done."
Meredith's meticulous client selection affects the pace and scale of his firm's expansion. "I identify a company or industry segment or other context where I believe we can bring value, and then develop a collaborative approach with a firm I think may be most appropriate for the implementation portion of our work." In a complementary way, design firms also retain his firm to support their work.
Smart organizations are rethinking everything about their businesses, including their work style, he says. As a result, things have slowed down, for good reason, but they haven't stopped developing. "In some ways it's intentionally slower, but slowness is only a matter of focus not being so much on profit and growth but more on contribution, purpose, and meaning."
Meredith defines growth in his business more in terms of translating the change he sees in work life and adding value for his client. "My interest in growth, basically is satisfaction in the transformation (of his clients' work environment), almost more than it is about the specific metrics of growth, in terms of people or profit or the things we normally think about the way organizations grow."
Meredith says he has had a significant increase in opportunities to bid on projects this year and is optimistic about the balance of 2010. He believes his firm could double its revenues over last year.
Critics of slow growth argue that it can result in "slow death" for a business unaware of its competitors' growth. Joel Spolsky, co-founder and CEO of Fog Creek Software
, writes in a 2009 Inc
. magazine article, "I have always believed that there is a natural, organic rate at which a business should grow, and that if we expanded too fast, the wheels would come flying off. … For the longest time, I smugly thought: We're profitable, our sales are rising, we make terrific products, and our customers love us. So what do we have to worry about?"
He worries about "a large competitor (which) appears to be growing a lot faster." Therein lies the rub for slow growth companies.
On the other hand, there's the tale of the tortoise and the hare.
Dennis Archambault is still growing. He is a freelance writer and regular contributor to Metromode. His previous article was New Generation Manufacturing.
Send comments here. Follow us on Facebook here.
Marilyn Trent at Trent Design-Rochester
Toby Brzoznowski, executive vice president of sales and marketing for LLamasoft
What a Fun Work Environment at Trent Design
All Photos by Dave Lewinski