The Psychology Of Business Growth
I want to tell you two stories about growth.
Or, rather, the lack thereof.
Story #1: A successful company in the construction space decides to expand into a new market. They’ve consistently grown the business in New England, but now they want to put a stake in the ground further south.
They do their research and choose a location (Maryland) that seems viable.
They send their best project manager down to start generating business. The PM will continue to manage some relationships in New England until the new market is up and running.
And after 9 months…nothing.
The company hasn’t acquired any new accounts in Maryland.
What happened?
***
Story #2: Another successful company in the consulting space wants to grow its client portfolio. This company is set up so that team members get paid based on the amount of time they spend working with clients (not salary).
The more companies they consult, the more they get paid.
The company slows down hiring so that the current team can fill up their books of business with new clients.
But something unexpected happens.
Growth slows down.
Leads aren’t closing as quickly. Fewer new clients are coming in through the door.
What happened?
***
In both of these situations, you’d expect the approach to work. On paper, it does.
In story #1, you take a super successful employee and send them off to be successful somewhere else.
In story #2, you provide the current team members with the opportunity to achieve their financial goals.
What’s wrong with this picture, then? Why did things go sideways?
Psychology.
We forget sometimes that businesses aren’t just run out of spreadsheets. They aren’t operated on paper. Projections and forecasts and everything else are the data we use to make predictions about how people will behave in the real world.
Sometimes, we don’t account for psychological factors in those predictions.
Take story #1. Maybe you’ve already identified the fatal flaw in this plan.
The awesome employee was still tied to New England. He was making money, continuing to bring in business, and nurturing his current relationships.
That work is a whole lot easier than starting over in a brand new territory.
So although he was willing to go to Maryland, he ended up putting his time toward the activities that were more enjoyable. And the structure he was under allowed for that.
Maryland never stood a chance.
In story #2, something similar: a disconnect between what you say you want and what you want.
A consultant may say they want to make $X per year—an ambitious goal. But in reality, they’re willing to settle for $Y per year, a number that’s considerably less but still makes them happy.
The extra money would be nice, but maybe it isn’t worth the effort of the extra business development, the extra pitches, the extra work.
So the company has overshot its projections of how much business each consultant will actually do.
And then deals start slipping.
***
In both situations, everyone has good intentions. There are no bad actors here.
There is only human nature.
Sometimes, your front domino isn’t a mistake in the numbers.
It’s failing to account for the way people behave in the real world.
What’s a situation you have that makes sense on paper but isn’t panning out the way it should?
Set up a time to talk it through with one of our consultants.
