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Smart Growth
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Smart Growth

Building an Enduring Business by Managing the Risks of Growth

Edward D. Hess
Columbia UP, 2010
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8

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  • Applicable

Recommendation

In this fervent academic treatise, Edward D. Hess applies more than a half dozen different strangleholds to bring the “Growth Mental Model” – also known as the “grow or die” corporate mind-set – to its knees. According to Hess, blind worship of growth causes companies to manage expectations by manipulating their earnings and to grow in ways that are downright irresponsible. Hess offers original research, case studies and academic rigor to convince you that there must be a better way – and there is. “Smart Growth” happens when companies flourish based on carefully managed plans, clear and reasonable parameters, and honest self-assessment. getAbstract recommends this refreshing, alternative viewpoint to business leaders, managers at all levels, strategy consultants and the Wall Street types who insist on growth, year in and year out.

Summary

The Dangers of “The Growth Mental Model”

“Mental models” describe how individuals, alone or in groups, see and process the world around them. If a piece of information aligns with your mental models, you recognize its value and use it. If it doesn’t support or relate to your mental models, chances are your brain will discard it.

The Growth Mental Model has attained iconic status in modern business; it drives many organizations with its underlying imperative that companies must “grow or die.” The Growth Mental Model’s narrative arc is simple: Growth is indisputably positive, and optimal growth is both predictable and continuing. Private companies often unquestioningly accept growth as their main objective. For public corporations, “Wall Street Rules” enforce rising quarterly earnings as the only measures of success. Investment banking analysts calculate those future quarterly earnings, and if your firm exceeds Wall Street’s forecasts, your stock price gets a shot in the arm. But fail to meet the predictions – no matter how well your firm may have performed against other measures – and your stock price tumbles.

To avoid that dire consequence, many companies play...

About the Author

Edward D. Hess, a professor at the Darden School of Business at the University of Virginia, has written eight books and his work has appeared in more than 100 media outlets.

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