No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights
Home Ethics

Forget Hyper-Growth. Let’s Learn to Scale Ethically.

Many Company Founders Were Brought Up in a Winner-Take-All Mentality

by Hemant Taneja
February 2, 2022
in Ethics, Governance
a chick with blue jay feathers

We’ve come a long way from the move fast and break things era. But C-suite and board members of any growing corporation inevitably reach a crossroads (or many crossroads) where they must choose between scaling aggressively and scaling ethically. 

We should be celebrating the empathetic entrepreneur who understands customer needs deeply and figures out the responsible way to serve them, even if it comes at the expense of some growth. 

Growth is good. Growth should be the goal of any company. But hyper-growth, or blitz-scaling, for the wrong reasons is irresponsible and potentially harmful. Wrong reasons include using growth as a way to “win” a market, as a path to cashing out for a lot of money, or because investors pumped the company full of excessive capital that the company is then expected to spend on growth.

From the dawn of the dot-com boom in 1995 and through 2020, “responsible growth” might have seemed like an oxymoron in Silicon Valley. The tech startup ecosystem was more likely to celebrate growth by any means. Hyper-growth made headlines. It hypnotized investors. Some of the premises that many took for true to arrive at that reasoning have since been exposed as myths.

When Winners Don’t Take All

One of those myths is that we’re in a winner-take-all economy, so that in every market category, one company is going to run away with 75 percent-plus of the economics and everyone else will get the scraps. That may have been true twenty or even ten years ago, when a lot of startups were network-effect companies, which meant everyone would want to belong to the biggest network. These are companies like Facebook, LinkedIn, Twitter – or companies like Google, where as more people use it, the better its algorithms get at search, which in turn convinces more people to use it … and the flywheel keeps spinning faster, leaving competitors behind.

But today, many startups are reinventing big, long-standing industries that impact everyday life – industries like insurance, healthcare, energy, banking and shipping. The same network effects don’t play out. These markets are enormous. Look at Gusto: it’s built a multi-billion-dollar business by serving 100,000 small companies in a market where there are millions of small companies yet to be touched by it. Tesla isn’t going to make all the electric cars in the world. Teledoc isn’t going to replace all in-person doctor visits by offering them virtually. In these kinds of industries, market domination is almost impossible. Instead, companies should focus on aggressive but manageable growth rates over a long period of time.

First Mover

Another myth has been “first mover advantage” – the idea that being first to introduce a new technology or business model confers an enormous lead over those who follow you. That mentality is used to justify irresponsible tactics like “move fast and break things.” But that myth has been exploded by the many first movers that have tanked while latecomers succeeded. Google wasn’t the first search engine. AWS wasn’t the first cloud computing platform. Netflix wasn’t the first streaming video service.

Silicon Valley has been obsessed with this idea of backing the hacker-entrepreneur who moves fast, puts out a least viable product, and iterates. But that is not well-suited to building ethically or responsibly.

What can confuse people is that sometimes irresponsible innovation works. It most famously worked for Uber. The company’s caustic culture celebrated breaking rules and behaving badly. Instead of working with cities, it stormed into them and later asked for forgiveness, counting on policymakers to be too scared to take away a service that consumers liked. But operating that way is a gamble. Uber got lucky, though it has faced major challenges from cities like London and New York. But more often, the gambler loses.

Finding the Responsible Rate of Growth

There is an optimal growth rate unique to each company. What is the pace of hiring required to service the next market segment, and can the company get the right employees and properly train them? How complex are the logistics of delivering new services? Such questions help figure out a growth plan that makes sense.

Other companies I’ve been involved with have scaled responsibly and aggressively. One is Stripe, the online payments company that has become the commerce backbone for the tech startup ecosystem. Providing an online payments API globally was a massive opportunity. Stripe took it in steps, building from its core. It wanted to first get the majority of newly-founded companies to sign up for their commerce capabilities. That ensured Stripe’s future. Then it started to go upmarket to also serve companies that have been around for a while. 

The other right-scaled company is Livongo. Its objective is to keep consumers with diabetes healthy. Those consumers have many co-morbidities, like hypertension and obesity, and Livongo realized it needed to deepen its offering much sooner to address those conditions because it was the right thing to do for its customers. In general, the decisions about how fast to scale and why are different for every company.

It’s important to acknowledge, too, that outside forces impact growth and must be managed. Something I hear from every founder who wants to build responsibly is that it’s vitally important to choose the right investors and board, making sure they share the same mindset. The wrong investors will focus on the short term, pushing for fast growth and a quick return on investment. The right investors will want to be partners for the long haul, building a company that matters and lasts for generations.

Choosing the right investors and board isn’t enough. It’s up to the founder to constantly reinforce the message of responsible growth, conditioning investors and all stakeholders to embrace such a philosophy, and doing it over and over again. The best CEOs leave no question about their stance: They want to build an enduring company that benefits society and stakeholders alike.

Excerpt from Intended Consequences: How to Build Market-Leading Companies with Responsible Innovation by Hemant Taneja, pp. 110-113 (McGraw Hill, January 2022)


Tags: Board of DirectorsCulture of EthicsTone at the Top
Previous Post

Can an Employee Be Fired for Sharing a Questionable Social Media Post?

Next Post

Net Zero Pledges from Asset Managers Can Align Funds with ESG Goals. They Can Also Breach Fiduciary Duty and Raise Other Conflicts.

Hemant Taneja

Hemant Taneja

Hemant TanejaHemant Taneja is an investor, founder, and author of Intended Consequences: How to Build Market-Leading Companies with Responsible Innovation. He is the managing partner of the venture capital firm General Catalyst, a venture capital firm that partners with founders from seed to growth stage and beyond to build companies that withstand the test of time. He is the founder of the firm’s Silicon Valley operations.

Related Posts

boards

Moving on Up? Before Reaching for a Board Seat, Make Sure You Understand Public-Private Nuances

by David Roberson
March 28, 2023

Compliance is a huge part of the job description for any member of the board of directors, so it’s no...

personnel management

Preparing for Budget Cuts in 2023? Be Sure Personnel Management Isn’t on the Chopping Block

by Vera Cherepanova
March 1, 2023

For compliance departments that need to do more with less, it’s tempting to lean into automated systems. Compliance and ethics...

mcds

What Charges Against Former McDonald’s CEO Can Teach Us About Investigations of Senior Officers

by Lloydette Bai-Marrow
January 18, 2023

The case of Steve Easterbrook, the former CEO of McDonald’s, is a salutary lesson in the dire consequences of failing...

tech fluency_n

Not Your Grandpa’s C-Suite: Improving Tech Fluency at the Top of the Organization

by Jim DeLoach
January 18, 2023

In our hyper-connected world, just about every company is a tech company. As commerce and technology become increasingly intertwined, it’s...

Next Post
dark leaf pattern

Net Zero Pledges from Asset Managers Can Align Funds with ESG Goals. They Can Also Breach Fiduciary Duty and Raise Other Conflicts.

Compliance Job Interview Q&A

Jump to a Topic

AML Anti-Bribery Anti-Corruption Artificial Intelligence (AI) Automation Banking Board of Directors Board Risk Oversight Business Continuity Planning California Consumer Privacy Act (CCPA) Code of Conduct Communications Management Corporate Culture COVID-19 Cryptocurrency Culture of Ethics Cybercrime Cyber Risk Data Analytics Data Breach Data Governance DOJ Download Due Diligence Enterprise Risk Management (ERM) ESG FCPA Enforcement Actions Financial Crime Financial Crimes Enforcement Network (FinCEN) GDPR HIPAA Know Your Customer (KYC) Machine Learning Monitoring RegTech Reputation Risk Risk Assessment SEC Social Media Risk Supply Chain Technology Third Party Risk Management Tone at the Top Training Whistleblowing
No Result
View All Result

Privacy Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2022 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe

© 2022 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT