Growing Smart

Everyone wants to grow: more customers, more employees, more revenue, more profit. But breakneck growth triggers new questions: How do you maintain a close-knit culture and find good people to bring into it? How do you keep the agility of a small company and develop the strength of a big one? We asked 11 businesspeople to answer these and other questions. Howard Schultz, Starbucks Corp.'s Chairman and CEO, explains how to get big while still acting small. Michael Bloomberg, CEO of Bloomberg LP, cautions against the seductive power of growth. And Terri Lonier, president of Working Solo Inc., asks, Just how much is enough? Read their contributions -- and then apply their cures to your own growing pains.

Michael Bloomberg

Founder and CEO
Bloomberg LP
New York, New York

Don't let growth seduce you. When you're growing fast, the temptation is to keep increasing your growth rate -- to double your bet while you're winning. You get euphoric. You think you can walk on water. You think you're smarter than everyone else. This is exactly when companies get into trouble. It's hard to say, "Let's slow down." But that's what you've got to do. Trends always stop; the curve always straightens out. I worry about my firm growing out of control. But by worrying, I achieve a degree of control.

I stress to everyone on my team that the time to think about the downside of growth is when we're doing well. Each day, I think about the disasters that could happen tomorrow: Our sales plummet to zero, my best manager gets hit by a bus, my best reporter leaves to work for a competitor. The job of management is less to manage growth while you're going strong than to know exactly what you'd do if -- or when -- you get into trouble.

On a more personal side, I've found that as the firm grows, work becomes less fun. Now I spend the bulk of my time on administrative duties, rather than on the creative side of product development. When you get big, the government requires you to be more structured. There are more laws and more forms to fill out, and the environment becomes more litigious. Excuses like "Oh, I forgot to pay my nanny taxes" don't work anymore.

Michael Bloomberg is one of Wall Street's most successful entrepreneurs. Before starting Bloomberg Financial Markets in 1981, he was a general partner at Salomon Brothers. Bloomberg LP provides financial news and analysis through several media. Since its founding, the company has increased revenues by an average of 30% per year. Today Bloomberg terminals are used by more than 250,000 people in 97 countries.

Howard Schultz

Chairman and CEO
Starbucks Corp.
Seattle, Washington

How does a company get big and stay small? That's the real challenge of growth. We open a new store every day and hire 500 people every month. In a little more than a decade, we've gone from 100 employees to almost 30,000. You can't grow if you're driven only by process, or only by the creative spirit. You've got to achieve a fragile balance between the two sides of the corporate brain. This balance is what lets a Starbucks district manager experiment in California with a coffee drink without permission from the top. That drink, Frappuccino, was such a local hit that we marketed it nationwide. It generated $100 million in revenues during its first year.

Growing successfully also means knowing when not to grow. For example, the business of artificially flavored coffee is growing dramatically. Each year, we have the opportunity to embrace that segment of the coffee market, which would translate into a 40% revenue increase. But for 27 years, we haven't sold a drop of artificially flavored coffee, and we're not going to start now -- no matter how profitable it would be.

As you grow, you have to deal with the perception that what gets big gets bad. For example, some people believe that Starbucks represents homogenization. But we won't let ourselves be put in a box that says "corporate behemoth." In fact, we're one of the only companies in America that gives equity and comprehensive health care to all of its employees, even part-time workers. At the same time, we have to guard against arrogance and cynicism, which would push us to embrace growth for growth's sake.

Howard Schultz joined Starbucks in 1982. In 1987, Starbucks had just 11 stores. By the year 2000, it plans to have 2,000 stores throughout North America.