Would you oust a CEO if the business hasn’t grown for six years in a row?
Setting business growth as a goal is like valuing school grades over knowledge.
We make three mistakes when we set revenue or profit growth goals.
The problem: growth isn’t the goal
In the mid-90s, Apple was in trouble. No great products, no breakthrough ideas.
The company’s revenue was shrinking:
- 1995: $11.1 billion
- 1996: $8.8 billion
- 1997: $6.53 billion
But in September 1997, a glimmer of hope appeared on the horizon for the brand’s fans – the great Steve was coming back!
But what happened to the revenue after Steve Jobs returned as CEO?
- 1998: $6.07 billion
- 1999: $6.76 billion
- 2000: $6.64 billion
- 2001: $5.73 billion – the lowest of the Jobs comeback era.
- 2002: $5.83 billion
- 2003: $6.74 billion – as much as in 1999.
The first six (!) years of Steve’s Second Coming — the revenue doesn’t just fail to skyrocket, it goes down!
Apple presented the first iPod in 2001, which was a triumph. But since it wasn’t compatible with PCs at the time, it didn’t become a financial game-changer for the business.
If the name of the guy in the CEO’s chair hadn’t been Steve Jobs, the board of directors would’ve axed him back in 2000. In a world obsessed with growth, stagnation looks like failure.
But then things changed dramatically:
- 2004: $9.76 billion
- 2007: $26.49 billion
- 2010: $76.28 billion
Apple didn’t grow for six years in a row, but the CEO had other priorities. He knew that growth wasn’t the goal but the effect.
Foolish goals
Steve Jobs was too wise to chase foolish goals like “grow by 20% yearly.” He didn’t care much about growth at all.
What he did care about was whether Apple was able to create great products. He knew that if Apple learned to do that, it would start growing sooner or later.
And if that means waiting six years, so be it.
If you need to pause and look for opportunities, then do it — don’t try to grow at all costs, gasping for every inch.
Sometimes, to grow, you have to… stop growing.
The three mistakes
The three mistakes we make when we set revenue or profit growth goals are:
1. We don’t just set growth goals – we set timeframes (a big shout-out to all the SMART goal worshippers). That narrows our perception of the task. We become slaves to the goal. Without realizing it, we choose the fastest path to reach it – but ‘fastest’ doesn’t always mean ‘best.’
Many of my clients make the mistake of reducing prices to boost growth. But cutting the price has its own price — the destruction of your positioning.
2. We confuse the cause and the effect. Growth is the result of our understanding of our customers’ needs and our ability to meet them. So, we should focus on our customers and products – like Steve Jobs did.
For years, Mark Zuckerberg poured money into the metaverse — and now it’s barely heard of. Maybe he never figured out why users would need it.
3. We see growth as a sign of a healthy business. But sometimes, we need to take a break to build a solid foundation for future growth.
By the early 2000s, Lego was on the brink of bankruptcy. The new CEO didn’t chase rapid growth but methodically implemented new IT solutions, launched the Lego Ideas platform, and pursued integration with media brands. It took years — but it worked.
Setting a goal first and then looking for ways to achieve it is flawed. A target like “grow by X% annually” limits your options — and that’s bad news. It makes you discard ideas that could deliver 5X% growth in five years if they don’t show results in year one. As a strategy consultant, I recommend a different approach.
The solution: focus on causes, not effects
As a strategy advisor to startups and mature businesses, I advise CEOs to swap “grow by X% per year” targets for “have X unique products that beat the competition in meeting customer expectations.”
If you reach this goal, growth will follow.
Forget about grades — focus on knowledge.
This approach works. In the Architects of Growth course, we’ll explore how to create products that don’t need promotion — they sell themselves.
A note from a seasoned CEO
I’m not naïve. I’ve been a CEO pushed by boards. I’ve sat on boards. I know that “steady growth” is a mantra repeated in boardrooms every single day.
I know how hard it might be to persuade board members to embrace the idea that the business should pause to recalibrate its processes and rethink its priorities.
But I’m sure that it’s better to take a couple of years to charge for the leap than to jump and land far from the goal.
Svyatoslav Biryulin
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I write about cognitive biases in business strategy, mental models for strategic decision making, and paradoxes in business strategy. Subscribe to get new articles delivered straight to your inbox. Prefer RSS? Subscribe here → https://sbiryulin.com/feed
If you want to dive deeper into strategic thinking — and you’re not afraid to face its paradoxes and provocations — read my book Red and Yellow Strategies: Flip Your Strategic Thinking and Overcome Short-termism.