Smart Growth: Building an Enduring Business by Managing the Risks of Growth
By Edward D. Hess
Columbia University Press, 2010
$27.95, 230 pages
In “Smart Growth,” Edward Hess questions the traditional business beliefs that businesses must continually grow or they will die, growth is always good, public company growth should occur continuously and smoothly, and quarterly earnings should be a primary measure of a public company’s success. More than questioning these beliefs, he challenges that they are actually antithetical to creating a strong, vibrant and healthy business.
While in the past such statements may have been deemed heretical, recent business and market performances suggest Hess should at least be heard out. Using data from major business studies and theories from economics and biology, Hess asserts that thinking longer term is actually more profitable than thinking strictly short term. In his words, “These beliefs drive short-term business behaviors that in too many cases defer or destroy long-term value creation.”
Using a typical academic style, Hess uses much of the book examining specific case studies of both public and private companies that eschewed the traditional beliefs about business growth and, despite that “deviation,” are now quite successful. Starbucks, McDonald’s and Best Buy are three such examples. Point by point Hess explains his “smart growth” philosophy while simultaneously knowing down the primary argument against it – that smart growth is anti-growth.
While it is too early to see the way Hess’ ideas will play out, historically, challenging the status quo has opened the door for either admiration or scorn. We can only hope this book engenders admiration. If it does not, though, at least we now have fodder to debate the seemingly unproductive way business growth occurs in today’s world of recessions and stagnant growth.
Brandon Jones is a writer by trade and a trader by choice. Although not a professional trader, he trades on a regular basis to maintain and improve his portfolio return. Contact him at firstname.lastname@example.org.