4. Hambrick, D. C., & Crozier, L. M. (1985, Winter). Stumblers and Stars in the Management of Rapid Growth. Journal of Business Venturing, 1(1), 31.

Question 1

What are the four fundamental challenges that rapid-growth companies face?

Answer 1

The four fundamental challenges that rapid-growth companies face are instant size, sense of infallibility, internal turmoil and frenzy, and extraordinary resource needs.

Question 2

What are the characteristics and actions of a chief executive that can lead to successful decision making and implementation?

Answer 2

The characteristics and actions of a chief executive that can lead to successful decision making and implementation include having a background and aptitude for key managerial roles, having experience and insight on the board of directors, and rewarding employees and ensuring that information flows effectively.

Question 3

What is the term that best describes the mentality and actions of firms that deal effectively with the problems of instant size?

Answer 3

The “anticipation of bigness” is the term that best describes the mentality and actions of firms which deal effectively with the problems of instant size.

Question 4

What do companies often to do deal effectively with the problems of instant size?

Answer 4

They often hire managers with experience in larger firms, even if it means passing over managers who have been with the firm since its inception.

Question 5

What can companies do to retain their style and processes while introducing formalization?

Answer 5

Companies can retain their style and processes while introducing formalization by resisting the urge to overload with reports and committees, and instead supplementing their accustomed way of doing things with new formal systems. They can also create a dual perspective that looks backward and forward at the same time, using informality and looseness of a small business along with the comprehensiveness and orderliness of a large business.

Question 6

What is an example of a formal system that high-growth companies may introduce?

Answer 6

Examples of formal systems that high-growth companies may introduce include planning systems, control systems, and compensation systems.

Question 7

What can lead to a sense of infallibility in a rapid growth firm?

Answer 7

Rapid growth firms can become rigid and unbending due to their prior favourable experiences with their strategies and behaviour, leading to a sense of infallibility where they become convinced of the wisdom of their ways and dismiss new competitors, technologies, and strategies.

Question 8

What strategies do successful firms use to remain vigilant to changes in the market?

Answer 8

Successful firms use a variety of channels to acquire information, set up processes for fairly airing data, and use consultants and retreats to stay objective, in order to maintain dynamic tension between continuity and the need for modifications to their strategies.

Question 8

What are some of the issues that can arise from rapid growth in a firm?

Answer 8

Some of the issues that can arise from rapid growth in a firm include poor quality decisions, turf battles, blurred core vision, and employee burnout (internal turmoil and frenzy).

Question 9

What approaches can rapid growth firms take to ensure successful decision-making and maintain a strong organizational culture?

Answer 9

Rapid growth firms can take a number of approaches to ensure successful decision-making and maintain a strong organizational culture, such as using decentralized task teams, recruiting and developing middle managers, and hiring people who fit the firm’s standards and values. Additionally, orientation sessions can be used to ensure that new employees learn the job, the company, and its norms.

Question 10

What strategies do firms employ when faced with limited resources?

Answer 10

Strategies employed by successful firms in times of limited resources include converting compensation to a variable or deferred cost, providing stock options and stock purchase programs, and stressing the family qualities of the organization to deliver substantial intrinsic motivation to employees in lieu of pay.

Question 11

What are some of the extraordinary resource needs of rapid growth firms?

Answer 11

Rapid growth firms often need funds to build plant, equipment, and working capital to keep up with the growth of the industry. They may also need to hire additional employees to manage the increased workload, leading to increased hours and multiple roles for existing staff.

Question 12

What are the implications of having limited cash flow for rapid growth firms?

Answer 12

Limited cash flow can lead to a bare bones existence and has implications for strategy and financing. It can also lead to burnout among employees due to the increased workload and decreased quality of decision making.

Question 13

What is the importance of a chief executive’s ability to anticipate and envision the future state of a rapidly growing firm?

Answer 13

It is important for a chief executive to be able to anticipate and envision the future state of a rapidly growing firm in order to better prepare and guide the organization to success. This ability can be inherent in some, but can also be learned and practiced with the help of certain exercises.

Question 14

What should the firm do to build a successful team?

Answer 14

The firm should report the personnel department directly to the CEO, implement a serious program of management and personnel development, and replace key people if they don’t possess the skills or knowledge needed for bigger roles.

Question 15

What is the purpose of the personnel department?

Answer 15

The purpose of the personnel department is to manage and develop personnel and help the firm build a successful team.

Question 16

What should be used to reinforce the core vision and philosophy of a business?

Answer 16

Symbols, creeds, commandments, meetings with the CEOs, ceremonies, pep rallies and slogans should be used to reinforce the core vision and philosophy of a business.

Question 17

What is the primary benefit of reinforcing the core vision and philosophy of a business?

Answer 17

The primary benefit of reinforcing the core vision and philosophy of a business is to ensure that all employees are aware of the company’s origins and direction, resulting in a successful firm.

Question 18

How should firms balance the past and future?

Answer 18

Firms balance the past and future by not discarding what has worked for them and embracing new approaches. This creates a dynamic but manageable tension.

Question 19

How can structural smallness help firms to be successful?

Answer 19

This structure can help firms to be successful by creating entrepreneurial groups that are better suited to fast-paced, rapidly growing environments.

Question 20

What must firms do in order to make structural smallness work?

Answer 20

Firms must focus on expanding the spans of control of existing layers and hiring managers who can effectively handle broader responsibilities in order to make this structure work.

Question 21

What approach have successful firms studied in this article adopted when it comes to their employees?

Answer 21

They have adopted a partnership approach, providing competitive salaries as well as substantial bonuses and stock options to all levels of employees.

Question 22

What should the owner-founnder maybe consider when the company is growing?

Answer 22

To ensure the sustainability of a firm, the founder chief executive may need to either adjust their own approach or hand over the reins to another person.