Having a successful company does not mean that you can relax and have a rest for the rest of your life. Actually, sustaining this success is a more difficult thing to do. So what can be done or what should be always remembered after having a successful company?
According to Leonard Berry, there are three challenges in sustaining service success; these are operating effectively while growing rapidly, operating effectively when competing on price and keeping the initial entrepreneurial spirit of a young, smaller company such as a start-up.
Operating effectively while growing rapidly
It is a very difficult thing to balance the growth and company execution. Core values, standards, and culture are the elements that make and keep the company strong. But as a company expands rapidly, it can be hard to keep these values and the culture. As the companies are growing, relaxing the standards and not being as careful as before while hiring new employees is a common solution and mistake. This situation can result as having employees who does not fit to the company culture and consequently the culture of the company starts to shake.
Maintaining the core values, company culture, internal communication, and strengthening the company’s vision are the steps for delivering a high quality service. And before any expansion, a company should be first careful about these entities. Because if the company can be successful at keeping these values as it is growing, then the expansion would be stronger.
As we saw in Starbucks study example, although Starbucks is such a good company, a little carelessness while growing rapidly was nearly going to cause them to lose some of their customers.
When we look at Zappos, they are using different techniques while they are hiring new employees and they are even offering the new employees $2000 after the first five week training process to quit if these people are not suitable for the company culture. They are saying that the company culture gets stronger as company grows, but only with the right people.
Operating effectively when competing on price
When companies cannot differentiate themselves with their services or their products they mostly choose the solution of using the price as a marketing tool. Price cutting is one of the favorite solutions for the companies because they can both implement this solution quickly and they have profit in the short-term. But in the long-term there can be some bad consequences of this solution. For example, cutting the price may lead to cutting the costs and it may weaken the execution eventually.
Actually this is a vicious circle because companies are cutting the prices for the reason that they are not being able to differentiate themselves with their services and products and vice versa; as they are cutting the prices, they are cutting the costs, and consequently the execution slows down which prevent them to develop and differentiate themselves.
I will again give Zappos as an example because although they are not applying very low prices, they have loyal customers and the number of their customers is increasing each day. The only reason of this is that they are differentiating themselves with their customer service.
Keeping the entrepreneurial spirit of a small, younger company
As the company grows and matures, it is a challenge to keep the entrepreneurial spirit. When the companies are first started, they have the dream and desire of building a great business, so they have the spirit. However, as they are growing, they usually tend to lose that spirit and start being more closed to criticism and innovations.
Small companies are trying to be aware of all the innovations and shape their companies according to the critiques of the people and these innovations. And I think this is the right thing to do for any company. A big company may have a wrong belief of continuing always with the same applications as they grew. The reason for that is their tendency to forget how they achieved the growth. But change is also a changing entity and what the companies should do is to be always open to change and innovations.
In mature companies another problem is that after a while rules are replacing with the personal dinteractions. While the ideas are being created by the employees and customers in the smaller and young companies, in older and mature companies mostly rules are shaping the ideas.
Some of the core values of Zappos are ‘Be humble’, ‘Embrace and Drive Change’, and ‘Be Adventurous, Creative and Open Minded’. I think these are the core values which makes Zappos to keep their entrepreneurial spirit. They are always open to new ideas from anyone and they do not try to continue as they are now. They are taking risks and developing themselves all the time, even if there is a possibility to fail.
