To Grow or to Hang?

For many companies, growth and expansion are built into their business plans. Growth and expansion are their key indicators of business success. However, for other smaller companies, like many family-run businesses, maintaining a reasonable profit margin and satisfying the needs of a local customer base are their primary objectives.

To grow, or not to grow? That’s a key business question. Let me illustrate this dilemma with two businesses from the world of drum music.

The first is a company from Singapore. The program director is a drummer who started off as a school music teacher. He gradually turned this into a business and began selling his programs to Singaporean schools, which implemented them in their music curriculum. As the drum programs became more popular, he opened them to the public. He hired a staff of drummers to facilitate the programs and had them trained to run their programs in the corporate world.

He now manages a staff of 10 and taps into a network of drummer contractors to work with him. “Now that I’ve got a well trained staff I can trust,’ he told me, “I can concentrate on my business.” His business continues to grow based on social outreach and community building. Growth has served him well.

The second company is from Switzerland. The two artisans who formed the company manufacture a haunting percussion instrument called the Hang (pronounced 'hung'). The Hang is a saucer-shaped object formed of acoustically dented steel and played with the hands. Percussionists who hear one and play one want one.

The Hang, however, is hand crafted. Production is limited, and the manufacturers want to keep it that way. As a result, the Hang has achieved cult status in the drum world. The company has neither a web site nor a distribution chain. Percussionists who want to acquire a Hang are requested to write a letter to the company in Bern. Subject to approval, the artisans will grant appointments for successful applicants to come to Switzerland and personally collect their Hang.

Fewer than 5000 Hang have been produced since they were introduced in 2000. Because of the high demand, Hang have appeared for sale on E-bay for more than ten times their original price. Yet, production levels remain constant AND the two artisans stop production for three months out of every year for research and development. By choosing not to grow, the company has created scarcity which has escalated the value of their product.

To be fair to the Hang manufacturers, they are opposed to what the market has done to their pricing. Now, they require agreements from all new Hang buyers stipulating that should they decide to sell their Hang, they will sell it back to the manufacturer at retail so they can sell it to someone else who wants one.

To grow or not to grow? Either plan has merits. What do you envision for your company’s future?