There is a particular kind of organizational delusion that sets in when revenue is climbing. It goes something like this: if growth is good, more growth is better, and anything standing in its way is an obstacle to be eliminated. The pitch deck gets bolder. The hiring plan balloons. And then, somewhere between the ambitious projections and reality, things quietly begin to come apart.
This is the growth trap — and according to research from Harvard Business School professor Gary Pisano, nearly every company falls into it at some point. After studying the performance of close to 11,000 public U.S. companies over 25 years, Pisano found that three-quarters showed little to no growth after adjusting for inflation. Even more striking: the companies in the top quartile of growth in any given year were rarely able to sustain that performance for more than a few years after. The data is unambiguous. Fast growth is the exception, not the rule. And chasing it without a coherent strategy doesn’t just stall companies — it can destroy the very foundations that made them successful in the first place.
The Problem With ‘More’
The growth-at-all-costs mentality is not new. It’s baked into how companies court investors, attract talent, and signal competitive health. In the technology sector especially, it has become quasi-religious — a belief system in which user acquisition, market share expansion, and revenue milestones are treated as ends in themselves, regardless of unit economics, operational readiness, or long-term sustainability.
But Pisano’s research exposes the fallacy at the center of this belief. Growth is not self-evidently good. Pursued too aggressively, or in the wrong direction, or through the wrong mechanism, it doesn’t create value — it destroys it. The companies that grow explosively and then crash aren’t anomalies. They’re the predictable output of a broken framework.
The most common failure mode is what Pisano calls outgrowing your resources. Companies see demand accelerating and make a simple but catastrophic error in reasoning: they assume that if they can capture the customers now, they can figure out how to serve them later. “We’ll catch up” becomes the organizational mantra. But the resources that enable great execution — trained people, refined processes, cultural coherence, supplier relationships — don’t scale on demand. They’re built slowly, and when they’re stretched past their limits, they break. And unlike cash, which a competent CFO can find a way to borrow, most of these resources can’t be borrowed at all.
“Growth is a strategic goal. You have to think about how fast to grow, how fast you can grow — and if you try to get past that, you will actually make things worse.” — Gary Pisano, Harvard Business School
The pandemic-era boom-and-bust cycle produced a generation of case studies in this failure. Peloton is perhaps the most cited example: demand for home fitness equipment surged, the company raced to build supply chain capacity to match, and by the time that capacity came online, the market had already normalized. The company was left with a cost structure designed for a company twice its actual size.
But Peloton is far from alone. In the data, insights, and analytics sector, we’ve watched similar dynamics play out with regularity. Research firms have scaled sales teams faster than they could train delivery teams. Technology platforms have acquired clients they lacked the infrastructure to retain. The story arc is familiar: aggressive growth phase, fraying operations, churn, contraction, and a painful reckoning about what the business actually is.
Rate, Direction, and Method: A Better Framework
Pisano argues that companies don’t need less ambition — they need a proper growth strategy. And a growth strategy, properly understood, has three components: rate (how fast), direction (which markets), and method (organic, acquisition, partnership, franchise). Most companies focus almost entirely on rate, treat direction as obvious, and outsource method decisions to whoever is closest to a deal. The result is a plan that is internally inconsistent and operationally undeliverable.
Consider direction. It sounds simple, but it’s where a lot of companies go badly wrong. Expanding geographically when your model is deeply local. Entering adjacent markets without the differentiated capabilities to compete in them. Diversifying into new verticals to reduce revenue concentration, only to discover that the new verticals require entirely different go-to-market motions, talent profiles, and pricing logic. Each of these is a direction choice, and each has profound implications for rate and method.
Method is equally underappreciated. The fastest-growing companies in any sector are often those that have found a structural advantage in how they grow — not just in what they offer. As an example, Southwest Airlines grew consistently for decades not because it flew better routes but because it had an operating model that could sustain modest, disciplined expansion without ever needing the explosive years that typically precede a crisis.
Culture: The Most Fragile Variable
Of all the resources that break under growth pressure, culture is the most fragile and the least visible until it’s already gone. Pisano is direct on this point: every time you add people, you’re introducing new cultural DNA. Companies talk endlessly about preserving culture as they scale, but rarely have a rigorous theory of how to do it. They rely on osmosis, on charismatic founders, on off-sites and values posters, on the assumption that the culture that made them successful will somehow survive the 200 new hires who arrived in a single quarter.
It doesn’t. Not reliably. What tends to happen instead is a gradual dilution — a drift toward the generic that goes unnoticed until a client complains, a key person leaves, or the team that was once exceptional is now merely average.
The counterexample Pisano offers is Pal’s, a fast-food chain that has turned culture maintenance into a literal growth constraint. Pal’s only opens a new location when it has a trained, graduated owner-operator ready to run it. The development pipeline determines the growth rate — not market demand, not investor pressure, not competitive urgency. It sounds almost perversely slow by modern business standards. But Pal’s has sustained extraordinary financial performance in one of the most challenging industries in retail precisely because it refuses to let growth outrun the capability to execute it well.
What Sustainable Growth Actually Looks Like
The companies that grow well over long periods share a set of characteristics that are the opposite of what gets celebrated in the business press. They’re not in a hurry. They don’t have explosive years followed by restructurings. Their variance is low. They identify the bottleneck resource — the constraint that would break first under acceleration — and they invest in it relentlessly, in advance of needing it, rather than scrambling to catch up after the fact.
They also have honest growth strategies: explicit choices about rate, direction, and method that are internally consistent and grounded in a realistic assessment of capability. Not aspirational. Not investor-facing spin. Honest.
In practice, this means doing the same rigorous resource analysis for people, process, and culture that a good CFO already does for cash. It means asking, before committing to a growth rate, not just “can the market absorb this?” but “can we actually deliver it without breaking what we’ve built?”
The answer, more often than most leadership teams are willing to admit, is no. But the companies willing to ask the question — and act on the honest answer — are the ones still standing when the growth-at-all-costs crowd is explaining their miss to the board.
Looking for your own sustainable growth model in 2026? Reach out to me for a chat.