The Predictable Crises of Growing Startups

Each of the three crises occurs at a different phase in a company’s life.

The first crisis, overload, refers to the internal dysfunction and loss of external momentum that management teams of young, fast-growing companies experience as they try to rapidly scale their businesses.

The second crisis, stall-out, refers to the sudden slowdown that many successful companies suffer as their rapid growth gives rise to layers of organizational complexity and dilutes the clear mission that once gave the company its focus and energy. Stall-out is a disorienting time for a company: the accelerator pedal of growth no longer responds as it used to, and faster, younger competitors are starting to gain ground. Most companies that stall out never fully recover.

The third crisis, free fall, is the most existentially threatening. A company in free fall has completely stopped growing in its core market, and its business model, until recently the reason for its success, suddenly no longer seems viable. Time feels scarce for a company in free fall. The management team often feels it has lost control. It can’t identify the root causes of the crisis, and it doesn’t know what levers to pull to escape it.

These three crises represent the riskiest and most stressful periods for businesses that have made it successfully through their start-up and early-growth phases. The good news is these crises are predictable and often avoidable. The killers of growth that these crises contain can be anticipated and even turned into a constructive reason for change.