Like many, I’ve been indoctrinated into believing growth and maximizing profits is something we should pursue when starting a business. And some of my most read and shared articles are about how to grow and scale quickly. So I’ve unconsciously been rewarded for promoting this idea, which made me question this idea even less.
As many as well, I’ve also sensed that there was something wrong with this since sometimes enough is more than enough, but I wasn’t able to point to a suitable alternative or to how it could work.
And the more I work on showing how open source and working with communities can help grow and scale, the more I’m concerned companies will use these tools in a way that will enhance the harm we’re doing to society and the environment.
So, where does this confusion come from? I was recently reading an interview from Satish Kumar, and I was floored by the clarity of his view on money and growth for growth’s sake:
“Capitalism is different from the notion of capital. Money is a reasonably good invention, which facilitates trade, but it is a means to an end.
The end is our relationship to other humans, nature, and the cosmos, but we have forgotten that.
We confuse means and ends. The means are money, production and consumption. The ends are the well-being of humans, the Earth, and the planet.
Today, the Earth, nature, and humans have become instruments to earn money. This is capitalism and it destroys our nature, our Earth, and everything is sacrificed for this profit: forests, lakes, mountains, soils, humans and animals.
We have to end this confusion between means and ends and say: money and capitalism are means, and the ends are greater, higher, and consist of protecting the land, nature, taking care of the land, revering it as sacred, taking care of the well-being of humans. This is the real revolution. “
Can we grow green?
The pursuit of growth can become a senseless game that leads us to pressure the environment and create a race to dominate everything to keep churning more productivity ever. Even green growth is a good candidate to keep destroying everything essential to sustain life and the community around us.
But degrowth sounds a little hopeless with all the problems still unsolved and so many people left in poverty and doesn’t show the positive alternative.
So what can we do? What’s the alternative to a culture of scarcity and never enough? Is it a culture of abundance where we all get more than we need?
I don’t think so. There is a middle ground that has to do with our physical growth: Aiming for enough.
My son is three years old and is a meter tall. And he grows every month a centimeter or so, which also comes with more pressure on how much we have to invest in keeping up with the food he needs to sustain his frenetic growth. The good thing is that he paid it back by doubling his size since he was born. Many companies would be pretty envious of that sort of growth.
But what will happen when his growth slows down after his teenage years? Should we keep demanding more growth ever from him?
You see where this is going.
Quantifiable physical growth of every living being always slows and stops, and then a new kind of development occurs. We’re not going to keep investing in new vegetarian or natural hormonal treatments, so my son keeps this pace of growth forever until he becomes 100 meters tall.
We need to start asking for better growth and enough growth.
What does that mean here?
It means that we have to look at the work we’re doing or supporting and demand growth of the sectors that we don’t have enough yet: renewable energy, low-impact transportation like trains, or regenerative agriculture. And when we got enough of it, to stop growing it.
And at the same time, we need to degrow the harmful sectors we might be involved in, like fossil fuels, SUVs, Planned obsolescence, weapons, beef, tobacco, or private jets, and transition these activities towards the activities that still need to grow.
So it’s no growth or degrowth. It’s growth AND degrowth at the same time.
But how does this solve inequality and poverty?
Since the seventies, the economy kept growing by getting more efficient and generating more value. Still, inequality has grown, and most people are getting a smaller and smaller portion of it.
And we’ve never had as many billionaires and entrepreneurs aspiring to be billionaires.
Instead of having a value that benefits those who need it most and that have made this growth possible, the rest of the value is siphoned upward to the few and wealthy persons and countries. More than pleasing customers, more than creating jobs or lowering poverty, business keeps getting better at serving the single-minded goal of maximizing shareholder value—the rewards for those who already have more than they need to keep investing.
Growth, except for China, hasn’t lifted people out of poverty in the last 40 years. It has increased poverty.
Some would argue that these investors and entrepreneurs deserve it because they’ve invested incredible amounts of effort, financial risk, and ingenuity, and they deserve to be rewarded accordingly. And I agree that there should be a reward. But once we get more money than we can spend for the rest of our lives and overindulge, what is the purpose of “getting more”?
In his book The Seven-Day Weekend, Ricardo Semler puts the maximum personal wealth limit at $12 million. He admits it’s a somewhat arbitrary number but argues that this is probably the right proportion of wealth in which humans can indulge.
He recalls the story of a neighbor of his in Sao Paulo who build a house that reminded him of a South American dictator’s compound:
“He may have spent his entire allotment of $12 million on the house. But now his problem is Leonardo [Da Vinci], who points out that a human cannot possibly feel at ease in such a disproportionate house. Certainly, my neighbor can live there, open it to photographers from design magazines, and be admired from afar. But in winter, he’ll huddle in the tiny TV room on the second floor, withdrawing from the cavernous rooms to seek more human scale.”
As we get enough, the purpose of profit should be to help improve our planet’s life for those who inhabit them.
But I ramble. If you’re reading this, you’re probably not a millionaire. So what does this have to do with you?
Whether you’re a solo freelancer or small business, or you’re leading an organization, it can help you set boundaries that will make things better for you and those around you.
And if you work for an organization, it can help you demand those boundaries from those you are working with.
“Why the hell is it “if you can’t pay rent, buy fewer lattes” and not “if you can’t pay your employees a living wage, buy fewer yachts”? – Andrea Junker
To define enough, we have to realize the maximum and minimum limits.
1/ Defining your Minimum Monthly Number (or MMN)
Here’s the formula inspired by Jason Zook you can use:
- Minimum monthly living expenses
- + Minimum monthly business expenses
- + Paying off debt (monthly payments)
- + Peace of mind cushion (monthly savings)
- = Your Minimum Monthly Number?
You should be surprised at how low that number is compared to the bigger numbers you’ve been thinking about. Again, this number is significant because it’s setting the minimum you know you need to live your life, provide for your family, pay down debt, etc.
2/ Defining your maximum Enough:
Now that you have your MMN, it’s time to establish your Maximum Enough Number. The super-important key to your Enough Number is to pick a realistic number you want to grow to based on your current MMN number. Think of your Enough Number like the next mountain you want to climb but one that doesn’t have a mountain after it. The second (enough) mountain is your ceiling. It’s your cap. It’s your line in the sand to avoid chasing more more more.
In his book Company of One, Paul Jarvis studies in detail why this maximum Enough is essential:
“Most businesses set goals and targets, but few consider having an upper bound to them. Paying attention instead to the lower bound of a goal, they focus on ever-exceeding increases in areas like profit and reach and set goals like, “I want to make at least $1 million this quarter,” or, “We need to grow our mailing list by 2,000 people per day.
What if we set upper limits to our goals instead? For instance, “I want to make at least $1 million this quarter, but not more than $1.4 million,” or, “We need to grow our list by 2,000 people per day, but not more than 2,200”?
If growth happens too quickly, problems can arise — like not being able to hire fast enough to keep up, or not having enough infrastructure to handle increased volume. The lower limit can be important, for example, if you need to make enough revenue to be profitable. But more than that? How useful is it to make more than you need to be profitable? How does it benefit you, your business, or your customers if you blow past your company’s goals?”
He also shares a story from how an airline company had the opportunity to grow exponentially but didn’t give in to the temptation:
“Southwest Airlines […] faced […] an interesting problem way back in 1996: the airline had methodically expanded from a tiny regional carrier to having a bit more of a national presence. And at a time when most other airlines were losing money or going under, over 100 cities were begging Southwest to service their location.
However, that’s not the interesting part. What’s interesting is that Southwest turned down over 95 percent of those offers and began serving only four new locations. It turned down exponential growth because company leadership had set an upper limit for growth.”
We can give up the attitude of world domination in our work to make a great living or even have a substantial impact. Our work can start and finish small while still being useful — focused on moving toward better instead of more.
Here are some things you can question:
- Whether you could make your business better (however you define that) instead of just making it bigger
- Whether your business needs scale to succeed
- Where the upper bound to that scale might be, the place where profit and enjoyment have diminishing returns
- How you could turn envy of others into enjoying their successes and learning from them
As humans, we’re wired to always want more and more. And now we can collect more than ever before, but our instinct of wanting to collect more to survive hasn’t changed and overrides our actual needs. That’s why it’s essential to set an upper bound to what we aim for.
So here’s a formula you can use to calculate your Enough Number:
- Your Minimum Monthly Number
- + Realistic growth that your business can endure sustainably
- + Additional money you want to save/invest each month
- = Your Enough Number
Jason Zook goes a little deeper into showing what that means: “What is your Enough Number for your current situation? Is it less than you may have been shooting for these past months or years? It should be. Establishing your Enough Number should feel empowering because it’s a number you can achieve based on your true goals and values. “
IMPORTANT: If/when you hit your Enough Number, you can stop growing. You can slow way down. You can embrace the fact that you made it to the top of your (enough) mountain and didn’t sacrifice your sanity to get there. This is a beautiful place to be in life, and we should all strive to feel this sense of “success.”
For Semler, this number was $12 million. Whatever yours is, setting one can only give you the freedom of stopping this status race towards more money we’ve all been told is important. Nobody cares if Jeff Bezos is richer than Bill Gates. And you’ll probably also realize that you need way less than you thought to be happy.
Once you hit your maximum personal wealth, you can focus your organization’s growth on investing in making things better. You can improve the conditions of your coworkers, your community, or invest as much as you can into improving how your products and services improve their impact on the environment as Patagonia or Interface do.
For example, Dan Price is the CEO of Gravity Payments, a software company based in Seattle. He took a $1 million pay cut from his salary down to $70.000 so that his staff of 120 people could receive a $70,000 minimum salary. Since then the company has:
- Tripled its revenues
- Staff who own homes grew 10x
- 401(k) contributions doubled
- 70% of employees paid off their debt
- Staff having kids soared 10x
- Turnover dropped in half
- 76% of staff are engaged at work which is twice the national average
- and the company has become a successful case study at Harvard Business School.
It’s time to draw a line in the sand and realize you’ve made it.
If you ever hit it big, you’ll have the sign that gives you permission to say, “I made it! Now the surplus is to invest in the well-being of others and the planet”. You can start paying better your employees, invest in community or whatever is important to your purpose in life and join the growing movement of companies and freelancers who believe that growth isn’t always the best course of action for a business.
The Nishiyama Onsen Keiunkan is the oldest continuously run hotel in the world. It has been in existence for about 1,300 years (it opened its doors in AD 705), managed by fifty-two generations of the same family. The hotel’s focus, since the beginning, has been on customer service, not on growth or expansion. It’s stayed small because the top priority has always been making guests comfortable.
For 1,428 years, Kongō Gumi started as a construction company surfing on the opportunity to build Buddhist temples. Kongō Gumi kept a relentless focus on serving customers and being absolute experts at their craft, and that focus enabled the construction company to be resilient enough to endure. But things suddenly changed when they decided to expand into real estate during a boom in the Japanese market in the 1980s due to an epic financial bubble and unconstrained credit growth.
For a while, Kongō Gumi reaped the short-term rewards of fast growth, but as so often happens, that growth wasn’t sustainable. By the start of the 1990s, the financial bubble had completely burst in Japan. Companies that took on vast amounts of borrowed money with artificially suppressed interest rates were left with nothing but debt. Debt was like a popular drug — everyone was doing it, and every business seemed to have access to it. Kongō Gumi ended up with close to $343 million in debt. It was sold to a larger company and ultimately liquidated a few years later — bringing its extremely long run as a company to an end. The temple construction company survived countless political crises, two atomic detonations, and even a period when the Japanese government set out to completely eradicate Buddhism from Japan. But ironically, what they couldn’t survive was the cost of rapid growth. Their downfall was putting growth above stability and profit.
You can find more examples of stories of resilient businesses like this in Paul Jarvis excellent book.
If things we need are still not at the size they should be, let’s scale them. If they are oversized, let’s trim them down. And if they are where we need them to be, let’s stay there and make them better.
I hope this article helps you make a shift in your life and free you from continuously striving for more or from the goals others have set for you to strive for enough.