As an entrepreneur, how do you look at the growth of your business? Professor of Entrepreneurship Yannick Dillen emphasises that you don’t necessarily have to grow quickly: it’s all about doing so in a sustainable way. The ‘island dilemma’ can help you with this.
The dilemma has a simple premise. Imagine you are stuck on an island, for an indeterminate length of time. Once a month, you have the chance to call your business and ask one question. What would you ask? About a particular KPI, or a benchmark perhaps?
“The chances are, you would ask about revenue or net profit”, says Yannick Dillen, Professor of Entrepreneurship at Vlerick Business School. “In other words, about the hard side of growth. That's logical: it's easier to measure, and it's important for your business to make a profit. But it's not the only important growth factor.”
Yannick wants to emphasise the importance of the two sides of growth. The hard side is about revenue, headcount, cash flow, signed contracts and customer numbers: hard figures, in other words. The soft side, such as product quality, customer satisfaction, employee satisfaction and innovation levels, is less tangible. A question such as ‘what is the atmosphere like in the workplace?' is difficult to quantify, but that does not make it any less important.
By posing the island dilemma, you force yourself to focus on a single priority as an entrepreneur. “I try to get them to reflect on how they look at growth. The mindset around it needs to change: besides growing bigger, they need to grow better.”
Finding a balance between the hard and soft sides of growth is the key, in Yannick’s view. “Specifically, you can do this by not only setting KPIs for revenue and headcount, but also for softer parameters. For example, you can conduct annual surveys among your staff and customers to find out how satisfied they are, or keep a record somewhere of how many innovations you make in a year. If you invest in the soft side now, you will reap the rewards in the long term, and these factors will impact the hard side as well.”
Yannick: “Only focusing on the hard side of growth can be damaging in the long run. If you just look at revenue and do not devote any attention to innovation, for example, you might find yourself becoming irrelevant within a few years. By striking a balance between the two, you may not grow as quickly as some businesses do, but you will grow in the most sustainable way”.