New ventures have historically played an important role in the development and commercialization of new products, processes and technologies. At times, such organizations have been instrumental in the creation of entirely new industries such as personal computers, bio-technology, and internet-based services. Growth has been a central concern within the economics, strategy and organizational literatures for decades. Based on these studies, it is apparent that there are two central growth related tasks that must be addressed by all senior executives. The first concerns where and how the firm will grow; the second critical task relates to how firms actually manage the challenges presented by very high rates of growth, about which remarkably little has been written. Aimed at MBAs and executives, this book by two top US strategy academics reports on a detailed study of the strategic and organizational approaches to managing growth in relatively young but fast growing ventures. The authors, well known for their research in this area, have interviewed executives in forty (40) high-growth companies to capture their growth stories. Through this inquiry Kazanjian and Drazin identify a set of strategic and organizational elements that advances our understanding of the central managerial tasks of business growth.

Table of Contents:
Table of Contents. . I. Introduction. -Review of the literature: What do we know?. -Research Methods: Protocol and participating companies. This chapter will begin with an explicit statement of the overall objective and scope of the book. The existing literature related to growth of new ventures will be reviewed, mapping the relevant theoretical roots including industrial organization (IO) economics, the resource based view (RBV) of strategy, and institutional theory. Finally, this chapter will detail the sample and research methods of the study. (A list of firms interviewed is included as an appendix to this document.). . II. Understanding High Growth Settings: Elegant Designs for Success. -Two integrating cases. -Development of a general model for generating and managing growth. We have identified two firms that we feel offer particularly rich and compelling examples of many of the growth factors that emerged from across our entire sample of 40 companies. We would present both of these cases in this chapter, weaving their histories and experiences into an overall theoretical model that serves as the organizing scheme for the rest of the book. The model is built on the notion that high growth ventures result from elegant designs that carefully consider the fit of internal organizational factors to external market opportunities. . III. The Entrepreneurial Process: Opportunity Identification. -Rational v. serendipitous routes. Growth must begin with the identification of an attractive opportunity and the allocation of resources to pursue it. Most of the existing literature on this question assumes such decisions emerge from an economically rational and comprehensive search process. Our findings point to an alternative explanation. Although in all cases in our sample firms, decision makers expected high economic returns (demonstrating economic rationality), the process of opportunity identification was not the outcome of a comprehensive search. Rather, founders of these ventures selected opportunities that reflected a match to very unique aspects of their experience and backgrounds suggesting a much more serendipitous route than is typically captured in existing descriptions. . IV. Strategies for Growth: The Role of Extreme Focus. -Replicibility. -Scalability. The importance of focus within a firm s portfolio of activities to growth has been described previously in the strategy literature. However, we find much of this description to be rather course grained. We have found in our sample of firms that success is associated with very narrow but well chosen niches which are carefully defined down to specific characteristics of customers to be pursued, geographic scope, and breadth of products and services offered. Given such well-defined domains, much of the growth results from a very disciplined process of replication within bounds of the scope. An additional boost to growth emerges when such opportunities are neither asset nor personnel intense, allowing for revenues to grow disproportionately to the required additional investment in supporting infrastructure. . V. Establishing Legitimacy: Reputation and Customer Relationships. -Overcoming liability of newness. -Critical role of initial customers. Institutional theory established in the 1990s that firms must establish legitimacy with customers, suppliers and investors in order to overcome their liability of newness and to attain organizational viability. We find that relationships with early customers of a certain profile can be critical to this process. Further, we find that these relationships not only contribute to the legitimacy of the firm, but on the negative side, can create vulnerabilities where firms have become dependent. Then, loss of such a key customer can threaten the future viability of the firm. This chapter will present a balanced discussion of the role of large customers in fostering growth, and the associated dangers of over dependence in such settings. . VI. Designing the Organization for Growth: The Role of Culture and Values. -Dual logics of design: strategic and moral. Researchers in the strategy and organizations domain have long argued that firms perform well when there is a fit between a firm s strategy and how it organizes to implement that strategy. Further, much of this work assumes that organizational design choices are consciously selected to attain maximum efficiency and performance. We label this approach a strategic logic of design, and indeed we find support for this view among firms in our sample. However, contrary to existing studies, we also find that many executives within these firms are balancing this strategic logic against what we describe as a moral logic revolving around a set of implicit and explicit values regarding how people should be treated in an organizational setting. In this chapter, we explicate this dual logic and describe how they can be mutually reinforcing at times or how they can be in friction at other times. . VII. Windows of Opportunity: Selecting a Rate of Growth. -Lumpy v. linear growth. -Proactive v. reactive. Research on organizational life-cycles portrays growth of new ventures as rather smooth, upward sloping s curves. Typically in such models, firms begin with a period of conception and development as the strategy and product or service are tested and refined. Once the product is launched, growth ensues at the pace of demand, and in later stages, slows are the market is saturated. However, our sample offered two interesting insights counter to this view. First, we found growth patterns to demonstrate more of a step function patterns with periods of extreme growth, then plateaus, occasionally a loss of revenue, and then possibly growth again. In brief, growth is much lumpier than described in most studies. Secondly, we surprisingly found that some firms chose not to grow for periods of time, sometimes refusing to accept new clients, and allowing the organization to catch up with the demands of the marketplace. This phenomenon is rarely if ever described in existing studies. We argue that this may well be a central consideration in managing growth. . VIII. Building Organizational Extensibility : Staffing, Processes and Systems. -Pre-investing for the organizational demands of the future. As mentioned in relation to chapter 6, existing theories of organizational design for implementation argue that strategy should serve as the primary contingency. However, we discovered among a number of firms in our sample that decision makers were designing their organization not around the current situation of the firm, but rather around a future expectation of what the firm might require when it would be both larger and more complex. One manager described this process as creating organizational extensibility. This concept assumes that firms growing at very high rates run the risk of quickly outgrowing processes, system and human capital when designed to address current requirements. This idea of pre-investing in the requirements of a $100 million firm when the company has only $10 million in current revenue makes sense when growth rates of 50-100% are being realized. We find this approach to be central to the active management of growth. . IX. Conclusions and Implications for Managing Growth. -Integrating case. -Implications for research and practice. In this final chapter we will review the overall model presented in chapter 1, reinforcing it with a case example that integrates and extends the themes presented in chapters 2-8. We will then discuss overall conclusions of our findings and implications for both research and practice.