Revenue is one of the easiest ways to tell a business growth story. A company that generated $10 million last year and $15 million this year appears to be moving in the right direction. Add new employees, new markets, and bigger clients, and the picture looks even better.
But Alexei Orlov argues that leaders should be careful not to confuse a bigger business with a stronger one.
Orlov has spent nearly 30 years building, transforming, and leading businesses around the world. As the founder of MTM Choice, he secured $35 million in growth funding and built the company into an approximately 200-person creative and advisory group generating roughly $55 million in annual revenue. The Alexei Orlov MTM experience gave him a firsthand view of what happens behind growth numbers. His broader career has also included senior leadership positions at Volkswagen, Omnicom, and Wunderman/WPP.
“Growth should leave the organization stronger,” Orlov says. “If you are adding revenue but creating weaknesses everywhere else in order to get it, you have to ask what you are really building.”
Revenue Tells You What Happened, Not What It Cost
Revenue matters. Businesses need customers and sales to survive. The problem begins when revenue becomes the only number that receives attention.
Imagine a company increases annual revenue from $20 million to $30 million. On paper, that is impressive growth. But suppose it had to double its sales team, dramatically increase customer acquisition costs, offer heavy discounts, and hire faster than its managers could properly train people.
The company is bigger. Is it better?
That is why profitability belongs in the conversation.
Recent McKinsey research examined roughly 3,000 global companies with at least $1 billion in 2019 revenue and complete financial reporting through 2024. The researchers noted that many companies grew revenue while diluting their margins. The 61 businesses identified as growth outperformers distinguished themselves by combining above-median revenue growth with above-median profitability.
Earlier McKinsey research reached a similar conclusion. Fewer than one in four companies analyzed outpaced industry peers on both revenue and profit growth.
For Orlov, the distinction is important because leaders can become captivated by visible signs of expansion.
“Headcount can go up. Revenue can go up. You can enter another market,” he says. “Those are milestones, but they are not the whole health report.”
Headcount Is Not a Scoreboard
Employee growth can create another misleading signal.
A company announcing that it has grown from 50 employees to 150 may sound successful. Sometimes it is. But hiring should create useful capacity, expertise, or opportunity.
More employees also create more complexity.
Managers have larger teams. Communication becomes harder. New processes become necessary. Payroll rises. The informal habits that worked when everyone knew one another stop working.
Orlov experienced that evolution while building MTM Choice.
“At 200 people, you are not simply running a larger version of a 20-person company,” he says. “You need leaders who can make decisions. You need clarity around responsibility. You need people who understand what they own.”
This is why he cautions founders against treating headcount as a trophy. A better question is whether each stage of hiring has made the organization more capable.
If a company adds 40 people but decisions still bottleneck with the same three executives, the organizational chart has grown faster than the organization itself.
Watch What Happens to the Customer
Rapid growth can also create problems in places that do not immediately appear on an income statement.
Customer experience is one of them.
A smaller company may provide highly personal service because its founders and senior employees know many customers directly. As the business grows, those relationships have to be supported by systems and larger teams.
That transition can go badly.
Response times get longer. Quality becomes inconsistent. Employees become stretched. Longtime customers begin wondering why the company they loved suddenly feels different.
Orlov recommends monitoring customer experience alongside financial growth.
“Growth creates expectations,” he says. “If you are attracting more customers than your organization can serve properly, eventually the growth itself becomes part of the problem.”
Leaders should watch repeat business, customer retention, complaints, service times, refunds, and other measures that reveal whether customers are experiencing the benefits of growth or paying the price for it.
Culture Can Become a Hidden Growth Cost
Culture is harder to place in a spreadsheet, but that does not make it unimportant.
A company can grow so quickly that employees no longer understand how decisions are made or what standards matter. Managers who were excellent with five employees may struggle with 25. New hires arrive faster than the company can integrate them.
Orlov believes leaders need to pay particular attention to this stage.
He describes himself as demanding about excellence, but he rejects fear, cruelty, and internal politics as tools for producing results. As companies grow, he believes maintaining that distinction becomes increasingly important.
A strong culture does not mean everyone is comfortable all the time. People can disagree. Leaders can set demanding standards. Teams can be held accountable.
The question is whether the environment helps good people perform well.
“People need to know that their contribution matters,” Orlov says. “Growth should create opportunities for talented people to take responsibility, not simply create more layers around them.”
Expansion Should Solve a Strategic Problem
Opening another office or entering another country makes for an exciting announcement. It also creates expenses and complexity.
Orlov has worked across the United States, United Kingdom, Europe, China, and Southeast Asia, and MTM Choice itself expanded internationally. His experience has made him wary of expansion simply because an opportunity exists.
Before entering a new market, leaders should ask what the move actually accomplishes.
Does it put the company closer to important customers? Is there proven demand? Does the company have people who understand the market? Can existing operations support the expansion? What happens if growth takes twice as long as expected?
The same discipline applies to acquisitions, new products, and major hiring plans.
Opportunity is not the same thing as strategy.
Build a Growth Dashboard That Is Harder to Brag About
Orlov recommends that leaders look beyond the handful of numbers that make the best presentation slides.
Revenue belongs on a growth dashboard, but so do margins, cash generation, customer retention, employee turnover, productivity, service quality, and the company’s ability to make decisions efficiently.
Leaders can also ask less numerical questions.
Are good employees receiving more responsibility? Are customers happier than they were a year ago? Has the company become easier or harder to operate? Are managers spending their time solving important problems or fighting preventable fires? Could the organization handle another 20 percent increase in demand without breaking something?
Those questions make growth harder to summarize, but they also make it harder to fool yourself.
Research supports the value of looking beyond the top line. In an analysis of 2,269 global companies, McKinsey found that businesses that outperformed peers on both revenue growth and economic profit produced stronger excess shareholder returns than businesses that outperformed on revenue growth alone.
The lesson is not that revenue growth is bad. Quite the opposite. Growth creates opportunities to invest, hire, innovate, and compete.
The challenge is making sure the rest of the company grows with it.
Stronger Is Better Than Simply Bigger
One of the most tempting things about growth is how easy it is to see.
A new office has an address. New employees appear on the company roster. Revenue has a number attached to it. These milestones can create a sense that the strategy is working.
Business strength is more complicated.
It appears in healthy margins, capable managers, loyal customers, clear operations, good decisions, and an organization that does not depend on a handful of people holding everything together.
For Orlov, sustainable growth requires leaders to keep both pictures in view.
“Of course you want to grow,” he says. “But the useful question is what that growth is doing to the business underneath the numbers.”
A company should not have to become weaker in order to become bigger.
A better goal is to make sure each new stage of growth leaves the organization more capable of handling the next stage.
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