Why Firms Grow in a Down Economy

April 1, 2003 · by James P. Cramer

It is a myth that all firms are shrinking today. Look around your own community and you can spotlight firms who are growing. When we challenged the conventional wisdom, here is what we learned:

Last week at one of our management meetings we went around the conference table and shared the names of professional design firms we knew of that were growing at either high single digit growth (7.5-9 percent) or double-digit percentages (10-28 percent) in 2002-03. We were somewhat surprised that the list quickly grew to almost fill the page. Then we examined the underlying reasons for this growth. I then asked our management to make a list of the market segments that these firms practice in and to put this information into columns. Then, to further indicate if their impressive growth was local, regional, national, or international. You might try this with your own staff. In our case we learned to challenge myths of growth. For instance, the healthcare segment is up 20 percent from three years ago. It will grow from $17.5 billion in 2003 to more than $22 billion in 2008. Yet some firms in this segment are shrinking and blame the economy. When we challenged the conventional wisdom, here is what we learned.

First, there are firms of all sizes who are dominating and have momentum within certain market sectors. Other firms have hitched up to high-growth corporations and have growth that parallels clients’. In a few instances, firms that have downsized just a year or two ago have just the opposite problem—they are forced to hire staff (fast) again. In each case though, these architecture, engineering, interior design, landscape architecture, and planning firms have a growth agenda. Often, however, its not identified as such but it flows freely in their culture.

It is a myth that all firms are shrinking today. Look around your own community and you can spotlight firms who are growing. These are not the reasons for growth:

While each can be a factor, the explanation is more complex (and interesting).

There’s always a temptation to look at the glass as half empty. Your message however needs to be more positive. Your glass is way more than halfway filled. State your reasons. Your firm too has hidden assets for growth. Find and use them. Sustaining a firm in difficult times is a leadership challenge. The solution lies not in working harder and harder but in being more strategic. You’ll find enjoyment in this wonderful world of design—even in a down economy.

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