What is "Shrink to Grow" strategy?
Shrink to Grow is a paradoxical strategy. It sounds absurd and conflicts with the culture, organizations inculcate for so long. To stay fit, one need to burn the fat in the belly to strengthen muscle
Shrink to Grow is a concept of becoming small, that would allow organizations to eliminate weak spots, gather strength and grow again.
Organizations built their foundation with a great culture. Over time organizations grow exponentially. It is extremely difficult to balance the resources at the required level at all times. This result in excess resources. Excess resources eat up profit margins and unbalanced work across teams. Often with investors’ pressure, organizations start looking at ways to either increase productivity or scale down to balance the costs.
Organizations often use the “Shrink to Grow” strategy to remove unwanted products, branches/offices, and staff. This strategy causes a lot of pain, and loss of trust in the team. Many organizations initiate this strategy during economic downtime as an opportunity to minimize brand damage.
In recent times Elon Musk seems followed this approach immediately after the Twitter acquisition.
How to effectively use “Shrink to Grow”?
Organizations often use this strategy to shed resources during financial turbulence. Rather it should be used as a consistent strategy to improve the team metrics and help the weak spots to become stronger.
This can be used as the best strategy to improve the quality or productivity of the team. Here is the process to do that:
Identify the metric to improve.
Define the metric
Identify the data that defines the metric
Capture metrics for 1 to 2 weeks
Rank the team against the metric
Identify the bottom 20% / 2 team, members
Review the work/tasks done by the bottom X team members
Identify 20% of the issues that impacts the metric 80% of the times
Prepare an improvement plan for the team member
Execute the plan ( if required during the improvement plan execution don’t assign any other critical work)
Inject them back into the team
Iterate the process.