Many business owners focus on exciting startups or global giants, but most companies fall in between as mid-sized firms. These companies often face the challenge of sustaining steady growth without hitting a plateau.
In an article in Harvard Business Review entitled “What Drives Growth in Midsize Firms?” Gary Wolbers and Arun Pillutla have explored how mid-sized manufacturers overcome these challenges. Their study, based on interviews with the CEOs of these businesses, shows that success comes from balancing strong personal relationships with ongoing improvements in company skills.
So what can be learnt from this important research study?
When a company is small- typically with revenues between £1.5 million and £15 million, the CEO usually acts as the main point of contact for customers. In this early stage, success depends on building personal relationships. CEOs get directly involved, earning trust by listening to customer needs and quickly solving problems. This hands-on approach creates a strong foundation because the company focuses on what it does best, delivering high-quality products and services that meet specific customer demands.
As companies grow and reach revenues between £15 million and £40 million, the strategy needs to evolve. At this point, relying only on personal connections is not enough. Firms begin to build more formal systems to manage their expanding customer base. CEOs describe this stage as turning into a “well-oiled machine.” The business invests in new technology and modernizes production processes—like adopting lean manufacturing—to speed up production and reduce delays. These improvements boost efficiency and help build a solid reputation for reliability. A better reputation means more customers and larger contracts, paving the way for further expansion.
When a company grows even larger reaching revenues between £40 million and £200 million, the focus shifts again. Now, success is driven by forming strong, strategic alliances. Personal connections become deeper partnerships. CEOs explain that at this stage, companies use their proven skills to explore new products, services, and markets. This may involve joining forces with other businesses or entering international markets through joint ventures. To support this more complex operation, companies often update their management structures and adjust incentive systems. These changes help the firm handle new challenges while continuing to deliver high-quality results.
Therefore, this study by Wolbers and Pillutla provides clear, practical insights for any business owner and shows that growth is not achieved by following a single formula. In the early days, being hands-on and building close, personal relationships is key. As the business grows, owners must invest in efficient systems and technology to manage more customers and higher production levels. Finally, to reach new markets and break through growth plateaus, forming strategic partnerships and adapting management practices become essential. In simple terms, as your business expands, your approach must change too. By understanding these steps, starting with personal connections, moving to streamlined operations, and finally, expanding through strategic alliances, mid-sized firm owners can make informed decisions that lead to steady, sustainable growth.
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