Growing companies: Insights on executive strategies and common missteps

When it comes to the evolution of both markets and technologies, the only constant is change. That means founders and executives need to hone their capacity to navigate volatility. To remain nimble, founders and executives should be prepared to periodically tweak their approaches, looking for opportunities to leverage insights that can enhance customer loyalty, improve contingency planning, and accelerate decision-making. In times of volatility, focusing on capital efficiency, operational resiliency, and productivity can help companies strengthen both their growth foundation and the value proposition they bring to the markets. 

With the IPO market on the rebound, some late-stage private companies are likely reassessing their options. Those considering going public can remain agile by replacing rigid long-term plans with iterative short-term goals and regular reassessments. This isn’t to say that companies should drift from their core strategic objectives. In fact, companies that remain committed to a clearly defined strategy may be better positioned to realize long-term gains. However, flexibility may be needed when determining how to reach those goals.

For instance, companies with proven growth potential may need to consider an unplanned pivot from an IPO track to a private primary or secondary offering. At the same time, they may need to be prepared for a sprint to an IPO if market and business conditions warrant it.

Strengthening operational infrastructure can also be important on the road to an IPO, whether streamlining workflows to reduce dependency on manual processes or reinforcing resilience against risks like cyber threats. On the people side, upskilling existing teams can help to prepare for the scrutiny of public markets, support scaling to the next level, and attract new talent. Likewise, rethinking the board composition with an eye towards public company readiness can be done in any market environment.

The key throughout is to maintain financial discipline. Beyond preparing companies for life in the public markets, this can confer greater financial flexibility to navigate unfavorable markets.

A good place to start is by building a shared vision and fostering a culture that values learning, rapid iteration, and ownership of results. Using dashboards, reviewing performance regularly, and setting objectives and key results (OKRs) that mirror investor reporting can help employees understand how their work drives the outcomes investors care about. Some management teams extend that throughline by linking employee performance incentives to investor-relevant metrics and by discussing culture and talent at the board level.

Admittedly, it’s not always possible to perfectly align employee and investor objectives. One way to navigate this healthy but challenging tension is through clear, transparent, and regular communication. Founders and executives should aim to work with all stakeholders to understand their priorities, foster mutual accountability by regularly disclosing where they’re headed, and maintain an open dialogue designed to build trust so potential disagreements can be navigated without damaging the relationship.

Each stage of growth comes with its own challenges for founders and executive teams. For instance, in a bid to demonstrate strong growth prospects, some companies end up chasing too many markets or initiatives at once—losing strategic focus, diluting resources, and weakening positioning in the process. Similarly, companies that scale prematurely by hiring aggressively or expanding before confirming the market fit for their products or services may see high churn and poor returns.

There’s also a risk associated with choosing the wrong metrics to benchmark performance, which can create misalignment with investors and throw off decision-making. This can play out when founders and executives hesitate to evolve their team. It can take different players to drive the growth journey, and many executives tell us in hindsight that they took too long to make tough choices.

Additionally, while rapid growth is valued, ignoring profitability can backfire. A disciplined approach that balances growth with a clear path to sustainable economics can be essential for companies eyeing the public markets. That said, growing companies may sometimes need to press an advantage by making a calculated bet, even if it comes at the expense of near-term profit. Sometimes, getting to their north star requires companies to make bold moves that may oppose a market or investor construct.

Having a strong strategy to enhance financial flexibility and operational resilience can help growing companies navigate market volatility. By helping to align employee and investor interests, Morgan Stanley empowers companies to maintain agility and drive sustainable growth, even in challenging market conditions.