Comment: Bigger doesn't always mean better

"For us, growth is a way of life, and we have to grow at all times," says Mukesh Ambani, chairman and managing director of Reliance Industries, India's largest company.

Not all businesses follow this mantra, but many do, and expansion is certainly the prevailing cultural paradigm of the private sector. Size matters; bigger is better; grow, grow, grow.

Risky as it is to generalise about the third sector, there often appears to be a tacit acceptance that the features of that ecosystem can be transplanted into ours. Nothing betrays this more than the view that growth is necessary, and that revenue growth is a measure of success. Exacerbated by the rise and rise of super-charities, there is an expectation that each year's annual report and accounts should show bodies adding to their reserves and growing revenues, and we tend to judge charities more on finance than on activity. Yet there may be good reasons for not growing.

One is that, in smaller outfits, it's easier for those at the top to stay close to their staff, volunteers, users and beneficiaries. Another is that the less you grow, the less you have to splurge on infrastructure - personnel departments, huge finance and facilities teams, office equipment and so on. This has particular traction, because it is far from clear whether economies of scale apply to charities: what works for bog-roll manufacturers may have little bearing on what proportion of the pound goes directly to the cause. In bigger bodies, boards have to spend more time focusing on money, investment port- folios, balance sheets and the like.

A well-run organisation has a sense that there's an optimum scale for what it wants to do, who it wants to do it for and how it wants to do it. And it seeks not to budge from there. This is not just about managing growth; it's about whether growth is even the right strategy. Boards should be especially wary when trying to grasp large sums of government money for revenue growth. They should beware the Macbethian fantasy, the Machiavellian 'dagger of the mind': "Is this a cheque which I see before me/The cash towards my hand?/Come, let me clutch thee/I have thee not, and yet I see thee still."

- Nick Seddon is an author and journalist: nptseddon@hotmail.com.

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