Inspiring Healthy Growth

The story of REI is a picture-perfect example not just of growth, but of healthy growth. What we mean is that, as the company grew, it grew in a particular way, with three key attributes. Its growth was strong, sustained, and served all parties.


The year was 1935 and Lloyd and Mary Anderson were a young couple with a problem. They didn’t need money for a down payment, a nanny to care for the kids, or any of the other normal trappings for people their age. They needed something else: good, affordable ice axes. Intrepid mountaineers who lived in Seattle, Washington, 29-year-old Mary and 33-year-old Floyd were frustrated with the subpar ice axes their local ski shops sold, which were overpriced to boot at $20 a pop. For traversing ridges with steep, icy drops below, they wanted the best equipment to catch themselves if they slipped, but they didn’t want to pay inflated prices. They decided to cut out the middleman and order top-of-the-line ice axes themselves directly from the catalogue of an Austrian outdoors company, which Mary translated into English. Soon enough, their sleek, durable new ice axes arrived in the mail—for the sweet price of $3.50.

It turned out that Lloyd and Mary weren’t the only people in the Seattle area hungry for higher quality mountaineering equipment at lower prices. Word got out among the local outdoors community about what the couple was up to, and others wanted in. Not long after, they found themselves placing bulk orders for gear, which made the products even more affordable. Three years later, in 1938, Lloyd, Mary, and 21 of their friends took their venture a step further and made if official: they formed a co-op, each paying a lifelong membership for the price of $1. Their first “storefront” was a shelf at local gas station.

From these humbling beginnings, the co-op continued to grow, attracting more members (who received dividends), expanding their retail offerings (rental equipment and food), and even printing their own mail-order catalogue. Even as they still ran the company out of their home, by 1950 Lloyd and Mary’s adventure had amassed 3,000 members and was making $40,000 a year. Six years later, the members voted to incorporate as Recreational Equipment, Inc. In the 1960s, the company opened its flagship store in Seattle, establishing generous medical and pension benefits for its employees and generating millions of dollars in sales. Best of all, Lloyd and Mary encouraged their employees to keep growing as outdoorspeople—the impetus for the co-op in the first place. In 1963, a longtime sales manager named Jim Whittaker became the first American to reach the top of Mount Everest.

The rest, as they say, is history. As of 2022, REI continues to be the go-to destination in the US for outdoors gear, with over 168 locations nationwide and some 15,000 employees. And it is still a member-owned co-op. The only difference is that now, instead of 20-odd members like it had at the beginning, REI has 20 million members. But the company still sells ice axes.

Why Healthy Growth?

The story of REI is a picture-perfect example not just of growth, but of healthy growth. What we mean is that, as the company grew, it grew in a particular way, with three key attributes. Its growth was strong, sustained, and served all parties.

It was strong in that its value increased as did its market position giving it the freedom to take new risks and expand.

And this strength was sustained; after all, you don’t start a company soon after the Great Depression and see it flourish for nearly a century if your earnings aren’t steady.

Lastly, REI didn’t view growth as merely a financial or organizational question; it has sought to serve all parties, from its employees, to its business partners, to its members (and through its charitable arm, REI also makes a commitment to preserve the natural world of mountains and rivers in which their customers put the company’s outdoor products to use). We’re not suggesting that every enterprise should be a co-op, but we are suggesting that growth is about more just than market share and profit. It is about purpose and people.

But not all growth is healthy, no matter how meteoric a company’s rise might be. For every REI, there are other enterprises launched with similarly good intentions whose growth either sputters out or overheats.

Just a few years ago we were retained by a pharmaceutical company to help them grow. Lee led this particular project for our firm, and he was welcomed in client meetings with a resounding and recurring chorus of “We have five years of record profit under our belt.” He acknowledged that this was clearly a nice trend of financial growth, but his goal was to help the client ensure they could sustain this growth so all stakeholders would benefit.

During his assessment, he noticed some challenges with their process and employee metrics (two leading indicators of healthy growth that we will address in the next chapter). Quality processes were not well-documents or executed and employee roles were unclear, and turnover was on the rise.

The very day Lee was scheduled to deliver his findings to the client and warn them of these risks that would inhibit healthy growth, they called him to reschedule the meeting. The client had received a call that morning from the FDA forcing the client to remove a key product from the shelves that accounted for 40% of their revenue due to a quality issue. This client has since recovered but they learned the hard way that cultivating healthy growth required a more comprehensive set of metrics and leadership practices.

Today we find ourselves once again in an era of hyper-speed growth. Startups launch with millions of dollars of funding. Young tech companies expand at astonishing velocities, capturing tens of millions of users, scaling up new products and services, and opening offices around the world. But much of this growth is unmanaged and quickly turns unhealthy. The symptoms of this ill-health are the predictable risks we have seen associated with growth, such as:

  • Operational infrastructure is underdeveloped relative to the volume of customers/demand.
  • Product and service quality declines; customer needs are obscured by growth needs.
  • The “diligence” in due diligence vanishes; hasty acquisitions cause organizational indigestion.
  • The planning horizon is too short; the real challenges that need addressing lurk around the corner | beyond the company’s short-sighted vision.
  • Loyalty to employees who “got us here” dominates, without accountability for results.
  • New opportunities or initiatives cause organizational focus to blur.
  • Management practices or capabilities remain suited to yesterday’s requirements, not today’s.

We don’t point out these risks of unhealthy growth in a spirit of judgment. They are simply risks you must manage, in part, to convert growth into healthy growth. These pitfalls can be anticipated and effectively managed if you recognize the five truths of growth.

  1. Change is inevitable, but growth is a choice.
    Change is omnipresent, but if we resist it, we may not grow from it. Growth can occur whether we face significant changes or blue skies. Real and sustained growth happens when we choose it.
  2. What gets watered grows.
    When we reinforce ourselves or others for a certain behavior, that behavior will be performed more frequently because we are creatures of pleasure. Since reinforcement feels good, we do more of what feels good.
  3. Growth almost always occurs when we are uncomfortable.
    Even if we initiate growth phases ourselves, growth by its nature pushes our thoughts, words, and/or actions into new, uncharted territory, which means we must confront uncertainty. Those who are growth-oriented learn to get comfortable with discomfort.
  4. When we help others grow, we grow.
    Just as when we teach, we learn, when we cultivate growth in others, we also plant seeds of growth within ourselves. We also tend to feel great satisfaction and fulfillment from helping others to grow.
  5. Growth opportunities are limitless.
    Growth is not a finite entity like a plot of land with limited square footage. There is always more space to grow. Our mindset will either reveal or hide these opportunities from us. (In Chapter 6, we will address how positive emotions expand the alternatives we see, and how negative emotions limit them.)

Traditional leadership myopically focuses on the needs of the shareholder. But profits don’t exist in a vacuum and business is not a zero-sum game. Someone doesn’t have to lose for someone else to win. That’s unhealthy and limits growth. In contrast, healthy growth is strong, sustained, and serves all parties. It is a choice—one that yields a competitive advantage and enhanced value for all stakeholders.

Shifting Employee Focus

As we mentioned in the previous chapter, there has been a marked shift in priorities for today’s worker. These shifts in employee focus have existed for several years, but the Covid-19 pandemic accelerated them just as any crisis tends to intensify existing trends.

Your team members don’t just work for a paycheck—they want meaning. They want to work for organizations with a compelling purpose. Compensation is important and must be fair, but it’s no longer the sole driver of career choices. And ping pong tables, cappuccino machines, free snacks and such are not strong motivators anymore. The emphasis for today’s team member has switched from paycheck to purpose, and so must your leadership approach.

Today’s employees are not pursuing mere job satisfaction. They strive for development both personal and professional, which are increasingly inseparable.

They want self-growth, and a position in an enterprise that is itself growing—so that they can contribute to that ongoing evolution. As a result, they don’t want bosses. They want coaches. They want someone in their corner who values them as both people and employees, and who helps them understand and cultivate their strengths.

Team members see little value in annual reviews.  Instead, they want ongoing, quality conversations via a variety of channels: face-to-face, over text, email, Slack, Zoom, and other platforms. This requires leaders themselves to grow—to develop flexible, direct, and real-time ways of communicating.

During these conversations, today’s team members don’t want to focus on fixing their weaknesses; rather, they want your help in building their strengths. Weaknesses rarely, if ever, magically transform into strengths, while strengths can develop infinitely. Leaders should not ignore weaknesses but put employees in positions to maximize strengths. This benefits both the individual and the organization.

Past Today
My PaycheckMy Purpose
My SatisfactionMy Development
My BossMy Coach
My Annual ReviewMy Ongoing Conversations
My WeaknessesMy Strengths
My JobMy Life

The Five Factors of Healthy Growth

Drawing upon what we now know about today’s employees, our field-tested healthy growth process is aligned with the unique needs of today’s teams and the requirements for today’s leader. It yields healthy growth for the leader, the employees, and the business.

Healthy growth is a mindset, a process, and an outcome. A healthy mindset and process enable us to perform at our best—and be our best selves—while we deliver healthy outcomes.

Here is a brief overview of each of the five factors of healthy growth.

L Group HG_Summary1

Growth Factor #1
Compelling Purpose & Plan

Purpose is two dimensional. You must first articulate a compelling purpose for the overall organization and also for each team member’s job. This provides personal and collective motivation. This the “why” of a plan, which is step one. But there must also be a “what.”

A compelling plan answers “what?” and provides a vision for the future that inspires and guides action, while accelerating decision making. It addresses six critical questions:

  1. Why do we exist? (mission)

    Answers how our company makes the world a better place or improves lives (for partners, customers and/or employees).

  2. Where are we going? (vision)

    Answers what we want to achieve in the future. Also serves as a clear filter for opportunities that do/do not help us realize the vision.

  3. How will we conduct ourselves? (values)

    Answers how we treat each other and our customers/partners. Also serves as cultural glue and guide for personnel and policy decisions.

  4. What will we do? (strategies)

    Answers how we will focus our resources. Just as importantly, it should clearly answer what we will not use our resources on.

  5. How will we measure our success? (metrics)

    Answers how we are progressing toward our goals and if we are growing in health ways.

  6. What improvements or changes must we make? (initiatives)

    Answers what actions we will take to execute our strategy.

Once you compellingly answer the why and the what, you’ve begun to set the stage for healthy growth.

L Group HG_Summary2

Growth Factor #2
Aligned Culture

Every organization has a culture by default. Few organizations have a culture by design. When we are aligned, we are working in accordance with each other. Yet even when an organization has intentionally aligned its culture as part of its strategy, change naturally and inevitably creates cultural misalignments. The more a changing organization wants to keep its culture the same, the more carefully it must adapt what it does to the shifting conditions.

Healthy leaders understand that designing culture can be expressed with a simple, two-word formula: CULTURE = BEHAVIOR. It’s that simple. Organizations are comprised of human beings, and humans are predictable and virtually always do what they are reinforced to do. So, if you reinforce behavior A, that is what you will get. It is not uncommon for leaders to express frustration with the behaviors of their teams, when the same behavior is exactly what they are reinforcing. For example, they might be frustrated by siloed, non-collaborative behavior while that is what their compensation system is rewarding.

As you design a culture, the question is, “Which behaviors do I want to see more of to help meet the needs of our stakeholders?” Don’t throw the baby out with the bathwater as you align your culture. Rarely is a culture completely misaligned with all stakeholder needs, so honor the past by preserving what is working. Shift to the future by reinforcing selected, new behaviors. And start by aligning (or realigning) your cultural systems with behaviors that support your stakeholders. Cultures are created and reinforced by these 12 systems:

  1. Values
  2. Leadership mindset and practices
  3. Communications
  4. Well-being support
  5. Rules and policies
  6. Goals and measures
  7. Rewards and recognition
  8. Staffing and selection
  9. Training and development
  10. Ceremonies and events
  11. Physical environment
  12. Organizational structure

When culture is aligned, people thrive because there are no friction points between what is said and what is done. All energy is spent on growth rather than resolving contradictions.

L Group HG_Summary3

Growth Factor #3
Engaged Hearts & Minds

Consider this: More than 80% of the U.S. gross domestic product comes from services and information which are created and delivered by people. The bottom line is that people buy from people, not companies. So, your people— and the performance they deliver—will always be the defining competitive advantage for your organization. Or competitive disadvantage if you don’t prioritize the people side of business.

When people are engaged in their work and feel a deep connection to it, they deliver passionate performance. This creates satisfied customers, and ultimately, growth for employees and for the organization. The most effective leaders learn how to coax passionate performance out of all of their team members. They invest time, energy, and resources to engage their people because engaged employees are more likely to:

  • stay with the organization;
  • perform at higher levels;
  • influence others to perform well;
  • promote the organization externally; and
  • deliver unparalleled customer service.

When you discover how to actively engage your team members to deliver passionate performance, you start a powerful and self-reinforcing cycle that builds value for your organization. This is part of the culture, and it creates a unique, sustainable competitive advantage. Passionate performance is achieved when employees are fully engaged—when they demonstrate a strong, sustained intellectual and emotional attachment to their work. You will feel the enthusiasm and see the results. Your team will be like kids again, a time when they had fun doing their very best at whatever engaged them. In short, work will feel like play.

The key to passionate performance is found within the minds and hearts of employees where basic human needs are fulfilled. It’s a simple but powerful formula: When my needs are fulfilled, I am engaged, I perform at my peak ability, and I’m motivated to help those who meet my needs. When my needs are not met, I’m frustrated, out of control, unfocused, and disconnected—in a word, I feel vulnerable and disengaged.

To meet these needs, leaders must first see them and acknowledge them. The key is to look at your employees as people. Only then can you identify and fulfill their six basic needs:

Intellectual NeedsEmotional Needs

Healthy leaders engage both the minds and hearts of their team members.

L Group HG_Summary4

Growth Factor #4
Positive Coaching

The central role of a leader today is that of a coach. Positive coaching leads to:

  • More focused effort (and less wasted mental and physical energy) because you and your team are aligned on expectations.
  • More discretionary effort from your team because they are engaged and motivated.
  • More ownership behavior and innovation because your team is involved in creating solutions.
  • Deeper commitment from team members because your team feels genuinely appreciated and valued.

The results of this coaching approach are a more productive team, improved relationships, and sustained positive performance. But achieving this requires dedication on the part of the leader. This is because inspiring winning results and relationships is a two-dimensional challenge that involves both a positive coaching mindset and positive coaching habits. A leader must look inward to build her own mindset and habits to coach her team.

L Group HG_Summary5

Growth Factor #5
Excellent Execution

In business and in life, the winners are usually the people who can consistently execute a well-thought-out strategy. In other words, winners stay committed—they practice adherence.

Adherence is the ability to consistently execute. Not coincidentally, the word “adherence” appears to have originated in the 1500s from the French word “adherer,” which means “to stick to.” Adherence is the critical link between strategy (knowing) and results (doing). Therefore, it is the solution to the knowing-doing gap. Successful execution of a plan is not a one-time event but rather steady progress over an extended period.

Fortunately, adherence is a skill that can be learned. Based on the experiences of winning individuals, teams, and organizations, we have identified three components of adherence: Focus x Competence x Passion = Adherence


    provides the clarity necessary to make decisions that support your most important goals. It results in a clearly defined pathway to success. A sharp focus answers the “what” question: What do you need to do to execute your strategy?

    is used in the broadest sense of the term. It encompasses all the skills, systems, processes, and tools a team uses to achieve its goals. The result is the ability to commit to, measure, and hit your targets. Building competence answers the “how” question: How will you execute your strategy?

    creates a sense of connectedness. It creates a connection between teammates, a connection to our human need for meaningful work and a connection to each individual’s sense of value and contribution. Igniting passion answers the “why” question: Why are you executing your strategy?

Mastering the art of adherence is a primary job of every leader at every level of the organization. It offers a proven way for you to consistently execute ambitious plans.

You can find a detailed manifesto for each of the five growth factors here.


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