The Crisis of Growth: How U2 & Magnuson Hotels Overcame Theirs

U2 and Magnuson Hotels' Crisis of Growth

“There goes U2. They used to be a rock and roll band.” Instead of the shouts of adoring fans, that’s what Bono and the band overheard one cold winter day in a Berlin hotel lobby.

For ten years, U2 toured nonstop, rising from a 1980s bar band to the world’s biggest rock stars. Then, at one of the final shows of the December 1989 Tour, Bono says onstage in Dublin “this is just the end of something for U2. We have to go away and dream it all up again.”

But the next year and a half became an emotional wasteland. When the band arrived in Berlin in October 1990, they had lost their way. The hope of coming up with another great record fell into nearly 2 years of infighting, ego wars, and mistrust.

While the band was consumed with taking on the world, they were coming apart and cracking from within. They hired some of the world’s greatest producers to help them come up with the next big thing, but the next breakthrough came after a breakdown.

One evening, as the band returned to their hotel, they walked through the lobby and overheard two German teenagers say what they needed to hear. “There goes U2. They used to be a rock and roll band.”

Rattled to the core, they returned to the studio the next day and scrapped months of work. They sat down with one acoustic guitar in a circle and wrote and recorded ‘One.’ They said that this affirmed who they were, and it became one of the biggest U2 songs in history.

It’s easy to lose your way; it’s difficult to know it.

Crisis doesn’t always announce its arrival as a SWAT team bashing down the door. There’s little drama, the danger signals are not always obvious. That steady drip could either be a leaky faucet, or it could be a crack in the bottom of the battleship.

Magnuson Hotels rose from a home based startup to a top 10 global hotel chain in seven years. At first, you are a nobody, but soon comes the glow of growth recognition. Then after awards such as Inc. 5000, complacency sets in. Too many people tell you what you want to hear, the press is great, and we can take each other, our partners and our customers for granted. The mission becomes about us, and not those we serve.

Frank Cespedes Harvard Business School

With growth comes danger. In business, Frank Cespedes from Harvard Business School calls it “The Devil’s Triangle.” This is when the business reaches a critical size, its complexity greatly increases, and expenses accelerate.

The original start up model may no longer be as valid as it once was. So one makes excuses for slowing growth and loss of customers. To compensate for the increasing cash burn, you ratchet up the sales volume to demonstrate that you are still vital. Rather than doing the hard work of facing the truth, you look for quick easy wins and you enter the stage of profitless growth. Is the founder CEO going to adapt his/her leadership style so the company can make it to Act Two, or will the company just be a one trick pony?

There’s one thing you need to know about global domination–the hardest and toughest competitor you will ever face is yourself. The real dangers come from within; self-doubt, lack of focus, distractions, excuses, allowing fatigue to beat us down.

Ask yourself this. Is my company growing profits—not just sales? Are we still on a focused mission, or have we compromised and drifted. If you’re not sure, here is what to do.

  1. Destroy and rebuild. Every day. Throw out what does not add value to customers or to your company growth. Effective strategy is choosing what not to do.
  2. Work hard. Winston Churchill once said, “I may be an average man but I work harder than any average man.” To be a world champion at anything you’ve got to do all the s**t nobody else wants to. You must become Supreme of the mundane details. It takes a lot of nights to become an overnight success.
  3. Don’t overthink things. Samurai warriors are taught the concept of ‘no mind.’ Find ways to eliminate distractions in your mind and company, and then listen to your intuition. Be honest with yourself– there’s a difference between accumulated knowledge and what you think you know. Ask your family, your co-workers, ‘is there something I need to know but nobody is telling me?’ Do I have any blind spots?
  4. When in doubt, go back to your roots. Why are we here? What fundamental problem do my customers have, and am I solving it better, faster and cheaper than everyone else? Become so differentiated and indispensable, that if you and your company were gone tomorrow, there would be a massive void.

There is a crossroads between acceptable and amazing. And there comes a turn in every journey where we can find ourselves back where we should be, on solid ground with an unshakeable faith on a clear path ahead.

U2 emerged after their longest winter with the hearts of lions. A little bit older, wiser and stronger. And so did Magnuson Hotels.  While U2 found their strength in each other and going back to basics, what we’ve learned is to always ‘step away from the vehicle’ and be better at seeing what is.

If you know who we are and what we stand for you will understand. If you don’t, you will. There’s nothing like a good crisis to get refocused on global domination.