For real estate professionals, the allure of rapid growth can be hard to resist. Whether it’s expanding property portfolios, increasing team size, or boosting transaction volumes, the industry often associates success with scaling quickly. However, can pushing for aggressive growth ultimately do more harm than good?
Research by Gary Pisano, a Harvard Business School professor, sheds light on the risks of scaling too rapidly without the necessary infrastructure. His study, which analyzed nearly 11,000 public companies, reveals that while growth is an inherent business goal, many firms struggle to sustain fast expansion. Pisano advocates for a more measured approach—one that aligns ambition with available resources, operational capacity, and long-term profitability.
“Growth is a strategic goal,” Pisano explains. “It’s important to consider not just how fast you want to grow, but how fast you can realistically grow while maximizing your capabilities.”
In the real estate world, this means aligning growth strategies with market conditions, team capacity, and operational efficiency—rather than simply trying to outpace the competition.
The Risks of Overstretching
One of the most significant challenges in real estate is maintaining service quality while scaling. A real estate agency might increase its listings, expand into new regions, or hire additional agents, but without solid support systems in place, such rapid growth can backfire.
Pisano points out in his Harvard Business Review podcast that companies that expand too quickly risk “damaging the very elements that made them successful in the first place.” In real estate, this could result in agencies struggling to maintain customer service standards due to high transaction volumes or agents becoming overwhelmed with clients, leading to missed opportunities and subpar client experiences.
A common pitfall is the hasty recruitment of agents without an adequate training or mentoring framework. While adding more agents may boost short-term sales, it can dilute the company’s culture, introduce inconsistencies in service quality, and ultimately weaken the brand’s reputation.
Scaling the Right Way
Successful real estate growth requires a careful balance between opportunity and infrastructure. Pisano outlines a three-part framework for sustainable growth: rate of growth, direction of growth, and method of growth.
For real estate agencies, this means considering:
- Rate: How fast can the business scale while maintaining service quality?
- Direction: Should the focus be on high-end properties, first-time buyers, or commercial real estate?
- Method: Will growth come from expanding the team, investing in technology, or entering new markets?
Pisano uses the example of Pal’s, a U.S.-based fast-food chain, which only opens new locations once it has trained store managers ready to maintain the company’s standards. A similar approach in real estate could involve expanding only when experienced agents or managers are available to uphold service quality.
Sustainable Growth in a Shifting Market
The real estate market is cyclical, and agents who overcommit to expansion during boom times may face significant challenges when market conditions shift. Pisano emphasizes the importance of anticipating bottlenecks in staffing, demand, or operations before embarking on rapid expansion.
He also cautions against assuming that demand will always remain high. He points to Peloton’s over-investment in production during the pandemic housing boom, which led to struggles when demand stabilized. In real estate, agencies that scale aggressively in a seller’s market could find themselves overextended when conditions shift in favor of buyers.
Ultimately, the key to long-term success in real estate is not merely about selling more properties faster; it’s about building a business that can sustain growth, provide consistent service, and adapt to changing market conditions. As Pisano puts it, “You don’t want growth to kill the company.”
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