there are two aspects of both these cases that would sap managerial attention and energy : rapid growth and newness. both would reduce organisational slack, but for the new Leaf, the stress of growth and newness was exacerbated by the fact it was operating what is traditionally a low margin business.
while new Leaf mimicked much bigger organisations in its approach, its due diligence in tackling the major acquisition that eventually lead to its downfall illustrates the limit to which it was able to attend to all managerial challenges at once.
the relative inexperience of the managers of both firms is also worth remarking. while new Leaf imported talent, it addressed (for example) HR issues in-house, cultivating talent rather than using a university graduate with formal skills.
some authors claim that the high growth associated with gazelle-like growth provides organisations with a degree of slack with which to deal with problems, and the comment from new Leaf’s CEO on wanting to growth the firm in order to be able to afford to have a significant head office cadre, illustrates this flip side.
freshcoat’s greater product innovation allowed the company to create value which it could then reinvest into one ‘quick fix’ solution to HR problems-higher wages, while New Leaf did not have this option open to it, being a minor player in a heavily populated, high competitive market characterised by low margins.
while freshcoat’s principals (without any professional HR support) learnt their HR lessons the hard way, the company had the financial momentum (and slack) to be able to cope with the setback