Why the “rational” path to growth is often the fastest path to stagnation
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“Most businesses only have two principal modes: cost reduction and regulatory paranoia.”
Rory Sutherland said that at The Drum’s Predictions 2026 session, and he was not pitching an argument. He was describing what he sees across the companies that Ogilvy UK advises and the data they have monitored over the past decade. Spend as little as possible. Avoid trouble with the regulator. Protect the downside. Call it strategy.
Sutherland paired the observation with a Peter Drucker line he has been citing for years. The purpose of a business is to find and keep a customer. Only two functions create value: marketing and innovation. Everything else is a cost.
Seth Godin has been making a structurally similar argument from a different angle since 1999. Permission Marketing rejected the idea that interruption produces lasting commercial results. Trust is the asset that compounds. Relevance and permission build enterprise value. Thinking marketing is only paid ads does not.
Dismissing either man is easy. Neither has carried a quarterly revenue number inside a growth-stage operating company in recent memory. A reasonable executive could read them, nod, and keep cutting the line items the finance team flagged last month, or keep marketing siloed from the rest of the business decision-making.
That executive would be wrong. The operators scaling companies right now are proving both men right, and the data on who outperforms across time horizons is making the case harder to wave off.
The bias hiding in every dashboard
Sutherland calls it a quantification bias. Fast metrics crowd out slow ones and leading indicators. What gets counted gets funded. What cannot be counted gets cut.
His example came from an online travel business. Website visitors converted at about 0.5 percent. Anyone who called the phone line converted at about 30 percent. The company’s response was to remove the phone number from the site, because phone support was a cost line and web conversion was a measurable metric. On a spreadsheet, the math worked. In operating reality, the decision destroyed 60 times the conversion rate to save on headcount.
The mistake was not a marketing failure. It was a finance function overriding a revenue function without understanding what was being traded away.
Speed-to-close, cost-per-lead, and gross margin sit on every executive dashboard because they are easy to count.
Trust, retention quality, word-of-mouth, and the long tail of customer lifetime value do not. So they get treated as soft. In most finance conversations, soft means optional.
Godin’s position, as outlined in Permission Marketing and in his 2026 talks, has been the opposite. Relationships that produce durable revenue are earned, not interrupted.
Interruption burns the asset it is trying to harvest. The companies that understand this keep their phone numbers. They answer their emails. They earn the right to talk to a customer again.
The cost of ignoring what cannot be counted is not zero. It shows up later, in revenue that never arrives, in customers who never come back, in referrals that never get made. By the time it registers on the dashboard, the decision that caused it is nine months in the rearview.
The operators who refused to play it safe
Sutherland made another observation that most of the coverage skipped past. Family-owned and founder-led businesses are better positioned to sustain serious marketing because they are not trapped by quarterly reporting. Public companies and short-horizon investors crowd out long-term investment not because their leaders are weak operators, but because the structure makes it nearly impossible to be a good one.
The data on what that structure produces is not subtle. Moody’s reported in 2024 that private equity-backed companies defaulted at roughly twice the rate of non-PE-backed companies. In the first quarter of 2025, seven of the ten largest U.S. bankruptcies among companies with more than one billion dollars in debt were PE portfolio companies. The common thread across those failures is rarely bad products or weak markets. It is a capital structure and operating philosophy that treats cost reduction as a strategy and calls it discipline.
The firms outperforming across short, medium, and long horizons share a different posture. Self-funded companies, family-office-backed companies, family-owned businesses, and the subset of PE and venture firms operating with longer hold periods and lower leverage land in a different distribution. Not because they are softer. Because they are more honest about what actually builds enterprise value.
Eric Lent is one of the clearest cases in practice. A CMO, COO, CCO, and CRO across multiple companies, including World 50 and Herschend Family Entertainment, Lent has spent his career inside organizations that treat marketing as a value creation function connected to the rest of the business, not as a cost center to be managed down. Herschend, one of the largest family-owned entertainment companies in the country, has compounded guest loyalty and employee tenure for decades because it was never forced into the quarterly tradeoffs that erode both. World 50 built a trusted global community of senior executives on the same premise. Trust is the product there. Lent’s record across both illustrates what happens when leadership refuses to box marketing in.
Brady Holcomb makes the argument more directly because he makes it from the revenue seat. A B2B chief revenue officer carries the number. No one is less inclined to philosophize about brand and trust than the person accountable for the quarterly forecast. That is exactly why the pattern in his career tracks matters.
Revenue leaders who have watched pipeline collapse one to three quarters after aggressive cuts to marketing, customer success, or implementation teams know how this movie ends. The savings show up on the next earnings call. The damage shows up after the next one. By the time the CRO can see it in the forecast, the decision is already locked in.
Kurt Uhlir has been part of more than sixty funding rounds and exits across NAVTEQ, Vitrue, Sideqik, eXp Realty, Showcase IDX, and dozens of other B2B companies backed by venture and private equity capital. He frames the operating principle in terms that a CEO or a board will recognize.
As Uhlir put it in a 2026 keynote, “Efficiency-only thinking does not make companies leaner. It makes them brittle.” Uhlir has argued in recent fireside chats that the companies that unlock real scale “go slow to go fast”, building systems where every person on the team can articulate how their work ties to a specific business outcome.
And he has been direct about what CEOs actually want from their marketing leader: “CEOs do not want to hear about brand building. They want to hear how marketing is building trust. That is what they are actually asking for.”
Three executives, three different seats, one operating conclusion. The companies treating marketing as a cost center or a paid ads-only department will spend the next three years losing ground to those treating it as a strategy hub that builds demand among potential customers.
The companies using AI to cut are losing to the ones using it to build
Image by StartupStockPhotos from Pixabay
Sutherland’s sharpest warning is not about marketing budgets. It is about what comes next.
AI is being absorbed into the same cost-obsessed logic that has starved marketing for years. Most companies are treating it as a headcount reduction tool. Fewer employees in customer service. Fewer writers. Fewer humans between the business and the customer. The spreadsheet case is obvious. The cost cutting case is a trap.
Uhlir has argued for years that most attribution models already fail to capture how content and trust actually contribute to revenue, and AI is widening the gap.
“AI has absorbed the customer research journey,” Uhlir has said. “Attribution models only see the last branded click. The real contribution of content, trust, and brand is growing, and most companies cannot see it because their dashboards are not built to.” Companies cutting the inputs that build trust are running the same play as the travel business that removed its phone number. They are optimizing a visible metric while destroying the invisible asset underneath it.
Sutherland drew a sharper analogy from industrial history. The electrification of factories produced almost no productivity gains for years, because companies retrofitted old steam-powered processes with electric motors instead of redesigning around electricity. The upside only arrived when the process itself was reimagined. AI will follow the same curve. Companies running faster, cheaper versions of what they already do will be outcompeted by the ones redesigning the process.
For a CEO making decisions today, the question is not whether to use AI. It is what to use it for.
Companies deploying AI to improve customer experience, accelerate discovery of what their market actually wants, and deepen the trust relationship with existing customers are building a compounding asset. Companies deploying AI to reduce the number of humans a customer can talk to are running the quantification bias faster and at a lower cost.
Godin’s argument from Permission Marketing carries more weight now than when he first wrote it. The businesses that earn permission, deliver value, and build genuine relationships with customers will absorb the ones abandoned by the companies running the efficiency playbook. AI does not change the underlying principle. It raises the stakes on both sides of the bet.
The companies that get this right will not look like the most efficient operators in their category. They will look like the most trusted. In three years, those will be the same companies everyone else is trying to reverse-engineer.
What CEOs and business owners should actually do with this
The argument is not that efficiency is wrong. It is that efficiency as a primary strategy produces companies optimized to stall.
Every cost reduction decision could carry a second-order revenue consequence. The question is not whether to cut. It is whether the cut protects or erodes the trust, experience, and team quality that produce revenue eighteen months from now.
Most executive teams answer the first question and call the meeting done. The second question rarely makes it onto the agenda, which is how companies arrive at stagnation while believing they are running a disciplined operation.
Marketing is not the paid-media group. Marketing owns the discipline of building and keeping customers, which is the only job Drucker said actually matters. Treating marketing as a synonym for paid ads is the most common and most expensive framing error growing companies make. It reduces a value creation function to a cost center and manages it accordingly. The results are predictable. They are showing up in bankruptcy filings, in stalled pipelines, and in customer bases that eroded quietly while the dashboard showed green.
The companies building revenue momentum across years share one operating habit. They refuse to let what is easy to measure crowd out what actually builds the business. That habit shows up in small decisions more often than big ones. Keeping the phone number. Answering the email. Hiring the customer success lead before the efficiency consultant says it is time.
The spreadsheet does not show what you stopped building
CEOs and executive teams must look for decision-making patterns that look rational at every step, but that produce stagnation.
The operators proving them right are not the loudest voices in any room. They are the ones whose companies keep growing even after their competitors, who focused on cutting costs, have run out of ways to save money.
That is the warning. The companies hearing it early enough to act on it are the ones worth watching.