The growth phenomenon: An analysis

Cla ke, Hugh G. A icle The g ow h phenomenon: An analysis Sou h A ican Jou nal o Business Managemen P o ided in Coope a ion wi h: Uni e si y o S ellenbosch Business School (USB), Bell ille, Sou h A ica Sugges ed Ci a ion: Cla ke, Hugh G. (1982) : The g ow h phenomenon: An analysis, Sou h A ican Jou nal o Business Managemen , ISSN 2078-5976, A ican Online Scien i ic In o ma ion Sys ems (AOSIS), Cape Town, Vol. 13, Iss. 4, pp. 177-182, h ps://doi.o g/10.4102/sajbm. 13i4.1195 This Ve sion is a ailable a : h ps://hdl.handle.ne /10419/217813 S anda d-Nu zungsbedingungen: Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen Zwecken und zum P i a geb auch gespeiche und kopie we den. Sie dü en die Dokumen e nich ü ö en liche ode komme zielle Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich machen, e eiben ode ande wei ig nu zen. So e n die Ve asse die Dokumen e un e Open-Con en -Lizenzen (insbesonde e CC-Lizenzen) zu Ve ügung ges ell haben soll en, gel en abweichend on diesen Nu zungsbedingungen die in de do genann en Lizenz gewäh en Nu zungs ech e. Te ms o use: Documen s in EconS o may be sa ed and copied o you pe sonal and schola ly pu poses. You a e no o copy documen s o public o comme cial pu poses, o exhibi he documen s publicly, o make hem publicly a ailable on he in e ne , o o dis ibu e o o he wise use he documen s in public. I he documen s ha e been made a ailable unde an Open Con en Licence (especially C ea i e Commons Licences), you may exe cise u he usage igh s as speci ied in he indica ed licence. h ps://c ea i ecommons.o g/licenses/by/4.0/ The g ow h phenomenon: An analysis Hugh G. Cla ke Lewis S o es L d., Cape Town The au ho main ains ha g ow h -biological, physical, economic -is conce ned wi h he ans o ma ion o one o m o ene gy and ma e in o ano he . He analyses he way his ene gy is used and ela es his o business g ow h. Ene gy u iliza ion, en opy, ans o ma ion and main enance cos s, and he need o seek ene ge ic e iciencies, a e discussed. In his analysis o he mechanics o g ow h, and especially he sigmoid cu e, he au ho shows wi h examples ha a cha ac e is ic o g ow h is ha success ends o de elop he seeds o ailu e: ha one cha ac e is ic o no mal de elopmen al g ow h is he es ic ion imposed on ha g ow h by he o ganisms o o ganiza ion's genus. Business ailu e is seen as ine i able as he 'na u al' ageing p ocess and he au ho examines c i ical pe iods in which he business may ail. He concludes by examining s a egies o p olonging business 'li e' and u ges g ea e mul i-disciplina y esea ch in o he li e p ocess. S. A . J. Bus. Mgm . 1982, 13: 176-182 Die sk ywe bewee da g oei -biologies, isies, ekonomies -die ans o masie an een o m an ene gie en ma e ie na 'n ande behels. Hy on leed die manie waa op hie die ene gie geb uik wo d en b ing di in e band me sakeg oei. Ene giebenu ing, en opie, ans o masie- en onde houdkos e en die noodsaaklikheid om ene gie-doel e endhede e soek, wo d besp eek. In sy on leding an die g oeimeganika, en e al die sigmoide ku we, oon die ou eu me oo beelde aan da di 'n eienskap an g oel is da sukses neig om die saad an mislukking in e hou: da een eienskap an no male on - wikkelingsg oei die bepe king,op-g oei is wa die be okke o ganisme o o ganisasie se aa d daa op plaas. Die misluk- king an sake-onde nemings wo d gesien as ne so on e - mydelik soos die 'na uu like' e oude ingsp oses en die ou eu onde soek k i iese ydpe ke waa in onde nemings mag misluk. Hy slui a me 'n onde soek an s a eglee waa deu die 'iewe' an sake-onde nemings e leng kan wo d en plei i mee mul i-dlssiplin6 e na o slng oo die lewensp oses. S.·A . Tydsk . Bed y sl. 1982, 13: 176-182 H.G. a.I e 68 Dean S ee , Newlands 7700, Republic o Sou h A ica Recei ed Ma ch 1982; accep ed Augus 1982 The g ow h phenomenon Why do businesses o p oduc s ail? Wha makes hem succeed? These wo ques ions a e o emendous impo ance o he ma ke ing man. Ye , s angely, ma ke ing heo is s ha e paid ela i ely li le a en ion o wha can be called ' he g ow h phenomenon'. This is especially su p ising when one conside s he numbe o new business en u es and p oduc launches ha ake place each yea h oughou he wo ld -and which end in ailu e. E en well-es ablished, success ul gian s a e no immune om business ailu e. O he 20 la ges companies in he Uni ed S a es 40 yea s ago, only wo a e s ill among he i s 20 in size. O he I 00 la ges companies in he Uni ed S a es 25 yea s ago, almos hal ha e disappea ed o declined subs an ially om hei peak. 1 This pape examines he mechanics unde lying g ow h and sugges s he need o a new analysis. The g ow h p ocess Wha is g ow h? In a nu shell, g ow h -biological, physical, economic - is he ans o ma ion o one o m o ene gy and ma e in o ano he . Plan s ake ene gy om he sun, ai and soil and ans o m i in o plan issue; animals con e ene gy om plan s o o he animals in o physical issue; business o ganiza ions ake aw o pa ly p ocessed esou ces and wo k on hese o ge alue-added p oduc s o se ices. G ow h is mos spec acula and apid in ea ly li e. Howe e , his ea ly apid g ow h soon slows, which is no su p ising when one conside s he amoun o inc easing ene gy ha needs o be expended o main ain a cons an g ow h a e. I company sales double e e y yea (in housands) as ollows: 10, 20, 40, 80, 160, 320, 640, e c., one soon eaches a poin whe e es ic ing ac o s -lack o esou ces, space, ine iciencies o ope a ion, e c. - esul in diminishing ma ginal e u ns and he g ow h a e slows. The ini ial apid g ow h and subsequen slow-down is well depic ed by he sigmoid o S-shaped cu e so well known o ma ke e s (see Figu e 1). I s applica ion o he economy as a whole is shown in Figu e 2. We can apply his g ow h cu e o e e y aspec o he business, o example: Ca ee de elopmen (indi idual g ow h in he wo k si ua ion): s. A . J. Bus. Mgm . 1982, 13(4) ' ' I I ' I I I I I -•--•--•--• - ,.. - ------- -- •T • - - '·~-~-------------~-- I I I M• u 1 y ..... i .. ,, ' ' ,, Deel in• TIIM Flp e I Typical (p oduc ) li e cycle A-million 17001------+-------'-----+------1 Sales a cu en p ices 16001------+-----"-T""----+--------1 15001------~------+---- 14001------~----....a..-- Seasonal a ia ion elimina ed --· 13001-------------··· I. -- --+------ J 9- Te m Hende son cu e -- , 1100 ______ _ 1000 MJ SDMJ SDMJ SDMJ SD 1978 1979 1980 1981 A-million Sales a cons an 1975 p ices 900 i--------------..;------1 Seasonal a ia ion elimina ed --·- 850 --------------~~---~ 13- Te m Hende son cu e -- 750 700 650 I I' ··-----1 I I . ' : "' J SD MJ SD MJSDMJ SD 1978 1979 1980 1981 Re ail sales in cash e ms a e no g owing a he same a e as hey we e las yea and In eal e ms a e le elling ou , as can be seen om hese g aphs p epa ed by he Depa men o S a is ics. A cu en p ices e ail sales in he h ee mon hs ended May a e es ima ed al R1 519,5 million a mon h, which Is an inc ease o 1,6% on lhe p e ious qua e . Howe e , measu ed in 1975 p ices, e ail sales in lhe Ma ch-May qua e we e down 1,5% on he p e ious h ee mon hs. Flau e 2 Re ail sales in Sou h A ica 1978-1981 (Rep oduced om The A gus, May 26, 1981, p.31) Company g ow h ( om sole ade o mul i-na ional); Consume g ow h (pe haps based upon he consume li e cycle); 177 P oduc g ow h (launch, accep ance, g ow h, ma u i- y, e c.); Pe sonal g ow h ( om physiological and secu i y needs o sel -ac ualizing); Leade ship g ow h ( h ough he a ious s yles o managemen ). Cha ac e is ics o he g ow h cu e The S-cu e o g ow h may be di ided in o wo p incipal segmen s: he i s o inc easing slope, designa ed he sel - accele a ing phase; he second o dec easing slope designa ed he sel -inhibi ing phase. The shape o he cu e may ac- co dingly be said o be moulded by wo opposing o ces: g ow h-accele a ing and g ow h- e a ding. In he g ow h phase o , say, a p oduc launch, oppo - uni ies look good. Sales zoom o . T ading p o i s a e high. The cash ill keeps inging me ily. The co e s a e ull. Howe e , he ela ion and eupho ia ha goes wi h his suc- cess is ( ela i ely) sho -li ed. Much o he annoyance o he ma ke ing manage , o he compe i o s en e he ma ke chasing he luc a i e p o i s. As mo e compe i o s en e he ma ke , p ice-cu ing becomes he o de o he day as a ac ic o hold o inc ease ma ke sha e. P o i s s a o slide ... i 's a well-known s o y. In echnical e ms, his building-up phase o g ow h is called anabolism; he b eaking-down, o gi ing-up phase is ca abolism; he combina ion o he wo is me abolism. In ea ly li e, anabolism (g ow h) is p edominan ; in la e li e, he e is a dec ease in anabolism - a educ ion in heal hy li e-gi ing ' issue' - and ageing akes place. The ques ion is: why is he e an ine i able decline wi h age? Why do g ow h companies s op g owing; 'Blue Chips' s agna e; p oduc s ail? Why is he e he ise and all o in- dus ies and e en o na ions as economic powe s? Al e - na i ely: why can' he e be a pe pe ual enewal o he body? Why can' o ganiza ions su i e h ough con inuous adap- a ions? Why can' one ex end he p oduc li e cycle o e e ? Reasons o business decline Th ee easons can be pu o wa d o business ( o p oduc ) ailu e: The i s eason o business decline conce ns 'ene gy u iliza- ion'. To con e a company's inpu s (man, machines, ma e ials, e c.) o ou pu s uses ene gy which has o be paid o . This wo d 'ene gy' is used in i s b oades sense -powe o machines, cos o human e o , e c. Indeed, any sys em, business o o he wise, has wo ene gy cos s associa ed wi h i : (i) he cos o ans o ming ene gy o ensu e g ow h (p oduc i i y). (ii) he cos o main aining he o ganiza ion (main enance). The key wo d in 'ene gy ans o ma ion' is e iciency. O ganiza ions (and o ganisms) ha a e e icien in hei use o ene gy esou ces su i e. Thei cos e iciency in he use o esou ces gi es hem he compe i i e edge -i.e. g ea e p o i ma gins. This need o e iciency is a undamen al law o na u e. and o g ow h in gene al. So much so ha ce ain au ho s ha e 'bo owed' managemen p inciples ela ing o g ow h 178 om na u e, e.g. Louis A. Allen1 alks o he 'P inciples o Conscious Selec ion': Those o ganisa ional o ms will end o domina e which can bes selec and adap o hei own use he mos success ul cha ac e is ics o hei own and com- pe ing o ms. (A o m o Da winism.) Compa e ha quo a ion wi h he Law o Recapi ula ion in Biology which sugges s: 'Those o ms which a e mos e - icien ha e he leas need o change o adap o he en i on- men '. The Pick 'N Pay Hype ma ke s (wa ehouse- ype ope a ion) a e demons ably mo e e icien in dis ibu ing consume goods han hei supe ma ke s -as e lec ed by hei o e all lowe end p ices and g ea e o al p o i abili- y. Ye , Hype ma ke s (as a business o m) a e only mo e e icien whe e he e a e la ge consume concen a ions and mass ma ke s. They would be ou o place, uneconomic, in he u al a eas whe e he popula ion is dispe sed. In seeking e iciencies o ensu e g ow h he businessman mus con inuously s i e o ind be e answe s o he ollow- ing ypes o ques ions: Is he e any way I can imp o e my p oduc ( alue analysis enginee ing); lowe my p oduc ion o p ocu emen cos s (p oduc ion echniques; nego ia ions skills); inc ease p oduc i i y (mechaniza ion and au oma- ion; wo k s udy); imp o e ope a ing e iciencies (elec onic aids; cle ical assessmen measu es), e c.? Un o una ely, his ques ioning does no always ake place - he g ow h p ocess is no unde s ood by many ma ke e s who seem hell-ben on doing mo e o he same old hings, bu a a as e and mo e ene ic pace. I eminds one o he classic s o y o wo Mon e-Ca lo ally d i e s who ind hemsel es on a lonely Alpine pass, all bu blinded by hea y snow and og. The d i e asks his na iga o : 'How a e we doing?' 'Well', comes he answe , 'I don' know whe e we a e, bu we' e making excellen ime'. T uly, his is he way o ex inc ion. Fac ! The e is a la ge gap in many a manage 's knowledge o he g ow h p ocess; o how he e olu iona y and ma u a- ion p ocess wo ks; o how o eplace ageing and dying s uc u es wi h new and possibly be e ones; o how o main ain he o ganiza ion in a young and dynamic s a e despi e he ageing and decline o i s cons i uen membe s (e.g. leade s and wo ke s); and, how o cope wi h change. A second eason o business decline conce ns he 'na u al' ageing p ocess. In he same way ha wi hin an indi idual he e is a loss o skin elas ici y, educ ion in chemical eac- i i y, ha dening o he a e ies and o ela ed i al issues, so in business he e a e simila symp oms o old age and decline, o example, s a ic o ganiza ion s uc u e, li le use o he la es echnology, in lexible au ho i y s uc u e, i - ually no esea ch and de elopmen , inadequa e si ua ional leade ship s yle, e c. Time a ec s he o ganiza ion li e cycle, om bi h o dea h, and he e a e many c i ical pe iods when he business may ail, namely: 'Bi h' 'Pube y' will he o ganiza ion su i e beyond yea one? will he o ganiza ion su i e he spu o sudden g ow h and he demands made on i s limi ed esou ces? (e.g. S.-A . Tydsk . Bed y sl. 1982, 13( 4) cash low p oblems) 'The Ma u i y how does he company compa e and Phase' compe e wi h i s mo e igo ous and younge compe i o s? Unless he manage is awa e o he p oblems likely o be encoun e ed as he o ganiza ion g ows and has wo ked ou con ingency plans o deal wi h hem, he company will age much mo e apidly han i need. Typical ea ly wa ning signs o 'ageing' and ea ly business ailu e include: decline in com- pany sales and p o i s; inc easing le el o adminis a ion and selling expenses; educ ion in numbe o cus ome s; inc eas- ing p oduc obsolescence; wo sening cash low and inc eas- ing commi men s; depa u e o key pe sonnel, and so on. A hi d eason o business ailu e conce ns en opy. Acco ding o he second law o he modynamics, any hing le o i sel uns down. A mo o ca us s, a shop ge s di - y, a salesman loses his en husiasm, a business loses momen- um. (Tha 's why manage s a e employed, inciden ally, o con inuously p omo e inpu s and eju ena e li e.) In business, as elsewhe e, li e is g ow h. To quo e Amiel, 2 he F ench poe : The s a iona y condi ion is he beginning o he end. I you o ganiza ion is no g owing, o is g owing a a a e slowe han he indus y as a whole, i aces an ine i able decline. The implica ions o his asse ion o a company a e appa en om Figu e 1 (see do ed line) whe e he e is no g ow h. The mechanics o g ow h All his does no answe ou ea lie ques ion: why canno he o ganiza ion ca y on adap ing and egene a ing i sel / The answe is ha acco ding o biological heo y, all o ganisms beha e in acco dance wi h a p ede e mined design. Wha you do depends on wha you a e. Fich e,3 he Ge man philosophe no ed: 'The ype o philosophy a man adop s depends on he ype o man he is' (beha iou de e - mines a i ude?). Alexande 4 no ed ha ' unc ion de ennines o m'; Chandle 5 ha 's uc u e ollows s a egy'; Heidegge 6 ha 'Essence p eceeds exis ence', e c. They we e all saying basically he same hing: ha one cha ac e is ic o no mal de elopmen al g ow h is he es ic ion imposed on ha g ow h by he o ganism's (o o ganiza ion's) genus. In sho , one wo ks wi hin a limi ed amewo k. To be su e, some egene a ion is possible, cosme ic o o he wise. Theodo e Le i 7 showed how o do his o he p oduc li e cycle. The business can be mode nized, gi en a ace-li so o speak: a new managemen eam b ough in, o he e is a esh injec ion o capi al. Bu his does no ep esen a comple e enewal o he o al o ganiza ion. Indeed, i he S-cu e holds ue, business ailu e is in- e i able. (O e he long e m, admi edly.) Fo no ma e how dynamic you company is igh now, i con ains wi hin i , he seeds o i s own des uc ion. Powe s and size did no p o ec he dinosau ; he de elopmen o pe ec sab e ee h did no p o ec he sab e- oo hed ige . Ex inc ion is com- mon in na u e. O he 8 000 species o mammals ha ha e been known o exis , abou 4 000 ha e become ex inc - o en a he peak o hei e olu iona y glo y. A simila com- men could be made o many business empi es ha ha e s. A . J. Bus. Mgm . 1982, 13(4) •c ashed', e.g. Cen al Lea he Company, Unde wood Co - po a ion, In e na ional Me can ile Ma ine, e c. 1 To quo e S. B ody:8 The e olu iona y illus a ions on how success in e olu- ion may lead o e en ual ailu e sugges he idea ha an impo an cha ac e is ic o many biological p o- cesses, including g ow h, is ha success ends o de elop he seeds o ailu e. E e y hing, including g ow h, seems p egnan wi h i s con a y. Fo in- s ance, g ow h de elops a condi ion which may i s e a d g ow h in acco dance wi h he law o diminishing e u ns, hen inally s ops i . Ma ke e s would do well o ake no e o his cau ion. Hen y Fo d's concep o mass p oduc ion and uni o mi y ('Any colou as long as i s black') was pa ly s ymied by he consume 's desi e o a ie y and choice; he Swiss monopoly o he wa ch ma ke wi h mechanical imepieces was h own o e boa d by Japan's elec onic wiza d y; Sou h Wes A ica's ishing g ounds we e uined by injudicious managemen and o e -exploi a ion. Success b eeds success -and ailu e! The Hype ma ke , success ul as i is now, may -wi h ime -become a gigan ic 'whi e elephan ', a p ey o i s own policy o oo wide a ange o goods a low p ices, o in- c eased en als and unning cos s and new me hods o con- sume shopping. The 'in incibles' a e all oo o en anquish- ed- ake he Ame ican mo o indus y, Angl~F ench Con- co de, he oil companies' cu en need o di e si y. This is no jus a ma e o echnology, ma ke o ces o en i on- men , bu o en oo much commi men o an ou da ed o ganiz.a ional li e-s yle -i.e. lack o he igh deg ee o cli isionaliz.a ion, depa men aliz.a ion, decen aliz.a ion, and so on. Is he e a connec ion be ween business g ow h and na u al g ow h? Jus in case any eade s ake a scep ical iew o he connec- ion be ween he na u al g ow h p ocesses and business g ow h i is well o compa e he wo wi h a speci ic example. This can be done bo h desc ip i ely and isually. Compa e he ollowing 'p oblems' ha occu in he g ow h p ocess: Human being P oblem: Human body which in- c eases wi h he cube o linea size, while he s eng h o he suppo ing muscles inc eases wi h he squa e o linea size. Resul : The body becomes uns able unless g ow h o he suppo ing muscles is p opo iona ely mo e apid han ha o he body as a whole. This ac ually occu s. Summa y: The o ganism changes (adap s) in o m so as o emain physiologically s able. Business conce n P oblem: As business sales olume inc eases, he o ganiza ional s uc- u e necessa y o main ain he g ow h a e changes. Resul : The o ganiza ion becomes ine icien unless he e is an ex- pansion o adminis a i e o ices; decen aliza ion; de elopmen o new di isions, e c. This ac ually occu s. Summa y: The o ganiza ion changes (adap s) i s s uc u e ac- co ding o he law o unc ional g ow h.9 The 'simila i y' be ween his need o s uc u al change du ing g ow h is shown in Figu e 3. 179 Figu e 3 The simila i y be ween he need o s uc u al change du ing g ow h (Human ana omy om Encyclopaedia B i annica, 1962, Vol. 10, p.922) G ow h, hen, in business o in physical li e, depends on he 'o gan' ma u ing in an o de ly way and i s s uc u e be- ing able o cope wi h expansion. Failu e o de elop he igh s uc u e is one o he delimi ing ac o s o g ow h. This poin has been no ed ime and again in he di e en disciplines. Fo example, sociologis s ha e no ed ha social o ganiz.a ions expand un il he communica ion ne wo k eaches a c i ical le el a e which he e is a 'communica- ions b eakdown'; s a is icians poin ou he need o s an- da d beha iou : he end owa ds cen al endency; physicis s e e o he concep o c i ical mass. In a wo d, homeos asis egula es he sociobiological en i onmen . In sho , ailu e by he businessman o make he necessa y changes b ough abou by g ow h, leads o o ganiza ional ine iciency wi h a esul ha company esou ces a e no employed as p o i ably as hey migh be. E en ually, he company su e s. The g ow h cu e: key ques ions and applica ions I is p obably well accep ed ha he S-cu e ep esen s a ac o business (o any o he ) li e. I implies ha wi hin a ime amewo k (unspeci ied a he momen ) he o ganiza- ion will g ow, ma u e and die. Th ee ques ions he e o e a ise: Wha a e he dis inguishing cha ac e is ics in no mal de elopmen al g ow h in business o ganiza ions? Is he e some in eg a i e p ocess binding he many business componen s in o a ha monious whole o achie e o main ain a ce ain desi able s a e? L 180 Wha is he ela ionship be ween he indi idual com- pany and he o al indus y and can ' ise and all' be p edic ed h ough ime? Le us discuss hese ques ions indi idually: Dis inguishing cha ac e is ics The g ow h-accele a ing phase o he S-cu e mani es s i sel ea ly in he his o y o he company ( o indi idual, o popula- ion) p io o g ow h- es ic ing o ces in he en i onmen . Ea ly g ow h ends o be a a cons an pe cen age a e in a geome ic p og ession -e.g. an ROI o (say) 10%. Le us assess he a ec o his in es men o e ime: Ini ial In es men RIO 000,00 F.nd o Yea 2 3 4 s 6 7 II 000 12 100 13 310 14 641 16 105 17 71S 19 487 8 9 10 II 12 13 14 21 435 23 579 25 937 28 S31 31 384 34 522 37 974 As you can obse e, he e u n doubles a cons an in e als. O cou se, in ac ual ac managemen does no se i s yea - ly g ow h a ge s a a cons an pe cen age -e.g. o 100/o g ow h each yea . This igu e a ies acco ding o he economic clima e, in la ion a e, and so on. Ne e heless, in eal e ms, he g ow h a e ends o be cons an , o ex- ample, he o al physical olume o goods and se ices in he Uni ed S a es has been g owing a a a e o abou 3o/o pe yea and he eal olume o goods and se ices has been doubling abou e e y 25 yea s.1·P·117 See Figu e 4. Howe e , soone o la e , (and we shall discuss he ime ac o in he business li e cycle la e ) es ic i e o ces de elop in he in e nal o ex e nal en i onmen o p e en such exponen ial g ow h om being main ained. Bo lenecks o g ow h occu : lack o skilled manpowe ; limi a ion o inancial esou ces; lack o su plus capaci y on machines; High I l Low Tiling High ask and low ela ionship s.,g High ask and high ela ionship S.-A . Tydsk . Bed y sl. 1982, l3( 4) • Seasonally adjus ed annual a es. 1T end line o 3,5% om middle o 1955 o 1962 IV; 3,75% om 1962 IV o 11185 IV; 4% om 1965 IV o 1969 IV; 4,3% om 1969 IV o 1970 IV; 4,4% om 1970 IV o 1971 IV; and 4.3% om 1971 IV o 1975 IV. Sou ces: Depa men o Comme ce and Council o Economic Ad ise s. Figu e 4 G ow h a e o goods and se ices in he US (Rep oduced om Robe Do man, P ices and Ma ke s, 2nd ed., P en ice-Hall, Enge)wood Cli s, 1972, p.214) o e loading o he communica ion sys em; and many o he s. The end esul is ha g adually g ow h changes i s cou se om being p opo ional o he g ow h al eady made, o be- ing p opo ional o he g ow h ye o be made o each ma u i y. The c i ical o u ning poin in he de elopmen o any business is he e o e he junc ion o 'majo in lec- ion' be ween he sel -accele a ing phase o g ow h and he sel -inhibi ing phase. Once his u ning poin is eached, he o ganiza ion (o o ganism) s a s g owing mo e slowly and e en ually shows no g ow h a all. The ac ha he majo segmen s o he g ow h cu e can be so simply desc ibed does no mean ha g ow h is a sim- ple p ocess. Ye , e y o en i is desc ibed pe haps wi hou he au ho being awa e ha he o she is desc ibing g ow h. Take e ec i e leade ship s yles, o ins ance. Va ious au ho i ies -e.g. Reddin 10 -ha e sugges ed ha e ec- i e leade ship s yles depend on he ma u i y o ollowe s. A ypical illus a ion o his ela ionship is shown in Figu e 5. Pa icipa ing Low ask and high ela ionship ' ' ' Delaga lng (Abdlca loll) Low ask and low ela ionship ' ' ' Sales and P o i s High ~-----------Task blha icu ------------ Low I Au oc a ic C.OOSUl a i e 1aa e 5 Leade ship s yle ela ed o company li e cycles Moni o ing j Scope o mallllglllM l incompe ence as o ganisa ion expends S. A . J. Bus. Mgm . 1982, 13(4) I is a guable ha his 'leade ship s yle' cu e p ecisely ma ches he g ow h cu e, i.e. in a ela i ely young and im- ma u e o ganiza ion, leade ship is au oc a ic and p oduc ion-o ien a ed. This ensu es a high a e o ini ial g ow h ( elling). This 's yle' is g adually supe ceded by a 'selling s yle' in which he e is mo e consul a ion be ween leade and ollowe _ i o no o he eason han he leade canno cope wi h e e y hing and mus s a ge ing his subo dina es in ol ed. This endency accele a es in he pa icipa i e phase in which mo e and mo e decisions a e 'handed o e ' o lowe le els o managemen . This can esul in an o e all weaken- ing o leade ship and a decline in sales and p oduc i i y i lowe le els o managemen a e un ained o poo ly mo i a ed. And e en ually he emphasis is on comple e delega ion in which decisions a e aken 'down he line', hus gi ing younge managemen a chance o ' ake o e ' om he old o de . Howe e , injudicious decen aliza ion (and di isionaliza- ion) a e p ecisely wha weakens he o ganiza ion -e.g. lowe le els o managemen a e gi en esponsibili ies and asks beyond hei le els o compe ence - he Pe e P inciple; 11 gene al and adminis a ion expenses c eep up; di isions compe e o company esou ces and wi h weakened op managemen , co po a e policy is no s ong enough o bind he a ious di e se elemen s oge he ; o e all pe o - mance su e s. I is a e o ind apid g ow h in any powe - sha ing si ua ion -be i business, poli ical, o wha e e . O cou se, his is only a scena io. Ne e heless, he e seems some u h in he ac ha we a e wi nessing he im- pac o he g ow h cu e. In eg a ing componen s du ing g ow h We men ioned ea lie ha di e en pa s o he human body de elop a di e en a es du ing ea ly emb yonic g ow h so ha he o al o ganism emains s able. The same con- cep applies o business, o example, p oduc ion acili ies and capaci ies mus be expanded in ad ance o ca e o an- icipa ed ma ke demand; sho - e m cash (liquidi y) e- qui emen s mus be ca e ully balanced agains long- e m in- es men s which migh ie up cash; he e u n on capi al om exis ing s o es o depa men s weighed up agains e u ns ha migh be ealized om new s o es o ex ensions, and so on. Unless he business expands in an o de ly and co- o dina ed way, i 'dies' in a e y sho ime. The e a e simply hund eds o ins ances o mismanagemen ; o gian com- panies olding, pe haps because, while hey had eno mous asse s, hei cash low was inadequa e o keep hem going in he sho e m. A key concep he e is 'di ec pu posi eness'. G ow h o any emb yo is di ec i e de elopmen , he p oduc ion o an o ganism in acco dance wi h a p e-de e mined design. G ow h wi hou di ec i e pu pose (as in he case o cance cells which simply sel -mul iply) leads o he des uc ion o he o ganism. The same applies o he business o ganiza ion. Ano he key concep is 'an icipa ion' o u u e needs. In na u e, such an icipa ion is o en inna e, he an icipa ed e en being p epa ed o long be o e he e en -e.g. he 181 mamma y gland is de eloped in an icipa ion o he possi- ble ~i~h o an i~ an . And his 'an icipa ion' is also a key eqms1 e o busmess -success ul businesses a e known o ha e o esigh , o an icipa e, o scan he en i onmen o change. The ques ion is: wha is he in eg a i e p ocess which binds he many business unc ions -sales, p oduc ion, inance, R. & D., pe sonnel, e c. -in o a ha monious whole o achie e, de elop o main ain a ce ain desi able s a e? The answe : 'e ec i e leade ship'. Time pe spec i e on business li e cycle The hi d ques ion ela es o ime. Can we p edic he ise and all o an indi idual company, g oup o companies, o indus y as a whole? He e, we a e on much mo e dange ous g ound and such p edic ions a e augh wi h dange as any commen a o on Gallup Polls o s a is ical o ecas ing will ell you. Ne e heless, i he g ow h phenomenon is pa o a na u al p ocess, as we ha e claimed, some commen s mus be made. Acco ding o he g ow h heo y, he ageing a e is, as a ule, di ec ly p opo ional o he ma u a ion a e: ha is, he soone 'cells' cease mul iplying, he soone hey ge old. (The cells in he business sense would be people, p oduc s, p o i s, e c.) The maximum du a ion o li e is abou i e imes he pe iod aken o each ull body size. Fo ins ance, he max- imal du a ion o human li e is abou I 00 yea s which is abou i e imes he pe iod aken o each ull body weigh and heigh . The e a e, o cou se, indi idual and species a ia- ions in his espec . This ma u a ion p inciple seems o apply o business. O en businesses which g ow quickly, decline quickly, while slowly de eloped o ganiza ions may ace a slow decline and linge ing dea h! O cou se, a ious o he ac o s a ec his g ow h/age- ing ela ionship. Fo example, in animals and humans he e is a nu i ional ela ionship be ween he a e o g ow h and he a e o ageing. In expe imen s on a s i has been shown ha ichly ed a s ( apidly ma u ing) li e a sho e pe iod han unde ed (slowly ma u ing) a s. Insu ance companies a e well awa e o he lowe li e expec a ions o o e ed adul s! The signi ican poin is ha while unde eeding in- ol es se ious haza ds, hese a e no as g ea as o e eeding. Rela ing his o he business o ganiza ion, one can sugges ha businesses which incu 'o ganiza ional slack' o ' a ness' (high expense a ios, an easy wo k a e, o e -depa men- a ion, o e -s ocking, e c.) will ace an ea ly dea h as p o- i s slide. Con e sely, a igh ly- un business wi hou 'ex- cessi e plumpness' has a g ea e chance o longe su i al. Exac ly when a slowing up o g ow h akes place, can be de e mined (and possibly p e en ed) by analysing he g ow h-inhibi ing ac o s bo h wi hin he o ga~iza~ion and in he en i onmen . Fo example, a sales o gamza 1on may ind ha g ow h p oceeds in a geome ic p og ~sion (~ discussed ea lie ) and hen suddenly s a s slowmg. Thi: slow-down e lec s he in usion o a c i ical ac o and sug ges s a need o ake a comple e elook a ma ke ing s a eg and s uc u e and he need o igo ous ac ion su~~ ~ employing addi ional sales s a , ~ ing m? e sales amm boos ing ad e ising expendi u e, m oducmg new p oduc 182 decen aliza ion, o wha e e app oach is app op ia e. The g ow h cu e - a poin e o he u u e The Sigmoid g ow h cu e is an inexo able ac o li e, business o o he wise. I is a ma hema ical ep esen a ion o a na u al phenomenon ha should no be igno ed by he business o ma ke ing man. The su p ising hing is ha i is used so li le. Pe haps because i is so li le unde s ood. No one, o cou se, is saying ha he issues in ol ed a e s aigh o wa d. The e a e many di e en easons why he g ow h o a business (o p oduc ) slows and ageing akes place and any numbe o 'c i ical ac o s' can a ec he ou - come, e.g. a ailabili y o esou ces and esou ce u iliza ion, communica ion b eakdown, en i onmen al ac o s -social, poli ical, economic -compe i i e ac ion, supply es ic- ions, and so on. The in e es ing poin hough is e en i he e a e no 'c i ical ac o s', he company s ill ages -in much he same way ha man ages i espec i e o whe he his en i onmen is hos ile o benign. (O cou se, a hos ile en i onmen has ens he ageing p ocess.) The 'g ow h phenomenon' ells us ha he e en ual decline o a business is ine i able om a combina ion o e olu iona y necessi y ela ed o he 'su i al o he species'; he accumula ed e ec s o 'wea and ea '; a g owing in- abili y o he o ganism o adap o he changing en i on- men ; om a homeos a ic imbalance wi hin he o ganiza- ion; accummula ion o 'me abolic was e'; ageing o business s uc u es and e en wha migh be e med 'disease'. The as onishing hing is ha he e a e so many simila i ies he e wi h na u e. This sugges s he need o businessmen in gene al, and esea che s in pa icula , o in es iga e u - he he g ow h phenomenon, o look a he mechanics and mechanisms ela ing o g ow h and o pu his knowledge o judicious use. In he same way ha mode n medical science has p o- longed he a e age li e span o man, so oo mode n business esea ch should be conce ned wi h p olonging he li e o business o ganiza ions. Pe haps he e is a call o de elop disciplined and co-o dina ed esea ch in o business ailmen s, much along he lines o medical esea ch, o example: Medical ean cll Emb yologis s udies emb yonic pe- iod o g ow h and he mechanisms ha make he emb yo g ow, and how o modi y i . Business pa allel Inno a ion specialis s udies he 'iMo a ion idea' and o wa ds i o ui ion. S ee s he company h ough i s 'binh pangs' and se s i success ully in he way o ma u i y. S.-A . Tydsk . Bed y sl. 1982, 13( 4) Cy ologis and his ologis s udies he s uc u e and unc ion o indi idual cells in g ow h and how g ow h occu s by cell di ision, cell enla ge- men , di e en ia ion and so on. Mo phologis s a e conce ned wi h p oblems o o ganiza ion, wi h he way di e en kinds o cells a e p o- duced, assembled in o di e en o gans, and de eloped in o bodies o di e en shape o o m. The cance specialis s udies he mechanisms whe eby some cells la e up in an uncon olled manne , o e - unning, choking and inally killing he body. O gani'l.ll ion and me hods manage makes an analy ical assessmen o o ganiza ion s uc u e and unc ion how g ow h occu s by di isionaliz.a'. ion, di ision enla gemen , di e en- ia ion, and so on. The • me ge s specialis ' is conce ned wi h oppo uni y a eas, wi h he way di e en kinds o businesses a e assembled in o o ganiza ions o a new shape o o m. The labou ela ions o ice p e en s p oblems om la ing up in an un- con olled manne : wild ca s ikes, labou discon en and slow downs, e c. which cause inancial loss. I could well be ha ma ke ing and ma ke esea ch could bene i om becoming, in a sense, uly in e -disciplina y, o lea ning he lessons p o ided by he housands o man- hou s spen on esea ch in o he ields, a he han emain- ing in i s own 'p opi ious niche'. Pe haps he e is a need o wide ho izons. A e all, g ow h is a uni e sal phenomenon and an unde s anding o he undamen al con- cep s unde lying g ow h is ce ainly a wo hwhile pu sui . Re e ences I. Allen, L.A. The Managemen P o ession. New Yo k: McG aw- Hill, 1964. 2. Amici, H-F. (1821-1881). F ench Poe . Sou ce o quo a ion unknown o au ho . 3. Fich e, J.G. (1762-1814). Ge man philosophe . Au ho o nume ous publica ions including his Wissenscha sleh e (1797) om which quo a ion aken. See S oll, A. & Popkin, R.H., In oduc ion o Philosophy. New Yo k: Hol , Rineha and Wins on; 1962. 4. Bowden, G.C.F.M. Ma hias Alexande and he C ea u e Ad- ance o he Indi idual. London: Camelo P ess, 1965. 5. Chandle , A.D. Jn ., S a egy and S uc u e. Camb idge, Massachuse s: The M.I.T. P ess, 1962. 6. Heidegge , M. Being and Time. T ansla ed by J. Macqua ie and E.J. Robinson. Ha pe and Row: New Yo k, 1962. 7. Le i , T. Inno a ion in Ma ke ing: New Pe spec i es o P o- i and G ow h. New Yo k: McG aw-Hill, 1962. 8. B ody, S. Bioene ge ics and G ow h. New Yo k: Reinhold Publishing Co p., 1945. 9. Flippo, E.B. Pe sonnel Managemen . (5 h ed.) Tokyo: McG aw-Hill, 1980, p.63. 10. Reddin, W.J. Manage ial E ec i eness. New Yo k: McG aw- Hill, 1970. See also Fiedle , F.E. A Theo y o Leade ship E · ec i eness. New Yo k: McG aw-Hill, 1970; Blake, R. & Mou on, J. Manage ial G id. Hous on: Gul Publishing Co., 1964. 11. Pe e , L.J. & Hull, R. The Pe e P inciple. New Yo k: William Mo ow and Company, 1969.