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
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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.