Monday, August 06, 2007

Are we growing too fast?


The world as we see today is plagued by a number of problems. We have people, population, pollution, poverty as the chief concerns of all major nations of the world, India is no different. At the same time we are witness to what some may call phenomenal growth and advancements in almost all frontiers of social concern and significance. Economies around the world are strengthening, technology is advancing by leaps and bounds, and the buying power of people is increasing without constraints. The minor fears of the world evolving into a society devoid of cultural and ethical values are largely unfounded. So, how can we explain the various troubles that are dominant even in this expanding growth environment?
Let us try to solve this puzzle by taking a scaled down example of the world (or a nation like India). Consider a company which has emerged as a major player in some advancing sector of a growth oriented industry, let us call this company X (you could as well like to call it Apple, Google, DELL, etc. because the story is not too different). Now, when X started off as a small business venture, just beginning to surface up, showing small sales (but huge growth rates), the managers at X got a bit dizzy with the ‘alarming’ growth rates. They tried to improve their infrastructure but at the same time had to maintain sufficient liquidity so in short it was hard time playing the balancing game. Sales figures rocketed to unimaginable heights, revenue flowed in uncontrolled, workforce had to be increased exponentially, growth became a really ‘too hot to handle’ commodity. Largely unnoticed, the company X became such a big firm that some sections of the company always had troubles. Asking the planners of X to slow down on the growth rate was unquestionable but something had to be done, and something was done in the end. So, the question is what was done and what should be done when you are faced with a growth epidemic? Apple met the growth crisis by siphoning the revenues into new projects, innovations and facilities. Google was (and is) growing at such a fast pace that it had to ask its engineers to STOP INNOVATING and instead channel the energy and resources to make the existing products more efficient. DELL had to segregate the company into smaller, manageable sections so that the accumulative growth may be sustained while dealing with growth scattered around in smaller packages would be an easier task.
As you can see, there is no standard mechanism to fix this problem. But the first step towards solving any problem is to acknowledge that the problem exists. The fallacy that growth is always good has to be challenged soon. The solution may not necessarily lie in curbing the growth deliberately but rather finding out means of controlling it at will.

3 comments:

descrying the shadows said...

Hey interesting point made but i guess u missed the fact that it is this uncontrolled growth that has provided the kind of vistas for employment we have today in many countries...think about what it would be like if there would have been no IT boom..where would INdia be where would we be??

Mudit said...

" The fallacy that growth is always good has to be challenged soon..."

X has adopted different strategies to cope up with their growth whether it is acquisition , refining the product or something else but they have never stoped.Apple has released i-phone and is working on Apple TV and Wi-Fi Pods.
In this world of cut-throat competition ,you need to do something to be on the par with the best.It is not a fallacy that the growth is good until it is contolled,balanced and managed propely.Afterall ,only the fittest survives.

Harsha said...

Hey nice post, but see the ultimate aim of any company, X or Y, is to earn profit and increase it profit margins with time.
Now when a company starts small, it begins with a particular product and as its market share increases it has to crater to the customers new demands and also differentiate its product from the competitor's. So it should focus on value addition and innovation.
Many a times the companies diversify and enter new sectors depending on their potentials.
But innovation will always be the key. You cant not reinvent the wheel, you have to prove to customer that your product is the best option, taking into consideration various factors that affect customer's decision. End of the day, the customer is the king so either the product developed should have a ready-made market or else the company should develop a market for the same.
And it just not the product that makes the difference the company should have strong management and marketing strategies to sell the products effectively and maximise the revenues.