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How Businesses Block Business Growth and Why They Do It

While trying to understand the phenomenon of business growth and how it could be replicated across different business contexts, I came across a book by Edward D. Hess and Jeanne Liedtka titled The Physics of Business Growth: Mindsets, System, and Processes (Stanford, CA: Stanford Briefs, 2012). In the book the authors distilled the results of their more than 15 years of research in studying business growth, and the first chapter of their book describes how businesses themselves are engaged in Fighting the Physics of Business Growth.

The study is revealing, and the research findings long suspected, but rarely presented with proof. In the first chapter, the authors say, "Through our research and work with businesspeople, from frontline managers to CEOs, we've concluded that organizations are often their own worst enemy."

How businesses impede business growth

The principal manners in which organizations impede their own business growth, according to Hess and Liedtka, include:
  • Not providing managers and employees the tools to find growth

  • Perpetuating business mindsets and processes that are averse to recognizing people who stumble upon growth opportunities

  • Static corporate cultures, measurements and reward systems visualize out-of-the box business growth as an unnatural act

In this research published in 2012, the authors hold that current business components including people, process, culture, measurements and rewards are quite often at odds with the "physics of growth" because it is something radically different from what ordinary managers view as achievement-oriented work.

Businesses impede their own growth when they do not set aside or allocate resources for activities that do not have predictable results.

Why businesses ignore activities that lead to business growth

Ordinary businesses run on processes that conform to stability, predictability and linearity. On the other hand processes that eventually result in business growth lack predictability, and involve exploration, invention, and experimentation.

When growth occurs, it usually occurs through the sheer courage and tremendous efforts of business managers and business leaders who ignore all criticism and entertain risks to their careers in order to achieve breakthroughs. If they succeed, sometimes they find appreciation, but, more frequently, when they fail, they lose their jobs.

This risk-averse mindset shackles business growth, and optimization of resources to the extent of stopping growth-oriented activity results in business stagnation.

The problem that businesses face in a globalized and tight economy is that they cannot engage in exploring new growth models and rather depend upon outside organizations that make research their main endeavor to provide growth strategies.

This happens because the recession made sure that every business becomes acutely aware of resource optimization. Exploration of new avenues is a high-variance activity, and as total quality management (TQM) suggests, "variation is the mother of waste," and though it remains the mother of invention, exercises involving high-variance in output is effectively ignored by business organizations, and thus they fear to pursue new avenues of business growth.