The Growth That May Not Show

What do you call growth? Increase in size and scope of operations? What is the hope in this kind of growth? Increase in market share? But market share is relative, meaning that you can’t grow larger than 100 percent, the pure monopoly. Is it continued increase in profits — the proper motivation for the growth obsession? One can also imagine a limit or supremum to how much profit can be made, even in a perfect monopoly, because resources are finite. So when you tank at 100 percent market share and are very well profitable, what is left is to leave, expand your portfolio, maintain your position and/or become totally tyrannical. It’s a nice place to be.

But if the structure of society/nations doesn’t permit that, you could either try to restructure society and the nations, and/or enjoy the vagaries of competition and chance in business. The point we’re making is that everything tanks somewhere or at some point. So we ask, is it possible to chose your size and maintain ‘successful’ operations despite the operating environment? What conditions would be necessary for this.

Most organisations have a growth obsession, and perhaps, rightly so. Because growth may be translated to profit. And even where it doesn’t translate to profit, a ‘good’ objective is to have minimal competition, insuring dominance and long term profitability and existence. Every going concern has to have a strategy to remain so. Every one, we assume, wants to be successful. And more, to be seen to be successful. These are the origins of the growth obsession: power, pride, survival.

If survival is the primary and overarching motive, then business growth, as is commonly understood, isn’t a necessity. How many profitable one-man or small businesses do you know or see around that have been operating for decades without visibly growing. On a bigger scale, the Semco group of Brazil deliberately control their size, minimizing the temptation to get acquired or to acquire new operations. It is said that they’ve implemented sales and human resource policies that have ensured profitable operations in their environment without over-expanding, for decades.

Could we choose where to tank per time whilst ensuring sustained success, without the pressure to survive and complicate management by expansion. It would at least mean respecting our abilities and capacity as a person or organisation, understanding the competitive and operating environment, potential/likely industry trajectory, and committing your objectives to wisdom.

This brings us to the notion of ‘invisible’ growth, something akin to maturity and the realities of our human experience. We all stop growing physically at some time, but our bodies continually regenerate cells, flushing out the old and bringing in the fresh. We also grow in knowledge, understanding, and wisdom. So that there’s a constancy to our appearance and a growth within that can be seen in the fruit we yield and that we still live.

If we hold on to that which is true, our tenacity keeps us from falling; we’re growing against a decay, so that people see a constancy. The underlying growth is hidden. Therefore, it is an attribute of growth to not regress from our current states when true and good. We may thus regard the act of maintaining sound practices as growth in itself. This growth is the growth of renewing and refreshing (i.e. a cultivation), not of change in height or status. Clearly, creating and maintaining some special relationships require the cleverness of renewing and refreshing those relationships (as with CRM). That is cultivation that leads to growth, a growth within constancy or permanence.

This is a growth where one is still: we aren’t stagnant since the cells of your bodies are continually renewed even while one greys. Procter and Gamble have rebranded a lot of their products countless times. It helps to keep and renew a product in the face of the people to keep it going. That’s the benefit of having traditions. It keeps hope alive. Products and services do not need to suffer from the decay that is of nature. They can be cultivated and made into a full grown tree, bearing fruit in its seasons.

Footnote/Asides:
CRM = Customer Relationship Management.

Growth is always at something’s expense. So we may choose to consider whether the expense is worth it. A number of environmentalists are of the opinion that the price we pay as a biological system for mining and burning fossil fuels at the current rate is too high for our future to bear.

If like Apple you have tens of billions in cash, most of which you choose not to share, and supposedly more than enough to maintain your competitive edge, what do you do? Buy up/into your supply chain, making you vertically integrated. Buy RIM and IBM if you could? Go into supercomputers? And then what? What about digging deeper roots in order to tank? Perhaps it’s some credit to apple they’ve been growing without radically expanding their their core businesses. And both them and Microsoft etc. are looking for new core businesses—and more importantly, relevance for the future.

Tanking requires strategic positioning and perpetual vigilance; it’s an equilibrium state that is potentially highly dynamic. So situations may not be right achieve and maintain it.

Couldn’t your businesses grow and maintain great market share and profits without necessarily growing its size. Let’s try to be as effective as possible, then as efficient as possible, before probably deciding that we need a new house. But why strain ourselves if we can already get the new place? Probably because we need to have learned some lessons from experience.

Social Organization Design: The CIA Framework

This is an acronym for three essential things to maintain in a human system. It also serves as a guide to defining responsibilities and the kinds of actions and interactions that should describe a ‘good’ working system.

CIA, here, isn’t for the Central Intelligence Agency, rather it’s an acronym for Confidentiality, Integrity, and Availability. Three words that characterise and/or are fundamental in human relations, risk management, and organisation design. CIA represents a framework for principle centered design and decision making, particularly as it relates to human social systems.

All business organization is social because business is a social activity. Even the one man business has to relate with customers. In fact many businesses factor in the customer in their organisation design by defining rules, explicitly or otherwise, for the customers to follow. The understanding and correct treatment of the customer as an essential part of the social organisation of a business makes the business appear more responsive (in general) to their customers.

Think about the rules you might have been taught (or learned ) to follow by (or because of) the people and businesses you relate with.

In the ‘business’ of the marriage relationship, the husband and wife would have to maintain each other’s confidentiality since many things between them are for their ears/lives only. Each one keeps a personal integrity and helps the other with keeping theirs to ensure they both maintain their marital and family integrity. Also, they’d both ensure their availability, physical and otherwise, to each other. Hence, considerations of CIA affects when, how, and why they relate in different situations relevant to the context of marriage.

Picture the stereotypical three-girl group of (TV) friends in their friendship; that close-knit all female clique with passionate-cum-fearsome loyalty to one another, to their gang, and to certain ideals. CIA is implicit in their actions and interactions.

With reference to Information Technology (IT), system and data confidentiality, integrity, and availability (CIA) drive some business policies and practices. We can see how redundant systems, and the frequency, types, and location of backups support system integrity and availability. Also, it’s obvious how encryption, certificate authorities, user/login authentication etc promote confidentiality and integrity. Control processes and monitoring systems are there to ensure adequate confidentiality, integrity and availability are maintained.

So, with CIA, and adequate background knowledge or experience, one could write an IT policy document in about an hour, or, say, for operations at a tranport terminal …. And since IT policy is essentially risk management, the CIA criteria that drive it could also be used to drive risk management in other areas.

The use of CIA in the context of risk management necessarily runs on the assumption that the person, interaction (man-man, man-machine, machine-machine), or machine can be compromised or may act undesirably. Its output would thus try to achieve the implementation of systems/structures to guarantee—if at all possible—the acceptable behaviour. It would seek to minimize weaknesses and threats and/or maximize strengths and opportunities. In all this, the underlying assumptions matter greatly. And this is perhaps where experience or domain expertise matters most.

Because human systems are everywhere and exist in various contexts; because man, and man-made systems may fail; and because potentially influential interacting systems exist or may be encountered, we innately or explicitly perform risk management. To be truly conscious of this is to be conscious of our assumptions.

The wisdom of the separation of powers in government and governance is first in the need to preserve the integrity of the constitution. That a judiciary, legislature, and executive, are independent, and are not concentrated in one person, is deemed generally sufficient (as assumed) to mitigate the risk of elected leaders letting loose an inner tyrant or thief or fool over the nation. It hasn’t always worked, but it is good design. It doesn’t seem to work well every time, but the design works.

Designed organizations, whether consciously so or not, are everywhere. Recognizing this, we may see a place for us to act so that the system functions ‘better’. Looking around, we may come to see CIA as the basis of the decision making or operation structure of the Mafias, intelligence agencies, secret societies, sororities, fraternities, the Roman Catholic Church institution, G8 meetings, Bin Ladin and company, Harvard admissions etc—basically every company, institution or group. The good use of it is implicit in all-human sub-systems that survive the long walk.

Risk Management—An Optimization Problem.

Risk management is information gathering about, and analyses of actual or potential risk scenarios, that leads to facts and assumptions (or intelligence); on the basis of which, systems and structures or a programme of action, are designed, implemented and maintained in order to ensure that the crystalisation of the risk scenario (or its possibility) is averted, eliminated, or minimised.

It involves creating and maintaining risk prevention, aversion, and minimisation structures to maximise the likelihood of an identified success or positive objective: the minimisation of any negative effects of risk crystallisation, and/or prevention or elimination of risk situations.

A necessary implication in practice is that this attempt to maximise a status, tends towards minimising the crystallization of potential or actual threats (risks). Here lies the basis for the definition of the desired ‘success’ or positive objective.

The objective narrative, to minimise risk, puts one in ‘aversion’ mode. But, the practice of risk management is better viewed from the perspective of preservation rather than of aversion, its dual. In the sense of the above paragraph, to maximise rather than minimise. Reason being that there might be a myopia in the formation of the corresponding constraints for a minimisation of risk that may lead to potential restrictions or non-consideration of legitimate or acceptable means of business. Maximization thinking gives consideration to actual business objectives and facilitates more possibilities (open thinking) with respect to the constraints while trying to adequately manage risks.

When a risk has crystallized you slip into the crisis management aspect of risk management, which may be an optimization problem — to get the best out of an unwanted situation. Some might argue that this is not an aspect of formal risk management practice. Considerations and implementations differ. What is important is that, because risk is what it is, there should be a system to deal with crystallized risks (when your fears come to pass). Trying to alleviate the effects, finding and using some gain in them, managing (live with/through) them or countering them are possible approaches. Regardless of the situation, the optimisation objective remains the maximisation of a utility.