Introduction

Most people like to work for growing organisations as they provide more advantages, such as promotional opportunities, resources for investments in new technology, new opportunities, etc. On the other hand,

"...Roughly one company in ten is able to sustain a kind of growth that translates into an above-average increase in shareholders' returns for more than a few years. Too often the very attempt to grow causes the entire corporation to crash. Consequently, most executives are in a no-win situation: it is demanded that they grow, but it's hard to know how to grow. Pursuing growth the wrong way can be worse than no growth at all......as most growth markets become saturated and mature, it is very hard act to continue to grow..."

Clayton Christensen et al, 2003

Some questions that need to be answered

- Why is it so hard to sustain success?

- Are there predictable reasons organisations stumble?

- How can you start an organisation that will topple the current industry leaders?

The most common rationale given for why organisations don't continue to grow is poor management, such as

managers lacking the capabilities to handle the task and/or

- become more risk adverse as the organisation grows and feeling that creating new-growth businesses (innovation) is simply too unpredictable and risky

Furthermore, as Peter Drucker (1985) suggested, the required mindset for growth is one that searches for unanticipated success, rather than seeking to correct deviations from a plan.

It is interesting to note

"...if you are late entrant to a market, you need to be radically different to win over customers..."

Richard Branson, 2008

Remember that for managers

"...powerful and predictable forces act upon them. These forces include the need to move up-market to maintain profit margins; the need to satisfy existing customers; the forces of commoditization and decommoditization; the mandate to grow......revenue base;......the processes and values that define the capabilities of one business model simultaneously define disabilities of other business models......the predictability of these forces makes it possible......turn them to your advantage in seeking, exploiting, and sustaining new growth opportunities......you need to focus primarily on getting the initial condition right. If you start from a good place, then the choices that lead to success will look like the right choices..."

Clayton Christensen et al, 2003

Innovation decline in USA
"...over the last 30 years, the rate of start-up formation in the US has slowed markedly and the technology industry has come to be dominated by older companies. This presents a risk to innovation, because the most transformative leaps forward tend to come not from established firms but from entrepreneurs with little to lose. Indeed start ups......of the past several centuries, including the car, the aeroplane, the telegraph, the telephone, the computer, an Internet search engine. If the United States wishes to reclaim its status as an innovation hub, it must reform a wide swathe of policies, including those covering immigration, business regulation, healthcare and education to support new businesses......the ratio of new firms to all firms, or the start-up rate has been steadily decreasing. In 1978, start-ups - defined in the database as companies less than one-year-old - accounted for nearly 15% of all US firms; by 2011, the figure had slipped to just 8%. for the first time in three decades, business deaths exceeded business births......fewer start-ups has meant fewer high-growth firms......companies that experience three consecutive years of at least a 20% increase in the number of people employed..."

Robert Litan, 2015
This national downward decline is the same for all of the 50 USA states and almost all of the 366 largest metropolitan centres. This includes California, despite its innovation centres of Silicon Valley and Los Angeles Orange County Region


This downward trend has affected all major industries, even the life-science sector (pharmaceutical, medical-device businesses, etc). For example, new life science firms grew to roughly 3000 in 1997, but by 2001, they had fallen to 1995


All the above runs counter to the perception that the US economy is highly entrepreneurial. These statistics cover the period during the revolution of information technology that substantially lowered the cost of launching an expanding new businesses, thanks to cheaper software and hardware, a more global Internet and savings afforded by data storage, eg cloud


Generally, ageing firms become more risk averse, with innovation aiming for incremental improvements rather than creative destruction or disruption. Additionally, they tend to be larger, more bureaucratic and less flexible than start-ups when faced with changing technology and shifting consumer preferences. Generally, the older, more entrenched firms find it harder to compete with younger, more dynamic ones.
In the USA, immigrants tend to be less risk averse than the general population and are more likely to launch a business than local-born Americans, eg immigrants were behind 1 in 4 technology start-ups between 1995 and 2005. In 2005, companies led by immigrant entrepreneurs employed 450,000 workers and generated US $ 52 b. in sales (Robert Litan, 2015). On the other hand, the US government has made it difficult for the immigrants to stay in the United States


Some negative sides of innovation include 
- the wealth/income inequalities that sometimes accompany technological changes. For example, the advances in robotics and information technology have increased demand for staff with strong technical backgrounds and reduced the need for unskilled labour.
- innovations in automation, robotics, data processing, etc will eliminate millions of jobs in the coming decades
To increase technological literacy, the education system needs to realise that writing a computer code could be just as important as learning English. Students will need to learn to code at the start of their schooling. At the same time as teaching these technical skills, the humanities and arts should not be neglected as the latter are important in developing the appropriate soft/people/behavioural skills for handling people.

Growth is linked with innovation (sustaining, incremental, breakthrough, disruptive, etc) manoeuvres and can help to re-invent/re-vitalise an organisation. But disruptive innovation needs to be treated differently to the others.

There is a vicious cycle of destruction and renewal.It is called creative destruction (Joseph Schumpeter) and disruptive innovation (Clayton Christensen). The current digital disruption is an example of it as it is changing the way we live, work, shop, bank,entertain, travel, talk or think, etc by providing cheap information and communications technology.

 

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