Growth, Development and Corporate Planning

There is a tendency to understand corporates by comparing them with organisms. This is because corporate changes its configuration with time. Moreover there is a need to form an abstract level entity of corporate organizations to understand them better. This comparison between organisms and organizations cause many times a blunder in corporate planning. Managers think that they are in for corporate development but what they actually mean is corporate growth. This is just the way organisms grow over time. It must be made clear that corporate growth and development are not the same thing and neither of these two concepts are dependent on others. That is, either of growth and development can happen without the other.

Growth is basically an increase in size or number. Hence an organization can increase in size and likewise, number of cities in a country can increase. Similarly Corporate Growth also refers to an increase in size or number of some key performance indicators like – revenue or profits. But this understanding again poses a different problem. Organisms grow compulsively without choice. And in many cases like obesity it is an unfavorable growth. Organizations in turn seem always ready to grow. This anomaly occurs because managers tend to think that organizational growth would imply in turn organizational development. But as stated earlier corporate growth and development do not always go together and more often than not a different approach is necessary for corporate growth and development. Although, when survival of firm is dependent on its growth, corporate growth becomes very important. So do we have limits in growth then?

To answer this question let us first understand development. Development is a process in which an individual increases his ability and desire to satisfy his own needs and legitimate desires. By legitimate desires we mean desires which do not hamper others' capability to fulfill their desires. It is more of having knowledge and motivation to achieve goals rather than having wealth. If we talk about a country, development actually is talked in relevance to quality of life rather than living standard. Increase in living standard does not necessarily increase quality of life. When a country is underdeveloped, the very first aim of government has always been to increase standard of living. And then by increasing standard of living, it is hoped that quality of life also increases. Now, this does not mean that resources are not important for quality of life or development. After all it’s with resources only that we have to finally work out something. But the whole contention is that, even with resources the end result is drastically different when they are handled by developed person or otherwise. Greater returns from limited resources are a sign of development. In fact, for development purposes, even resources are sought after and optimally utilized. Maximum utilization of resources is the target.

Development cannot be given or prescribed by any one. It has to be learnt. It is like teacher, who can teach but only give the information, not the understanding. Development is about potential and abilities and these can only be facilitated and encouraged. Learning and motivation can never be taught.

Corporate planners are many times concerned with resource availability and its effect on limitation of growth and development. While planning, it must be understood that improvement is itself not the development, but development is actually the potential to improve. Hence even though resource constraints can bring about decrease in improvement, the potential remains untouched. Resource constraint becomes inconsequential if desires are changed so as to decrease interdependence on the resources. Even technological development causes to find a roundabout method of dealing with physical unavailability of resources. Resources can only hamper development in the extreme case where no substitute of resource is possible. Thus, in corporate planning, it must be always remembered that though growth may be affected by external factors, developmental limits are only set by internal factors and are mostly self imposed.

Reference:

1)The Concept of Development, Creating the Corporate Future Russell Lincoln Ackoff,1981

2)Management in Small Doses,Russell Lincoln Ackoff,1986