Growth of Business

The growth of a business is readily represented as a standard balancing loop.

Desired Growth interacts with Current Growth to create a Growth Gap. This gap influences additional Activity. This Activity serves to increase Current Growth which subsequently influences the Growth Gap to decline.

Yet one must realize that the activity isn't for free as is depicted in the following diagram.

Resources interact with the Growth Gap to create the Activity which increases the Current Growth. Yet, at the same time that Activity increases the Current Growth it depletes the available Resources. The system finally evolves to a point where Current Growth stabilizes in a manner dependent on the available Resources. This structure represents a classic Limits to Growth structure.

To overcome the Limits to Growth scenario there must be a realization that there must be a connection between the Growth Gap and the Resources available to create the Activity necessary to increase Current Growth.

This connection still has it's limitations as one must realize that the acquisition and acclimation of Resources is not without an associated time delays and short term impacts on the productivity of existing Resources.

There are several addition concerns that should be elaborated at this point.

Along with the Desired Growth there is an Expected Gap Reduction Rate which interacts with the actual Gap Reduction Rate to create a Rate Variance. It is this Rate Variance which influences the Perceived Need for Resources. As the Perceived Need for Resources increases it results in Hiring. Hiring increases Resources and at the same time increases Training Requirements. The Training Requirements result in Training, yet the Training decreases the Resources Available.

Also, the decrease in Resources Available has a tendency to lead to Feasibility Concerns as to whether the initial Desired Growth actually makes sense. These Feasibility Concerns have a tendency to decrease the Desired Growth. If Desired Growth actually declines, which is a short term effect, it shifts the whole dynamic of the system to where the system tends to grow at a rate limited by the available resources. This leads to the typical Growth and Underinvestment scenario where the growth is limited by a resource that takes time to develop.

And I have but another set of thoughts that I don't know when I'll find time to finish!

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