This example shows that the Growth and Underinvestment structure is simply a Limits to Growth structure with some implications in terms of the minimizing the limits.
In a business context marketing can generate
demand. When the marketing effort
succeeds in this fashion the normal inclination is to do more
marketing. If some works more should work better.
The difficulty comes into play when the demand
runs into the limiting aspect of capacity. Greater
demand will result in a requirement for more
product to be shipped, and when the demand approaches
and finally exceeds capacity it will result in
longer product delivery time. Longer delivery
time is fine as long as it's less than what's acceptable to
the market. If delivery time exceeds acceptable delivery
time (not shown) then it will begin to impact demand.
As delivery time interacts with the delivery
standard, and there should be such a thing, it will add
to the perceived capacity required. Since capacity
is something that usually requires substantial investment and
takes time to develop there is a delay associated
with its increase. Because of this delay it is
quite possible that by the time capacity has
been increased the increases in delivery time
will have negated the increase in demand created
by the marketing effort.
Thus, as the organization ponders action, which quite often it
does, for far too long, the demand will dissipate
and they will say, "See, we didn't really need the added
capacity after all." And I guess they didn't
need the extra sales that would have resulted from the capacity
increase either.