Thursday, January 05, 2012

The 'Growth' obsession

One of the great things of working in emerging markets like India is about being witness to the incredible amount of growth that some industries and firms here are going through. But, is an obsession with growth the 'right thing' in the long run? With stock markets and investors tracking growth on a quarter-by-quarter basis, many firms (and executives) have no choice but to put all their efforts behind relentless growth.

The problem with the relentless focus on growth is that it brings short-termism into decisions that executives make. A recent client had to choose between becoming one of the industry's largest players and becoming one of the industry's most distinctive value creators. Adopting the distinctiveness plank would create significant value for clients and itself in the long run, but would require it to patiently invest in shaping next generation opportunities. Adopting the scale plank would give it immediate growth, but would relegate it to a commodity positioning in the long run.

Guess what the firm chose? A typical senior executive spends 3-5 years in a specific career role during which he/she is measured largely by the extent of business growth in the duration. Who has the time for long-term thinking in this context?

Yet, long-term discipline is the basis of most things that stand the test of time. Launching new initiatives takes time, bringing about a change in thinking and approach takes time, creative innovation takes time, making structural changes takes time. An excessive focus on the short-term takes away attention from the long-term.

Is all this obsession with growth taking us in the right direction in the long run? I worry.
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