Is All Business Growth Good?

There is pressure on businesses to grow, especially those businesses on the share market as increased profits drive dividend distributions and increases in share price.

But is all growth good? Do all businesses, for example, the corner dairy, need to grow? If the corner dairy does not need to grow, then that surely suggests there must be more nuance to the mantra for business growth than the growth disciples are letting on.

I am reminded of the presentation by Sir David Attenborough, speaking at the Royal Geographical Society, October 2013, where he said, “We have a finite environment—the planet. Anyone who thinks that you can have infinite growth in a finite environment is either a madman or an economist.”

So what does happen when all growth opportunities have been exhausted?

Anyway, enough musing from me; here’s an interesting article from McKinsey & Company, Why the biggest and best struggle to grow. The authors point out that executives seeking growth, and keeping their jobs, are at risk of trading long-term business health and even viability for short-term gains such as share price and stock options. They instead go onto discuss value creation intensity, the amount of capital investment needed to fuel top-line growth. An interesting concept, but again I ask, what happens when all growth opportunities have been exhausted? It may not happen for a while, but you can’t ignore the fact that we live on a planet, the only one we have, and that its resources are finite.