I was reading Michael McKinney's blog Leadership Now today and his post Nothing Can Grow Forever. He summarized there some of Peter Drucker's writings from the 1980's along the same lines--that things expand, sometimes for decades, then they contract. Part of the reason nothing can grow forever is that continual exponential growth is simply unsustainable--it takes more and more to keep up the same percentage increase.
I was with Automatic Data Processing for some 12 fantastic years. During the first ten of those years, ADP was a "ruler stock". It sold at a 28x earnings multiple (a premium for the industry) because ADP had more than 140 quarters of year over year double-digit earnings per share growth. A Wall Street analyst's darling.
Eight years in to my 12 years there, the whispers began about the potential end of that run. Purely from a statistical standpoint it was becoming increasingly probable that the exponential growth could not be sustained because growth on top of compounding growth becomes, well, huge. Fear mounted. Empowerment of its executives--its hallmark--submitted to micro-control. It happened. The string ended.
The net is, we are obsessed by growth. Nothing has value unless it is growing, right?
I attended a presentation on the unsustainability of growth by Dr. Albert Bartlett, Professor Emeritus of Physics at the University of Colorado on growth. This charismatic man's presentation was amazing. He's made this presentation to Congress. It should be a must-see in CEO circles, boardrooms and business schools. The core of his message is dead simple: anything that grows continuously is harmful, that we are obsessed with growth, and we do not understand the implications of it. In his own more scholarly words, "THE GREATEST SHORTCOMING OF THE HUMAN RACE IS OUR INABILITY TO UNDERSTAND THE EXPONENTIAL FUNCTION."
Listen. Part of leadership is seeing things differently than other people see them. You have very likely bought into a notion that growth is good and contraction is bad. In fact, you have bought into a notion that what we should strive for is continual growth. I am not asking you to change that perception. But I am challenging you to see growth from a different perspective. How?
Well, one way is to watch Dr. Bartlett's presentation. I just did a little research for you and the CU Bookstore sells a DVD of his presentation for a whopping 12 bucks (plus $10 shipping). You can get it by clicking here: Sustainability 101: Arithmetic, Population and Energy. I cannot vouch for the quality of the DVD, but I can vouch for this man's message. It is strong. And anyone who uses examples such as the price of Vail lift tickets to explain the exponential function is my hero.
I just ordered my copy. And you?
