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|In: Industry Commentary|Last Updated:

I entered college shortly after the first Earth Day. The book Limits to Growth was popular back then — it made the point, now unpopular but still mathematically inescapable, that there are … well, the title says it.

It’s like this: The earth’s population now exceeds 6 billion people, and it doubles every 50 years or so. Think the year 2000 caused headaches? If the population continues to grow at its current rate, in the year 3000 our descendants will each live out their lives standing in a three inch circle. It’s the miracle of compound interest. Maybe if they stand on tip toe they’ll be able to make it work.

And no, we can’t just ship the excess population into space. To do so, in 50 years we’d have to create the technology and capacity to put 120 million people a year into space, just to stay even.

“Well sure,” I hear you say, “but the population won’t continue to grow at that rate.”

Exactly. The only question is what’s going to stop it, when, and how many people will live on the planet when the population levels off. That there are limits to growth is a matter of arithmetic, which means you don’t get to argue.

It isn’t only the human population that has limits to growth. Marketplaces do too. Look at it this way: If you’re McDonald’s, and every human being is already eating three fast-food meals a day, you’d better figure out a better expansion plan than to open more restaurants. You’ve saturated the market.

Right about here it gets complicated. “Marketplace” isn’t easily defined. For example, the American restaurant marketplace is close to saturated — just how many more meals can we all eat out, after all? The fast-food marketplace is also close to saturated, I imagine. The non-traditional-Mexican-fast-food marketplace is, it appears, expanding rapidly, though, which explains McDonald’s investment in Chipotle.

In theory, companies can operate successfully in both mature (the code word for saturated) and growing marketplaces. In principle, it’s a rare company that succeeds at both, because so many of the factors that drive success are very different between the two.

In a growing marketplace, sales and marketing are missionary in nature, and new customer acquisition is everything. You have to explain an unfamiliar concept and its benefits to customers who, when you start, have no idea what you’re talking about. Whether it was the personal computer in 1980, the PDA in the mid 1990s, or for that matter fast food when White Castle opened its doors, the challenge is persuading potential customers to buy anything at all.

In a mature marketplace, in contrast, sales and marketing are comparative. Car manufacturers don’t have to explain what a car is for, how it works, and what the benefits are from owning one. They do need to persuade you that buying the ones they sell is a better idea than buying the ones someone else sells. In this kind of environment, growth is incremental, not exponential.

Companies organized to support exponential growth look very different from those organized to support incremental growth. Margins are different, internal controls are different, the whole budgeting process is different. It all has to be. When revenue growth can be exponential, spending is a high-return investment. When revenue can only grow incrementally, all spending is suspect, because cost management has a much greater impact on net profitability.

The trade-offs among speed, cost and quality are quite different, too. In a high growth situation, speed matters most, because the revenue lost due to a delay in capitalizing on an opportunity compounds exponentially. In a low-growth situation, the excess long-term cost that results from quick-and-dirty work far outweighs any short-term gains.

The corporate risk-profiles for the two situations are quite different, too: With high growth comes both an appetite for and a need to take risks, since the alternative is being left behind. With significant marketshare and only incremental growth, it’s far easier to lose ground than to gain it. Companies in mature marketplaces are, and should be, more risk averse.

And there you sit, leading an IT organization. Chances are good you’ve read a bunch of material about IT best practices. Perhaps you worry that you aren’t following them. Or maybe you’re worried that you are, and they aren’t working as well as they’re supposed to. So here’s a question:

Where did those “best practices” come from? Who decides, for you and your company, what’s really best?

There are limits to growth, whether for a population or a marketplace. The idea of “best practices” suggests there’s also a limited number of good ways to run an IT organization. Namely, one.

Just an opinion: Even if there is such a limit, we haven’t reached it yet.

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|In: Business Ethics|Last Updated:

Worthy of note:

Item #1: Last week I accidentally denigrated the WWF when I said business leaders are, metaphorically, “… trapped in a cage match without the script.” Unbeknownst to yours truly the World Wildlife Fund successfully sued the World Wrestling Federation and the wrestlers are now WWE (World Wrestling Entertainment). Allan West, who informed me of this, did like the mental image of panda bears in a ring jumping off the ropes to smash one another. I find it disturbing.

Item #2: Some additional correspondence solved the mystery. A reader who had complained about my apparent bias two weeks ago explained that in the 2000 election, many commentators described George W. Bush as the candidate you’d rather have a beer with. I recommended that you not choose who to vote for based on who you’d rather have a beer with. His conclusion? I was covertly suggesting you vote against Bush.

For the record: Don’t vote for the guy with whom you’d most like to have a beer. Don’t vote against him, either. When you choose who to vote for, leave the beer out of it.

You’ll need it after you vote.

Item #3: Last week’s column, about making ethical choices when none of your choices are particularly good, generated quite a bit of mail.

A couple of readers contested the main point — that when all of the choices available to you are bad, you should hold your nose and choose the least wrong among them. One said I was “playing the victim” because we can always say no and walk away, or stand up for what’s right and take the consequences.

We can. That doesn’t make these good choices. Maybe they’re less wrong than the alternatives, but even that assessment is uncertain. For those who have families to feed in a shaky economy, for example, walking away or getting fired for standing on principle can be downright irresponsible.

Keep in mind that while for some, “getting fired was the best thing that ever happened to me,” many more end up unemployed or underemployed for months and even years. I know. Some contact Advice Line for suggestions.

They just aren’t the ones in a position to write inspirational books.

Item #4: Okay, don’t call it the Vince Lombardi syndrome.

Few contested my suggestion last week that we’ve changed from a society that values fair play above all to one that values winning above all.

But many wrote to defend Vince Lombardi, who, it appears, never said, “Winning isn’t everything. It’s the only thing.” Brad Mitchell was the first to provide Lombardi’s actually statement. It’s “Winning isn’t everything — but wanting to win is,” an admirable sentiment.

So it isn’t the Vince Lombardi syndrome. Call it the Bobby Knight syndrome instead. He deserves it.

Not that winning is a bad thing. Even if the game is a stupid one, if you have to play, winning is better than losing.

Which brings us the OODA loop, mentioned here before.

A military theorist named Colonel John Boyd developed this formulation for winning at maneuver warfare: Observe, Orient, Decide, Act (OODA). Then do it again.

According to Boyd, whichever side has the faster OODA loops wins. The faster you can observe a situation, orient yourself to it (which includes recognizing your own biases and how they affect your perceptions), make a decision on how to proceed, then act on that decision — and then go through it again — the more likely you are to win.

There’s a fascinating consequence: According to OODA theory, thoughtful analysis loses to quick decisions and disciplined execution. It’s an unsettling proposition for those of us who consider careful thought to be a worthwhile investment of time and energy.

OODA still values thinking, but quick thinking: Observe, Orient, and Decide. Speed beats perfection. When, that is, you’re engaged in a contest to be won in real time — OODA’s domain. OODA is the wrong tool for (for example) good science, good policy, or even good chess. But like the guy with a hammer who sees a world filled with nails, many who excel at OODA loops limit their view of the world to a succession of battles, which is to say, time-constrained transactions with one winner and one loser.

OODA masters win the battles they fight. That gives them a tremendous advantage and confers tremendous power. It also creates a very real danger: They’re unlikely to make sure they should be fighting in the first place. They’re winning, after all.

So why should they care? Winning is, after all, the only thing.

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