Overcoming the limits to growth

Dr. Burkhard Schwenker, Dr. Stefan Bötzel

2005

Companies charting a course to growth and scale are doing exactly the right thing. They are exploiting economies of scale and scope and creating additional free cashflow for subsequent investment in growth and more operational excellence. The only condition is that they must succeed in dealing with the diseconomies just as systematically as they handle the economies. The key is to create an efficient, decentralized organizational structure, with elements of both centralization and outsourcing. The massive increase in IT capabilities and the corresponding reduction in transaction costs help keep this kind of organization manageable as it grows more complex.

An external audit of your company can be extremely helpful if you want to know where you stand in terms of your capability and readiness for growth. It shows you where you could exploit economies even more efficiently and avoid diseconomies even better. This will help you overcome the limits to growth.