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Harvard

Business Review
July-August

Larry E. Greiner

Evolution and revolution


as organizations grow
A company's past has clues for management
that are critical to fnture success

Foreword
This author maintains that growing organizations article provides a prescription for appropriate man-
move through five distinguishable phases of develop- agement action in each of the five phases, and it shows
ment, each of which contains a relatively calm period how companies can turn organizational crises into
of growth that ends with a management crisis. He opportunities for future growth.
argues, moreover, that since each phase is strongly Mr. Greiner is Associate Professor of Organizational
influenced hy the previous one, a management with Behavior at the Harvard Business School and is the
a sense of its own organization's history can anticipate author of several previous HBR articles on organiza-
and prepare for the next developmental crisis. This tion development.

A small research company chooses too com-


plicated and formalized an organization struc-
from this structure. The company eventually
goes into bankruptcy.
ture for its young age and limited size. It floun- A large bank disciplines a "rebellious" man-
ders in rigidity and bureaucracy for several years ager who is blamed for current control problems,
and is finally acquired by a larger company. when the underlying cause is centralized pro-
Key executives of a retail store chain hold on
to an organization structure long after it has Author'a note: This article is part of a continuing project on orsatiization
iltrvelopment with my colleague. Professor Louis B. Barnes, and spnnsorcd
served its purpose, because their power is derived by the Division of Research, Harvard Business Schoor
Harvard Business Review: July-August 1972

cedures that are holding back expansion into longed periods of growth where no major up-
new markets. Many younger managers subse- heaval occurs in organization practices.
quently leave the bank, competition moves in, 2. The term revolution is used to describe
and profits are still declining. those periods of substantial turmoil in organ-
ization life.
The problems of these companies, like those of
many others, are rooted more in past decisions As a company progresses through developmental
than in present events or outside market dy- phases, each evolutionary period creates its own
namics. Historical forces do indeed shape the revolution. For instance, centralized practices
future growth of organizations. Yet manage- eventually lead to demands for decentralization.
ment, in its haste to grow, often overlooks such Moreover, the nature of management's solution
critical developmental questions as: Where has to each revolutionary period determines whether
our organization been? Where is it now' And a company will move forward into its next stage
what do the answers to these questions mean of evolutionary growth. As I shall show later,
for where we are going? Instead, its gaze is fixed there are at least five phases of organization
outward toward the environment and the fu- development, each characterized by both an
tureas if more precise market projections will evolution and a revolution.
provide a new organizational identity.
Companies fail to see that many clues to their
future success lie within their own organiza- Key forces in development
tions and their evolving states of development.
Moreover, the inability of management to un- During the past few years a small amount of
derstand its organization development problems research knowledge about the phases of or-
can result in a company becoming "frozen" in ganization development has been building. Some
its present stage of evolution or, ultimately, of this research is very quantitative, such as
in failure, regardless of market opportunities. time-series analyses that reveal patterns of eco-
My position in this article is that the future nomic performance over time.' The majority of
of an organization may be less determined by studies, however, are case-oriented and use com-
outside forces than it is by the organization's pany records and interviews to reconstruct a rich
history. In stressing the force of history on an picture of corporate development.- Yet both
organization, I have drawn from the legacies of types of research tend to be heavily empirical
European psychologists (their thesis being that without attempting more generalized statements
individual behavior is determined primarily by about the overall process of development.
previous events and experiences, not by what A notable exception is the historical work of
lies ahead). Extending this analogy of individ- Alfred D. Chandler, fr., in his book Strategy and
ual development to the problems of organiza- Structure.-^ This study depicts four very broad
tion development, I shall discuss a series of de- and general phases in the lives of four large
velopmental phases through which growing U.S. companies. It proposes that outside market
companies tend to pass. But, first, let me provide opportunities determine a company's strategy,
two definitions: which in turn determines the company's orga-
1. The term evolution is used to describe pro- nization structure. This thesis has a valid ring
for the four companies examined by Chandler,
!. See, for exaTiiple, Wiliiam H. Siarhutk, "Organizational Metamor-
phosis," in Promising Research Directions, ediied by R.W. Millman
largely because they developed in a time of ex-
and M.P. Hottenstein |Tempe, Arizona, Academy of Maiiafiement, plosive markets and technological advances. But
[968), p. 115.
more recent evidence suggests that organization
Z. See, for ex.itnple, the Griiiigesfeerg ease series, prepared by C. Roland
Christenseii and Bruce R. Scott, Case Clearing Ht)u-,e-, Harvard
structure may be less malleable than Chandler
Business Sehiml. assumed; in fact, structure can play a critical
3, Strategy and Structure: Chapters in the History of the American role in influencing corporate strategy. It is this
Industrial Entciprise [Cambridge, Massachusetts, The M.l.T. Press, iufiz). reverse emphasis on how organization structure
4. I have drawn on many sources for evidence: |a) numerous cases affects future growth which is highlighted in the
collected at the Harvard Business School; (h) Organization Crnwth and
Development, edited by William H. Starbuek (Midiilesex, England, model presented in this article.
Penguin Books, Ltd., 1971], where several studies are cited; and (c)
articles published in journals, such as Lawrence E. Fouraker and |(ihn From an analysis of recent studies,^ five key
M. Stiipford, "Organization Structure and the Multinational Strategy." dimensions emerge as essential for building a
Administrative Science Quurierly. Vol. i ) , N o . i, 1968, p. 47; and
Makolm S. Salter, "Management Appraisal and Reward Systems," model of organization development:
lournal of Easiness Policy, Vol. 1, No. 4, [971. 1. Age of the organization.

38
Growing organizations

2. Size of the organization. tions to each revolution determine the next


3. Stages of evolution. stage of evolution.
4. Stages of revolution.
5. Growth rate of the industry. Age of the organization
I shall describe each of these elements separate- The most obvious and essential dimension for
ly, but first note their combined effect as il- any model of development is the life span of an
lustrated in Exhibit J. Note especially how each organization (represented as the horizontal axis
dimension influences the other over time; when in Exhibit 1). All historical studies gather data
all five elements begin to interact, a more com- from various points in time and then make
plete and dynamic picture of organizational comparisons. From these observations, it is evi-
growth emerges. dent that the same organization practices are
After describing these dimensions and their not maintained throughout a long time span.
interconnections, I shall discuss each evolu- This makes a most basic point: management
tionary revolutionary phase of development and problems and principles are rooted in time. The
show (a) how each stage of evolution breeds its concept of decentralization, for example, can
own revolution, and (b) how management solu- have meaning for describing corporate practices

Exhibit I. Model of organization development

Size of
organi-
zation
Large

ompany in
medium-growth
industry

Company in
low-growtb
industxy

Small

Young Mature
Age of organization

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Harvard Business Review: July-August 1972

at one time period but loses its descriptive managers and disillusioned lower-level man-
power at another. agers. During such periods of crisis, a number of
The passage of time also contributes to the companies failthose unable to abandon past
institutionalization of managerial attitudes. As practices and effect major organization changes
a result, employee behavior becomes not only are likely either to fold or to level off in their
more predictable but also more difficult to growth rates.
change when attitudes are outdated. The critical task for management in each
revolutionary period is to find a new set of
Size of the organization organization practices that will become the basis
for managing the next period of evolutionary
This dimension is depicted as the vertical axis growth. Interestingly enough, these new prac-
in Exhibit 1. A company's problems and solu- tices eventually sow their own seeds of decay
tions tend to change markedly as the number and lead to another period of revolution. Com-
of employees and sales volume increase. Thus, panies therefore experience the irony of seeing
time is not the only determinant of structure; a major solution in one time period become a
in fact, organizations that do not grow in size major problem at a latter date.
can retain many of the same management issues
and practices over lengthy periods. In addition
to increased size, however, problems of coor- Growth rate of the industry
dination and communication magnify, new The speed at which an organization experiences
functions emerge, levels in the management phases of evolution and revolution is closely
hierarchy multiply, and jobs beeome more related to the market enviromnent of its indus-
interrelated. try. For example, a company in a rapidly expand-
ing market will have to add employees rapidly;
Stages of evolution hence, the need for new organization structures
to accommodate large staff increases is accel-
As both age and size increase, another phenom- erated. While evolutionary periods tend to be
enon becomes evident: the prolonged growth relatively short in fast-growing industries, much
that I have termed the evolutionary period. Most longer evolutionary periods occur in mature or
growing organizations do not expand for two slowly growing industries.
years and then retreat for one year; rather, those Evolution can also be prolonged, and revolu-
that survive a crisis usually enjoy four to eight tions delayed, when profits come easily. For in-
years of continuous growth without a major stance, companies that make grievous errors in
economic setback or severe internal disruption. a rewarding industry can still look good on their
The term evolution seems appropriate for de- profit and loss statements; thus they can avoid
scribing these quieter periods because only mod- a change in management practices for a longer
est adjustments appear necessary for maintain- period. The aerospace industry in its infancy is
ing growth under the same overall pattern of an example. Yet revolutionary periods still oc-
management. cur, as one did in aerospace when profit opportu-
nities began to dry up. Revolutions seem to be
Stages of revolution much more severe and difficult to resolve when
the market environment is poor.
Smooth evolution is not inevitable; it cannot be
assumed that organization growth is linear. For-
tune's "soo" list, for example, has had significant Phases of growth
turnover during the last 50 years. Thus we find
evidence from numerous case histories which With the foregoing framework in mind, let us
reveals periods of substantial turbulence spaced now examine in depth the five specific phases
between smoother periods of evolution. of evolution and revolution. As shown in Exhibit
I have termed these turbulent times the peri- U, each evolutionary period is characterized by
ods of revolution because they typically exhibit the dominant management style used to achieve
a serious upheaval of management practices. growth, while each revolutionary period is char-
Traditional management practices, which were acterized by the dominant management problem
appropriate for a smaller size and earlier time, that must be solved before growth can continue.
are brought under scrutiny by frustrated top The patterns presented in Exhibit 11 seem to be

40
Growiny organizations

Exhibit IL The five phases of growth

PHASE I

Evolution stages
Revolution stages

4: Crisis of
RED TAPE

5: Growth through
COLLABORATION

4: Growth through
COORDINATION
2: Crisis of
AUTONOMY

3: Growth thruueh
DELEGATION j

2: Growth through
DIRECTION a

1: Growth through
CREATIVITY

Young
Age of organiz^ition

typical for companies in industries with mod- is characterized by attempts to regain control
erate growth over a long time period; companies over the diversity created through increased del-
in faster growing industries tend to experience egation.
all five phases more rapidly, while those in The principal implication of each phase is that
slower growing industries encounter only two or management actions are narrowly prescribed if
three phases over many years. growth is to occur. For example, a company ex-
It is important to note that each phase is both periencing an autonomy crisis in Phase 2 cannot
an effect of the previous phase and a cause for return to directive management for a solution-
the next phase. For example, the evolutionary it must adopt a new style of delegation in order
management style in Phase 3 of the exhibit is to move ahead.
"delegation," which grows out of, and becomes
the solution to, demands for greater "autonomy" Phase 1: Creativity...
in the preceding Phase 2 revolution. The style
of delegation used in Phase 3, however, even- In the birth stage of an organization, the em-
tually provokes a major revolutionary crisis that phasis is on creating both a product and a mar-

41
Harvard Business Review: July-August 1972

ket. Here are the characteristics of the period troduced to separate manufacturing from mar-
of creative evolution: keting activities, and job assignments become
O The company's founders are usually tech- more specialized.
nically or entrepreneurially oriented, and they O Accounting systems for inventory and pur-
disdain management activities; their physical chasing are introduced.
and mental energies are absorbed entirely in O Incentives, budgets, and work standards are
making and selling a new product. adopted.
O Communication among employees is fre- O Communication becomes more formal and
quent and informal. impersonal as a hierarchy of titles and positions
O Long hours of work are rewarded by modest builds.
salaries and the promise of ownership benefits. O The new manager and his key supervisors
O Control of activities comes from immediate take most of the responsibility for instituting
marketplace feedback; the management acts as direction, while lower-level supervisors are treat-
the customers react. ed more as functional specialists than as au-
tonomous decision-making managers.
. .. e^ the leadership crisis: All of the foregoing
individualistic and creative activities are essen- . . .&) the autonomy crisis: Although the new
tial for the company to get off the ground. But directive techniques channel employee energy
therein lies the problem. As the company grows, more efficiently into growth, they eventually
larger production runs require knowledge about become inappropriate for controlling a larger,
the efficiencies of manufacturing. Increased more diverse and complex organization. Lower-
numbers of employees cannot be managed ex- level employees find themselves restricted by a
clusively through informal communication; new cumbersome and centralized hierarchy. They
employees are not motivated by an intense have come to possess more direct knowledge
dedication to the product or organization. Addi- about markets and machinery than do the lead-
tional capital must be secured, and new account- ers at the top; consequently, they feel torn be-
ing procedures are needed for financial control. tween following procedures and taking initia-
Thus the founders find themselves burdened tive on their own.
with unwanted management responsibilities. So Thus the second revolution is imminent as
they long for the "good old days," still trying a crisis develops from demands for greater au-
to act as they did in the past. And conflicts be- tonomy on the part of lower-level managers.
tween the harried leaders grow more intense. The solution adopted by most companies is to
At this point a crisis of leadership occurs, move toward greater delegation. Yet it is difficult
which is the onset of the first revolution. Who for top managers who were previously successful
is to lead the company out of confusion and at being directive to give up responsibility. More-
solve the managerial problems confronting it? over, lower-level managers are not accustomed
Quite obviously, a strong manager is needed who to making decisions for themselves, As a result,
has the necessary knowledge and skill to in- numerous companies flounder during this revo-
troduce new business techniques. But this is lutionary period, adhering to centralized meth-
easier said than done. The founders often hate ods while lower-level employees grow more dis-
to step aside even though they are probably enchanted and leave the organization.
temperamentally unsuited to be managers. So
here is the first critical developmental choice Phase 3: Delegation ...
to locate and install a strong business manager
who is acceptable to the founders and who can The next era of growth evolves from the success-
pull the organization together. ful application of a decentralized organization
structure. It exhibits these characteristics:
Phase 2: Direction ... O Much greater responsihility is given to the
managers of plants and market territories.
Those companies that survive the first phase by O Profit centers and bonuses are used to stim-
installing a capable business manager usually ulate motivation.
embark on a period of sustained growth under O The top executives at headquarters restrain
able and directive leadership. Here are the char- themselves to managing by exception, based on
acteristics of this evolutionary period: periodic reports from the field.
O A functional organization structure is in- O Management often concentrates on making

42
Growing organizations

new acquisitions which can be lined up beside ing are used to encourage identity with the firm
other decentralized units. as a whole.
O Communication from the top is infrequent,
usually by correspondence, telephone, or brief All of these new coordination systems prove
visits to field locations. useful for achieving growth through more ef-
ficient allocation of a company's limited re-
The delegation stage proves useful for gaining sources. They prompt field managers to look
expansion through heightened motivation at beyond the needs of their local units. While
lower levels. Decentralized managers with great- these managers still have much decision-making
er authority and incentive are able to penetrate responsibility, they learn to justify their actions
larger markets, respond faster to customers, and more carefully to a "watchdog" audience at
develop new products. headquarters.

. . . t5^ the control crisis: A serious problem even- ... a? the red-tape crisis: But a lack of confi-
tually evolves, however, as top exeeutives sense dence gradually builds between line and staff,
that they are losing control over a highly diver- and between headquarters and the field. The
sified field operation. Autonomous field manag- proliferation of systems and programs begins to
ers prefer to run their own shows without coor- exceed its utility; a red-tape crisis is created. Line
dinating plans, money, technology, and man- managers, for example, increasingly resent heavy
power with the rest of the organization. Freedom staff direction from those who are not familiar
breeds a parochial attitude. with local conditions. Staff people, on the other
Hence, the Phase 3 revolution is under way hand, complain about uncooperative and unin-
when top management seeks to regain control formed line managers. Together both groups crit-
over the total company. Some top managements icize the bureaucratic paper system that has
attempt a return to centralized management, evolved. Procedures take precedence over prob-
which usually fails because of the vast scope of lem solving, and innovation is dampened. In
operations. Those companies that move ahead short, the organization has become too large
find a new solution in the use of special co- and complex to be managed through formal
ordination techniques. programs and rigid systems. The Phase 4 revo-
lution is under way.
Phase 4: Coordination ...
Phase 5: Collaboration ...
During this phase, the evolutionary period is
characterized by the use of formal systems for The last observable phase in previous studies
achieving greater coordination and by top ex- emphasizes strong interpersonal collaboration
ecutives taking responsibility for the initiation in an attempt to overcome the red-tape crisis.
and administration of these new systems. For Where Phase 4 was managed more through
example: formal systems and procedures. Phase 5 em-
O Decentralized units are merged into prod- phasizes greater spontaneity in management
uct groups. action through teams and the skillful confronta-
O Formal planning procedures are established tion of interpersonal differences. Social control
and intensively reviewed. and self-discipline take over from formal con-
O Numerous staff personnel are hired and trol. This transition is especially difficult for
located at headquarters to initiate company- those experts who created the old systems as
wide programs of control and review for line well as for those line managers who relied on
managers. formal methods for answers.
O Capital expenditures are carefully weighed The Phase 5 evolution, then, builds around a
and parceled out across the organization. more fiexible and behavioral approach to man-
O Each product group is treated as an invest- agement. Here are its characteristics:
ment center where return on invested capital is O The focus is on solving problems quickly
an important criterion used in allocating funds. through team action.
O Certain technical functions, such as data O Teams are combined across functions for
processing, are centralized at headquarters, while task-group activity.
daily operating decisions remain decentralized. O Headquarters staff experts are reduced in
O Stock options and companywide profit shar- number, reassigned, and combined in interdis-

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Harvard Business Review: July-August 1972

ciplinary teams to consult with, not to direct, security, building physical facilities for relaxa-
field units. tion during, the working day, making jobs more
O A matrix-type structure is frequently used interchangeable, creating an extra team on the
to assemble the right teams for the appropriate assembly line so that one team is always off for
problems. reeducation, and switching to longer vacations
O Previous formal systems are simplified and and more flexible working hours.
combined into single multipurpose systems. The Chinese practice of requiring executives
O Conferences of key managers are held fre- to spend time periodically on lower-level jobs
quently to focus on major problem issues. may also be worth a nonideological evaluation.
O Educational programs are utilized to train For too long U.S. management has assumed that
managers in behavioral skills for achieving het- career progress should be equated with an up-
ter teamwork and conflict resolution. ward path toward title, salary, and power. Could
O Real-time information systems are inte- it be that some vice presidents of marketing
grated into daily decision making. might just long for, and even benefit from, tem-
O Economic rewards are geared more to team porary duty in the field sales organization?
performance than to individual achievement.
O Experiments in new practices are encour-
aged throughout the organization. Implications of history
. . . a? the ' crisis: What will be the revolution Let me now summarize some important implica-
in response to this stage of evolution? Many tions for practicing managers. First, the main
large U.S. companies are now in the Phase 5 features of this discussion are depicted in Ex-
evolutionary stage, so the answers are critical. hibit 111, which shows the specific management
While there is little clear evidence, I imagine actions that characterize each growth phase.
the revolution will center around the "psycho- These actions are also the solutions which ended
logical saturation" of employees who grow emo- each preceding revolutionary period.
tionally and physically exhausted by the inten- In one sense, I hope that many readers will
sity of teamwork and the heavy pressure for react to my model by calling it obvious and
innovative solutions. natural for depicting the growth of an organiza-
My hunch is that the Phase 5 revolution will tion. To me this type of reaction is a useful test
be solved through new structures and programs of the model's validity.
that allow employees to periodically rest, reflect, But at a more reflective level I imagine some
and revitalize themselves. We may even see of these reactions are more hindsight than fore-
companies with dual organization structures: a sight. Those experienced managers who have
"habit" structure for getting the daily work been through a developmental sequence can
done, and a "reflective" structure for stimulat- empathize with it now, but how did they react
ing perspective and personal enrichment. Em- when in the middle of a stage of evolution or
ployees could then move back and forth between revolution? They can probably recall the lim-
the two structures as their energies are dissipated its of their own developmental understanding
and refueled. at that time. Perhaps they resisted desirable
One European organization has implemented changes or were even swept emotionally into a
just such a structure. Five reflective groups revolution without being able to propose con-
have been established outside the regular struc- structive solutions. So let me offer some explicit
ture for the purpose of continuously evaluating guidelines for managers of growing organizations
five task activities basic to the organization. to keep in mind.
They report directly to the managing director,
although their reports are made public through- Know where you are in the developmental
out the organization. Membership in each group sequence.
includes all levels and functions, and employ-
ees are rotated through these groups on a six- Every organization and its component parts are
month basis. at different stages of development. The task of
Other concrete examples now in practice in- top management is to be aware of these stages;
clude providing sabbaticals for employees, mov- otherwise, it may not recognize when the time
ing managers in and out of "hot spot" jobs, for change has come, or it may act to impose
establishing a four-day workweek, assuring job the wrong solution.

44
Growing organizations

Exhibit III. Organization practices during evolution in the


five phases of growth
PHASE I PHASE 2 PHASE 3 PHASE 4 PHASE 5

^ 1-j .- Problem
MANAGEMENT Efficiency of Expansion Consohdation solving &
FOCUS Make & sell operations of market ot organization innovation

ORGANIZATION Centralized Decentralized Line-stafT &


Informal Matrix of teams
STRUCTURE & functional & geographical product groups

TOP Individualistic &


MANAGEMENT Directive Delegative Watchdog Participative
entrepreneurial
STYLE

Plans &
CONTROL Market Standards & Reports & investment Mutual
SYSTEM results cost centers profit centers centers goal setting

MANAGEMENT Salary &


REWARD Ownership merit Individual Profit sharing Team bonus
EMPHASIS increases bonus & stock options
1
Top leaders should be ready to work with the Management must be prepared to dismantle
flow of the tide rather than against it; yet they current structures before the revolutionary stage
should be cautious, since it is tempting to skip becomes too turbulent. Top managers, realizing
phases out of impatience. Each phase results in that their own managerial styles are no longer
certain strengths and learning experiences in the appropriate, may even have to take themselves
organization that will he essential for success in out of leadership positions. A good Phase 2 man-
subsequent phases. A child prodigy, for example, ager facing Phase 3 might be wise to find another
may be able to read like a teenager, but he can- Phase 2 organization that better fits his talents,
not behave like one until he ages through a either outside the company or with one of its
sequence of experiences. newer subsidiaries.
I also doubt that managers can or should act Finally, evolution is not an automatic affair,-
to avoid revolutions. Rather, these periods of it is a contest for survival. To move ahead,
tension provide the pressure, ideas, and aware- companies must consciously introduce planned
ness that afford a platform for change and the structures that not only are solutions to a cur-
introduction of new practices. rent crisis but also are fitted to the next phase
of growth. This requires considerable self-aware-
Recogjiize the limited range of solutions. ness on the part of top management, as well
as great interpersonal skill in persuading other
In each revolutionary stage it becomes evident managers that change is needed.
that this stage can be ended only by certain
specific solutions; moreover, these solutions are Realize that solutions breed new problems.
different from those which were applied to the
problems of the preceding revolution. Too often Managers often fail to realize that organizational
it is tempting to choose solutions that were tried solutions create problems for the future (i.e., a
before, which makes it impossible for a new decision to delegate eventually causes a prob-
phase of growth to evolve. lem of control). Historical actions are very much

45
Harvard Business Review: July-August 1972

determinants of what happens to the company reaching a stage where the government will act
at a much later date. to hreak them up because they are too large.
An awareness of this effect should help man-
agers to evaluate company problems with great-
er historical understanding instead of "pinning Concluding note
the blame" on a current development. Better yet,
managers should be in a position to predict Clearly, there is still much to learn about process-
future problems, and thereby to prepare solutions es of development in organizations. The phases
and coping strategies before a revolution gets outlined here are only five in number and are
out of hand. still only approximations. Researchers are just
A management that is aware of the prohlems beginning to study the specific developmen-
ahead could well decide not to grow. Top man- tal problems of structure, control, rewards, and
agers may, for instance, prefer to retain the in- management style in different industries and in
formal practices of a small company, knowing a variety of cultures.
that this way of life is inherent in the organiza- One should not, however, wait for conclusive
tion's limited size, not in their congenial per- evidence before educating managers to think
sonalities. If they ehoose to grow, they may and act from a developmental perspective. The
do themselves out of a joh and a way of life critical dimension of time has been missing for
they enjoy. too long from our management theories and
And what about the managements of very practices. The intriguing paradox is that by
large organizations? Can they find new solutions learning more about history we may do a better
for continued phases of evolution? Or are they job in the future.

The battle between the forces of growth and the restraints of nature may
An end be resolved in a number of ways. Man, if he understands well enough and
acts wisely, can choose a path out of the conflict of world pressures that
to growth? is more favorable than present actions, attitudes, and policies portend.
Such a path must be toward a non-growing and balanced condition of
the world system.. ..
Population, capital investment, pollution, food consumption, and stan-
dard of living have heen growing exponentially throughout recorded his-
tory. Man has come to expect growth, to see it as the natural condition
of human behavior, and to equate growth with "progress." We speak of
the annual percentage growth in gross national product (GNP) and in
population. Quantities that grow by a fixed percentage per year are ex-
hibiting "exponential" growth. But exponential growth cannot continue
indefinitely.
Pure exponential growth possesses the characteristic of behaving ac-
cording to a "doubling time." Each fixed time interval shows a doubling
of the relevant system variable. Exponential growth is treacherous and
misleading. A system variable can continue through many doubling inter-
vals without seeming to reach significant size. But then, in one or two
more doubling periods, still following the same law of exponential growth,
it suddenly seems to become overwhelming.
The psychological impact of exponential growth is seldom appreciated.
Suppose that some ultimate physical limit stands in the way of a quantity
that is growing exponentially. In all previous time hefore the limit is
approached, the quantity is much smaller than the limit. The very exis-
tence of the limit may be unrealized. No clash between the growing
quantity and the limit forces attention to the eventual pressures that must
arise. Then suddenly, within one doubling interval, the quantity grows
Jay W. Forrester, from half the limit to the limit. The stresses from overexpansion hecome
World Dynamics, highly visible; they can no longer be ignored. If the pressures created by
approach to the limit are not great enough to suppress growth, then growth
Cambridge, Massachusetts,
continues until the limit has been overstepped far enough to generate
Wright-Allen Press, inc.,
forces sufficient to inhibit growth.
1971, pp. 2-3.

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