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> But unlike local restaurants, many businesses have to aggressively compete in national and global markets and if it stops growing, it starts dying. How is a

> But unlike local restaurants, many businesses have to aggressively compete in national and global markets and if it stops growing, it starts dying. How is a company dying if it continues to make profit in a changing market? > Growing revenue and profits allows adaption to new competitive threats. Adaption to "new competitive threats" is done by humans.

TeMPOraL 4y ago
> How is a company dying if it continues to make profit in a changing market? Because, for example. their market is being steadily taken away by their competitors, and the company doesn't have a way to stop it. Death takes time, and may not be apparent if you're only looking at profits. The company could be profitable, but less so every year. Or, the company could be growing its profits year by year, but by a smaller factor. In more general terms: your profit may be positive, but if any of its derivatives (first, second, N-th) is negative and you have no way to address it, then you're dying. >> Growing revenue and profits allows adaption to new competitive threats. > Adaption to "new competitive threats" is done by humans. Yes, but having more resources lets those humans invent and execute such adaptations better - in the same way it's easier for individuals and households to adapt to changing life circumstances when they have savings and a stable income source, and the more of these they have, the easier it gets.
- jnovek 4y ago
  “Because, for example. their market is being steadily taken away by their competitors, and the company doesn't have a way to stop it.” This is circular reasoning: companies must grow because because otherwise they will have their lunch eaten by other companies who are growing because they must grow. I realize that this is an absolute basic tenet of capitalism that you’re talking about, but this response only explains where we are, not why we’re there.
  - TeMPOraL 4y ago
    > This is circular reasoning Yes. Or, in other words, a feedback loop. > I realize that this is an absolute basic tenet of capitalism that you’re talking about, but this response only explains where we are, not why we’re there. It does both: we are here because it's a self-sustaining negative feedback loop. How exactly we got here has been long lost to history, and the specifics don't matter anyway: what matters is, how hard would it be to break out of this state, whether it's worth doing in the first place, and, if we somehow break the cycle, what's there to stop us from immediately falling back into it.
    - pixelfarmer 4y ago
      The driving motivator is just greed, nothing else. Growth is not per se required to run a successful company for a long time, that is just plain myth. Nor is growth a guarantee to survive for a long period of time. It may increase the chances to stay afloat, but that highly depends on the circumstances. Also, as soon as you make growth the main motivator to run a company you are opening yourself up to go bust, inherently so.
      - TeMPOraL 4y ago
        > The driving motivator is just greed, nothing else. In some cases, sure. But I feel it's also a cop-out - it's easier to assume those business men are just driven by greed, than to look at the messy interplay of motivations and incentives that are the actual driver. Perhaps that's too cynical a take, but I think it's quite common for small companies to focus on growth because... that's How Business Is Done. Many entrepreneurs are not experts in market economy, nor do they have everything figured out - they follow their intuition, what other entrepreneurs and business press says, etc. > Growth is not per se required to run a successful company for a long time, that is just plain myth. Define "long time". I believe that with competition and sufficiently long time, it's not a myth, but an inevitability. > Also, as soon as you make growth the main motivator to run a company you are opening yourself up to go bust, inherently so. You can always go bust. If you build a non-expanding, sustainable business, it's only a matter of time before change in the market, or competitors, or just plain increase of costs of living / inflation in general will force you to either grow or give up, as some nonzero amount of growth will be required to just maintain your status quo. Turning this around, and giving another answer to the "driving motivator" question, you can view it through perspective of observer selection: pretty much all companies pursue growth, because those that didn't are no longer operating.

TeMPOraL 4y ago

> How is a company dying if it continues to make profit in a changing market? Because, for example. their market is being steadily taken away by their competitors, and the company doesn't have a way to stop it. Death takes time, and may not be apparent if you're only looking at profits. The company could be profitable, but less so every year. Or, the company could be growing its profits year by year, but by a smaller factor. In more general terms: your profit may be positive, but if any of its derivatives (first, second, N-th) is negative and you have no way to address it, then you're dying. >> Growing revenue and profits allows adaption to new competitive threats. > Adaption to "new competitive threats" is done by humans. Yes, but having more resources lets those humans invent and execute such adaptations better - in the same way it's easier for individuals and households to adapt to changing life circumstances when they have savings and a stable income source, and the more of these they have, the easier it gets.

jnovek 4y ago
“Because, for example. their market is being steadily taken away by their competitors, and the company doesn't have a way to stop it.” This is circular reasoning: companies must grow because because otherwise they will have their lunch eaten by other companies who are growing because they must grow. I realize that this is an absolute basic tenet of capitalism that you’re talking about, but this response only explains where we are, not why we’re there.
- TeMPOraL 4y ago
  > This is circular reasoning Yes. Or, in other words, a feedback loop. > I realize that this is an absolute basic tenet of capitalism that you’re talking about, but this response only explains where we are, not why we’re there. It does both: we are here because it's a self-sustaining negative feedback loop. How exactly we got here has been long lost to history, and the specifics don't matter anyway: what matters is, how hard would it be to break out of this state, whether it's worth doing in the first place, and, if we somehow break the cycle, what's there to stop us from immediately falling back into it.
  - pixelfarmer 4y ago
    The driving motivator is just greed, nothing else. Growth is not per se required to run a successful company for a long time, that is just plain myth. Nor is growth a guarantee to survive for a long period of time. It may increase the chances to stay afloat, but that highly depends on the circumstances. Also, as soon as you make growth the main motivator to run a company you are opening yourself up to go bust, inherently so.
    - TeMPOraL 4y ago
      > The driving motivator is just greed, nothing else. In some cases, sure. But I feel it's also a cop-out - it's easier to assume those business men are just driven by greed, than to look at the messy interplay of motivations and incentives that are the actual driver. Perhaps that's too cynical a take, but I think it's quite common for small companies to focus on growth because... that's How Business Is Done. Many entrepreneurs are not experts in market economy, nor do they have everything figured out - they follow their intuition, what other entrepreneurs and business press says, etc. > Growth is not per se required to run a successful company for a long time, that is just plain myth. Define "long time". I believe that with competition and sufficiently long time, it's not a myth, but an inevitability. > Also, as soon as you make growth the main motivator to run a company you are opening yourself up to go bust, inherently so. You can always go bust. If you build a non-expanding, sustainable business, it's only a matter of time before change in the market, or competitors, or just plain increase of costs of living / inflation in general will force you to either grow or give up, as some nonzero amount of growth will be required to just maintain your status quo. Turning this around, and giving another answer to the "driving motivator" question, you can view it through perspective of observer selection: pretty much all companies pursue growth, because those that didn't are no longer operating.