Wasted Growth

One sure-fire way to accumulate waste is to assume uncontrolled growth.

In the case of an organization such as a corporation, growth requires that additional resources be located, extracted, and converted into useful products and services which in turn must be marketed and exchanged for other products, services, or resources. All of this requires infrastructure (or as businesses call it, “capital” and “overhead”), which enables everything else to happen.

If growth in infrastructure falls behind growth in operations (everything else), the tendency of many organizations is to skimp on the quality of the infrastructure. This may enable short term gain, but it will ultimately degrade the effectiveness of the additional operations, thus wasting some of the resources spent on them. The waste generated in this fashion tends to grow exponentially, since additional infrastructure (and the resources spent on it) often depends on existing infrastructure to function properly.

Degradation of operations due to inadequate infrastructure can lead to reduction of resources needed to fuel an organization’s growth, or even its survival. The mechanism for this is the reaction of consumers of the organization’s output to unmet expectations: choosing to pay less or find another supplier. The reduction translates into lower consumption by the organization and possibly further decline in quality and quantity of both infrastructure and operations.

To avoid this potential death spiral, infrastructure should always precede the operations it supports and be built and maintained with the highest quality. Resource availability should always be factored into planning for growth, with enough on-hand to support the organization before income from operations can be acquired, and the amount of total resources identified so that the lifetime of the organization can be estimated and its termination planned for (a vital step that is often overlooked).