System Archetype 10: Growth and Underinvestment

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Ignatius D
Manager, India
Description of Growth and Underinvestment One of the System Archetypes is "Growth and Underinvestment". This archetype is based upon the archetype Limits to Growth which tells us to invest in a firm's resources and capabilities to grow. When growing action is there, it increases the demand, but the firm's performance level acts as a limit to that growth. So similar to limits to growth, if the performance level is the limiting factor, it will eventually stop to grow further. The growth and underinvestment archetype tells us how the performance standard is related to investment and investment is related to the growth of the firm. If the performance standards are low, then it may lead to a low interest in the need to invest as people may feel that if currently we are not making enough profits, then why to throw away the money instead of investing it somewhere else. Most of the time, performance standards are lowered to justify the underinvestment. Which causes people to set lower goals (...) Read more? Sign up for free


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