The illusion of growth

I was recently stuck in traffic (not an uncommon occurrence in today's metropolitan areas) and it got me thinking about the fallacies associated with movement. The traffic i was stuck in was stop and go traffic meaning that we would move a few yards and then come to a complete stop. Because of this, some cars were taking an alternative route, which also had traffic. However the traffic in the alternative route- albeit just as heavy- kept on moving constantly. Even though the time spent may have been the same on both routes, the constantly moving one gave the illusion of movement and thus seemed more attractive to the time conscious commuter. In a company's life, just as in traffic, it is inevitable that there will be periods of stop and go movement. Notwithstanding that truism, companies are constantly punished at the stock market whenever they exhibit signs of a plateau in growth. This trend has become so widespread that companies no longer issues dividends for fear of being labelled "mature" with all the negative connotations that entails.

Industries too have cycles. From nascent to teething to high growth to maturity. Notwithstanding, companies are constantly looking for ways to spur growth as indeed they should. And one of the ways to growth is through acquisitions. However it becomes a problem when companies pursue the appearance of growth to the detriment of long term strategy. In hindsight, many of the mergers that occurred in the boom years were ill conceived and would in the long run not realize the benefits they touted. Hewlett Packard and Compaq's ill advised marriage is just one example of this. However the short-term benefits to the bottom line that occurred as a result of those mergers became so attractive that companies lost sight of the truism. The illusion of growth can never, in the long term, replace actual growth.