All successful organizations go through a process of growth and development. Although used interchangeably, the terms growth and development have different implications. The term “growth” is generally used to express or communicate a positive change in the size or number(s) of something that we can easily count or measure. The term development is, however, used in a more broader sense. It is used to denote not only the quantitative growth of something but also any qualitative change or modification that is capable of improving its abilities to function. In an organizational context, growth is more concerned with achieving higher revenue and profit numbers whereas development is more concerned with learnings and improving processes and overall business environment.
In this article, we will discuss the concepts of organizational growth and development, how they are different from each other and also how they are related to each other.
Definitions and explanations
Growth typically refers to an increase in size or number. It is a positive quantitative change which can be observed and measured or counted without much effort. In organizations, growth is gauged, expressed and communicated in terms of matrices like a 25% rise in annual sales revenue, increase in number of employees by 10% during current quarter, a 7% additional gain of market share and a 5% boost in net annual profit etc. Such measures determine the extent to which an organization has experienced externally evident and quantifiable modifications.
Regardless of current scope and volume, growth is important for all types of business. When a business grows, it indicates that it is going to be bigger and moving towards prosperity and success. Organizations mostly strive to grow; smaller entities wish to become larger whereas the larger ones strive to become even larger. Entities, especially commercial ones, need to continually grow so that they can survive in an economic world with high competition. All direct and indirect costs of doing business including raw materials, salaries, wages and marketing expenses inflate over time. To counter this inflationary impact and remain profitable, entities constantly need to grow their revenue and profit figures. For small businesses, growth brings economies of scale, more power and influence, greater potential to deal with market fluctuations and finally a higher rate of survival.
The term development is broader than the term growth. Development includes both growth and an improvement in business environment that entity manages to create. This means that development includes not only a change in size and volume of business but also a modification in how the organization performs in its internal and external environment. In addition to measurable growth (as explained above), there are numerous activities of qualitative nature that lead to an organization’s development, including employees training and motivational programs, modification in production processes, adopting software packages for bookkeeping needs, collaboration with other entities and institutions, offering better after sale services and accepting environmental responsibility in a better way etc.
The development is a blend of both quantitative and qualitative achievements and is, therefore, not always easy to measure. For example, achieving a higher level of employees’ motivation is something that would certainly benefit the organization but it is not possible to measure and state this motivational level numerically.
Development is also said to be a learning and transformation process that brings about an increase in the complexity, diversity and quality of a system.
When we say an organization has developed, we refer to the improvements it has achieved in its abilities to fulfill its requirements and those of others connected with it in any way. Individual and organizational development pertains more to learning rather than to profit making.
Difference between growth and development
The four main points of difference between growth and development are listed below:
Growth means an increase in size or number which is generally signified by an increase in sales, profitability, number of employees and market share etc.. On the other hand, development signifies an improvement in not just size and numbers, but in the overall circumstances in which organization functions. In organizations, development is denoted in terms of improved competency, diversity, complexity and excellence.
Growth is quantitative and external in nature, and essentially involves physical changes. However, development is usually qualitative and internal in nature.
Since growth involves physical changes, it can be observed and measured. In organizations, it can be measured in terms of increase in sales, profitability, number of employees, income, etc. On the contrary, development is not easily measurable because of its qualitative nature.
4. Ceases to occur
Organizational growth stops when it has reached the maturity stage; however, development never stops and continues as long as the organization remains operational.
Growth vs development – tabular comparison
A tabular comparison of growth and development is presented below:
|Any change that occurs as an increase in number or size||Internal improvements that are experienced in an organization in terms of its skills, competencies, learning, etc.|
|Quantitative and external||Qualitative and internal|
|Can be measured easily||Not easily measurable|
|Ceases to occur|
|Stops when organization reaches the stage of maturity||Organizational development can never cease|
Conclusion – growth vs development
The key point of difference between growth and development is that the former term is used to denote countable or measurable positive changes which can be generally expressed quantitatively whereas the latter term is used to express changes and modifications of both quantitative and qualitative nature which may not always be countable or measurable. In business context, the term growth is specifically linked with measures like revenues, profits and market shares whereas the term development is linked with all the areas and aspects of an organization that contribute towards its discipline, strength, popularity, survival and overall success.
In commercial organizations, growth and development has an interesting relationship. Both are strong supportive of each other and proceed side by side. Growing revenues and profits increase inflow of resources into organizations which can be utilized for the development of organization’s processes and its employees by arranging training and motivational programs etc. Development, in turn, brings efficient processes and highly motivated employees to boost growth.