Create Organic Growth

Organic growth is a key driver of every company’s long term plan. But there is evidence that not enough businesses are effective at finding and implementing strategies to create organic growth. In the most recent McKinsey Global Survey, this topic is addressed. 

They identified three dimensions, “Companies can Invest, or identify pockets of growth and reallocate resources to them; they can Create, or innovate products, services, and business models; and they can Perform, or excel at commercial functions and operations.” The study also identifies four myths that don’t hold up when you look at the data.

Creating new products, services, and businesses is the best way to grow

The excitement of developing new offerings is intoxicating. However, create is the least used option of the most successful organic growth companies. 44% of respondents focus on investment to drive organic growth. “It makes sense that top-growth companies adopt this lens more often than the other two, given that the most common best practices for investing all relate to how a company fundamentally focuses its resources and organizational attention on growth.”  

Another compelling finding is the need to develop proficiency in more than one of the three areas. If you don’t develop any proficiency, annual growth rate is below that of the industry overall. If you focus on just one dimension, you’ll do slightly better than industry growth rates. If you are able to adopt two or all three dimensions for organic growth, you’ll do 3.5 times better than if you focus on a single dimension.

A word of caution, this is not an easy task. Just 12% of companies have been able to apply all three dimensions. To do so requires dedication and attention across the entire company, as well as investment to see it through to success.

What worked before will work going forward

Much like Marshall Goldsmith’s book, ‘What Got You Here Won’t Get You There’, you can’t assume that what worked for you in the past will continue to work. Technology is changing the playing field faster and faster. Areas where you had an advantage are more quickly copied resulting in a need for new approaches to stay ahead. If you’re growing slower than the industry, you need to focus on understanding and improving your customer experience.

If you’re ahead of the industry growth rate, consider the following proven methods for high-growth companies to maximize your own growth:

  • pursuing innovation through short commercialization cycles
  • actively managing their product and service pipeline
  • accepting small failures as necessary and important to innovation

Innovation capabilities can’t be developed

If you’ve laid a solid foundation for growth, innovation can be a “powerful and differentiating source of growth.” As noted above, create is the least cited dimension of the three, but if you’re successful with it, it is also the dimension that realizes the largest growth gap. “But realizing growth through innovation can feel as elusive as it is important: it requires exceptional creativity and can bring about transformational results.” You have to be comfortable with risk and learn from failure.

Superior growth is not possible in my industry

Blaming the industry you’re in for a lack of growth is simply a crutch to absolve you of any accountability. The study found that there are high-growth companies in every industry. Don’t allow this mindset permeate your company or you’re facing a more difficult, and self-imposed, hurdle to your success.

The report found that on average, “respondents across industries report very similar rates of adopting key growth capabilities— between 40 and 50 percent, whether they are in high tech or in basic materials.” If you have put in the work and have “strong organizational capabilities” in place, you can achieve a significant improvement in your growth rate.

For more information on assembling the right team to create lasting growth, please send us a note and one of our executive recruiters will respond accordingly.