Strategies to Drive Organic Growth
In our daily lives as business leaders, we tend to get lost in the routine of running our firms, and/or simply keeping our heads above water. It is the proverbial “working in the business” instead of taking the needed time to “work on our business.” We get so entrenched in our respective operational environments that we find ourselves losing touch with or simply forgetting even the fundamental concepts (those basics that we learned in business school) or tools that we can employ to successfully and sustainably grow our companies. Certainly, it is worth a refresh from time-to-time to review basic strategies that lead to growth, and in taking time to assess that information which many of us learned long ago, perhaps we may each challenge ourselves to rediscover, develop and execute some programs that can lead to further or even exponential growth.Internal or “organic” growth strategies are efforts employing the resources within the firm itself (i.e. – new product development, line extensions, marketing programs or pricing strategies, and/or geographic expansion) to drive growth.
There are many advantages to concentrating on growing a company organically, versus the mergers and acquisitions (M&A) or joint venture route. Internal growth allows the management team to control the rate of growth. It can be incremental and even-paced. Certainly, growth from within preserves the culture of the organization, and at the very least, allows the company itself to define or modify the culture. Conversely, mergers or acquisitions tend to complicate a company’s culture, or change it so dramatically over a short period of time that the firm resembles nothing of its former self. And when a merger or acquisition does not go well, the cultures clash, or the management teams find they are incompatible, decline rather than growth, is one of the more likely outcomes.
Although there are many advantages to organic growth, employing internal growth strategies tend to be a slow form of realizing growth, while pursuing a M&A game plan, albeit quite risky, can help a firm see near immediate top line or resource expansion. It can also be quite difficult, especially for a smaller firm, to recoup or come back from a failed investment in an internal growth strategy. It is therefore important to weigh the advantages and disadvantages of each growth strategy that a firm might pursue. Risk and reward are certainly a factor in each strategic direction as is the speed or tempo at which a company wishes to achieve growth.
Over the next several weeks, we will take a deeper dive into the fundamentals specific to developing and implementing strategy to drive and achieve internal (organic) growth. We’ll explore new product/service development and how it can be (and usually is) a strategic instrument and catalyst to further company growth. We’ll look at other product/service-related strategies, including product/service improvements, line extensions, increasing market penetration and geographic expansion.