You can redeem these points with hundreds of online vendors or redeem them as a statement credit to further invest in your business². Are you looking for the latest trends and insights to fuel your business strategy? Businesses can effectively research their target clients by creating detailed customer profiles, analyzing buyer history, forming focus groups, gathering feedback in-person or via surveys, and analyzing competitors. If you only attack one lever or component at a time, you will miss opportunities. So, make sure that someone within your company owns each of these critical areas. Empower them to work across the organization to make necessary changes, and put measuring systems in place to ensure that the steps you’re taking are making a positive impact.
The new product path can be a difficult one, since the market may not accept newly-launched products. However, some industries have very short product cycles, requiring businesses to continually churn out new products. If so, a business may need to engage in new product development, irrespective of the risks involved. Third, using the diagnostic questions, we conducted an online research survey of more than 1,200 US-based executives across multiple functions and industries.
As science demonstrates, natural processes are slow, yet they remain spontaneous and stable. In the same vein, organic growth tends to be slower—it takes time to market your product, seek customers’ attention, and expand your business. But organic growth surely never disappoints if you have invested the appropriate intellectual capital and required resources. In an organic growth strategy, a business utilizes all of its resources – without the need to borrow – to expand its operations and grow the company.
In the seize archetype industries, growth opportunities may come from innovating within current and adjacent product categories, so gaining market share through superior strategy and execution may be the key to growth. Under what circumstances and in what industries would each archetype be the most effective? We figured that there is no easy industry split of growth archetypes—all industries have examples of both archetypes, reflecting the unique growth opportunities available to a given company. However, logically speaking, where growth opportunities are far-flung and dynamic, it could be most beneficial to have strength in the scanning and portfolio management disciplines of the see and select archetype. And where growth opportunities are more concentrated and stable, there could be benefit in having strength in the strategy formulation and execution disciplines of the seize archetype.
Among companies focused on investing and creating, top-growth respondents are at least 70 percent more likely than their peers to report strong data and analytics skills (Exhibit 5). For example, among top-growth respondents at creator companies, 40 percent agree or strongly agree that their analytics-generated insights are easy to act upon; only 13 percent at other companies focused on creating say the same. A strong brand image can significantly contribute to organic growth by setting a company apart from its competitors and highlighting its unique value propositions, ultimately resulting in increased revenue. To create a powerful brand image, businesses can develop a distinct identity, design a recognizable logo, and utilize consistent messaging across all platforms.
They may even lack key underlying capabilities to do so or have incomplete and siloed views of where they stand on them. “Organic growth means growing your business using internal strategies and techniques such as marketing, sales, and search engine optimisation,” explains business strategy consultant Louisa Willcox. While organic growth is fuelled by actions and resources inside your business, inorganic growth is fuelled by external actions and can include paid advertising campaigns, and growth from merging or acquiring other companies. To track KPIs effectively, businesses must collect data (either manually or through automated systems) and monitor metrics such as customer acquisition costs, customer lifetime value, customer retention rate, and customer satisfaction rate.
Usually, a successful growth strategy will involve a combination of both organic and inorganic growth, as well as careful planning and execution to ensure long-term success. The concept is used to differentiate between sales generated from existing operations and those operations that were acquired during the measurement period. In particular, organic growth is used to determine whether existing operations are in a state of decline, neutral growth, or expansion.
First, you have to get clear on what constitutes a strong organic growth rate. Remember, I aim for 30% when I come into a company because I want to double the company quickly. However, according to the Rule of 72, at that rate, your business will take 7.2 years to double in size. Since organic growth knows your business in and out, it acts as the underpinnings to uphold your business’s pendulum without diluting the clasp of your company.
If a company merges with another in pursuit of inorganic growth, that company’s market share and assets become larger. This offers immediate benefits such as the additional skills and expertise of new staff and a greater likelihood of obtaining capital when needed. As well, it allows a company to grow much faster and almost immediately increase its market share. Inorganic growth, such as a boost from acquisitions, can provide a short-term boost. However, steady and slow organic growth can be viewed as superior, as it shows the company has the ability to make money regardless of the economic backdrop. Plus, there’s the downside of potentially using debt to fund inorganic growth.
That’s why, when you’re looking to boost your organic growth up to meaningful levels (30%, for example), decreasing your costs to provide your products or services should be a major contributing factor. The premise of organic growth is the optimization of a company’s business model from the collective efforts of the management team and their employees. The successful execution of the strategies stems from a strong, disciplined management team, effective internal planning and budgeting, and an in-depth understanding of the target market (and end-users served). Just like how a biathlete needs to concentrate on both skiing and rifle shooting to win the game, your organization’s growth-oriented strategies serve the purpose only when you focus on achieving both organic and inorganic growth in business.
Assessing growth readiness is a way to uncover those hidden elements and address them systematically to improve organic growth performance. Respondents were asked to state which activities/capability areas they thought mattered the most for growth. Segment/target, design, and execute showed up in that quadrant for both archetypes, which implies that when it comes to organic growth, they can be indispensable and warrant careful diagnosis.
This may be accomplished with more extensive marketing, essentially by selling more into existing sales regions. It may mean that existing customers buy in greater volume, 23 best free business software solutions for 2021 or that new customers are found within existing sales regions. Margins can decline when pursuing this strategy, as there may be additional marketing or expansion costs.
The problem, of course, is that any such returns tend to be delayed, and on paper, the growth may not be as impressive. Investors may be tempted to favor companies using inorganic growth because larger numbers are more attractive, even if the reality is that the company isn’t growing much internally. Another pitfall is that continued organic growth is very dependent on the state of the market. Not all smaller businesses have the internal skill sets for branding and marketing. From social media to paid ads – a marketing strategy needs to target the places your customers regularly inhabit.
Let’s say the soft drink company above is losing its market share in the beverage sector because customers are gravitating to flavored iced teas. The CEO of the soft drink company could decide to launch a new product line but instead directs the company to spend $1 billion to acquire the world’s largest iced tea manufacturer. Firm A had to rely on inorganic growth, i.e., an acquisition, for its 30% expansion. One option is to increase unit prices, so that customers are paying more for the same unit volume of sales. This approach is most tenable when pricing is relatively inelastic – that is, customers are willing to pay more, rather than buying elsewhere.