Sales Essentials Blog

Is an Organic Growth Strategy a better way to go?

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How do I grow my business?

How do I get a better ROI?

How do I get more profitable sales?

How do I attract and convert more customer?

These are some of questions entrepreneurs, business owners, CEOs and sales leaders ask on daily basis. And rightly so. We need to ask questions of ourselves and how we run our businesses so as to be appraised of the better ideas that serve our goals and ambitions.

To keep me fresh, I like to read widely and most recently, while sitting on a plane to Sydney, I came across a very interesting McKinsey article about the various business growth options available to us.

It was called ‘The organic path to growth’[i].

It got me thinking about the various conversations I have with clients about how they want to grow their businesses, what products/services they want to sell, which channels do they want to sell to, what types up customers do they want to attract and serve, how their salespeople need to sell and so on. These are business and sales strategy questions that then need to be operationised into a focused sales and services effort across the value chain.

Today, you would be forgiven if you thought the only way to grow a business was through mergers and acquisitions. The plethora of news articles and business publications spruiking private equity firms and venture capitalists as the pathway to growth would lead you to believe this to be true. It seems every start-up tech entrepreneur is looking for their venture capitalist to accelerate growth.

At its worst and in a world of short-termism and instant desire for profit and growth, the mergers and acquisition approach to growing businesses can be a bit like house renovators flipping houses to sell. We’ve heard and read too many disaster stories of businesses being stripped down to the bare minimum to remove costs and then sold on without any consideration or regard for the domain expertise within that business and sector via the people (customers and employees) and any intrinsic value. This approach often results in the shell of a company being the only remains. I’ve see this first hand.  

So what about organic growth?

Is this a bit old fashioned? What the McKinsey article pointed out is that done right, organic growth delivers long-term value too, and often better than M&As.

Organic growth may take longer and may not be for every market place or business; however, organic growth typically generates more value: ‘A look at the share-price performance of 550 US and European companies over 15 years reveals that for all levels of revenue growth, those with more organic growth generated higher shareholder returns than those whose growth relied more heavily on acquisitions’.

Here are three organic growth options available to us:

  1. Investors: Investors have a clear understanding of sources of growth from existing products and services and squeeze funds from a variety of areas, such as low-growth initiatives or unproductive costs, to reallocate capital and double down on winners.
  2. Creators: Creators build value by developing new products, services, or business models.
  3. Performers: Performers grow by constantly optimising core commercial capabilities in sales, pricing, and marketing.

Now, you can choose one of these options to further your growth but the research shows that the better performing businesses adopted at least 2 of these options simultaneously which demonstrated the power of a diversified approach to growth. Those organisations that took a diversified approach to growth, specifically combining ‘investor’ with ‘creator’ grew at 4% greater than their sector’s growth over the previous 3 years.

As the article stated: “These results make intuitive sense: companies creating new products or services frequently need to reallocate capital so they can place their bets, while an exceptional sales force or top-flight marketing team can accelerate a variety of new product or service initiatives. Our analysis further showed that companies exhibiting strong investor and creator tendencies particularly benefited from a diversified approach to changing their growth trajectory”.

Over the festive season when you may have some time to reflect, you might like to consider your growth strategy options.

Organic growth strategy looks like it might be a more viable and sustainable option for businesses to implement and for industries and communities to flourish.  And of course you will need a sales force that is aligned and ready to go to deliver your organic growth strategy.


Remember everybody lives by selling something.

Author: Sue Barrett, 

Venture capital firms mostly invest in start-ups with high growth potential.

Private equity firms mostly buy 100% ownership of the companies in which they invest. As a result, the companies are in total control of the firm after the buyout.


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