Resources & Blog
Posted: Wednesday, December 07, 2011
Achieving Sustainable Growth From Within
A company that emphasizes growth from within (also known as organic growth) does just that; they start building the business from the inside out.
Edward Hess, Professor of Business Administration at the University of Virginia’s Darden School of Business, conducted extensive studies of public companies. After examining 800 companies, Hess found that just 22 consistently created significant economic value for their shareholders and excelled in their industry through organic growth. Rather than relying on smart acquisitions or clever marketing, these companies grew from within by focusing on building their customer base, creating new products, and operational efficiencies.
Based on his research, Hess defines six characteristics of companies that grow from within:
- They relentlessly pursue a simple, easy-to-understand business model – Employees at all levels can easily understand and explain the mission of the organization. What’s more, employees understand how their job helps the company to execute that mission and are committed to achieving it.
- The “soul” of the organization is entrepreneurial – The organization provides employees with an environment that focuses on entrepreneurship. Each person is accountable for the success of the organization and shares in its rewards, resulting in high employee satisfaction. When employees are highly satisfied, customers will be highly satisfied, leading to greater profits.
Measurement is king – Performance measurement is essential. It helps track the organization’s financial results as well as operational and behavioral objectives in a way that is open and objective, providing everyone in the organization with a common dashboard.
- They build talent from within – Employees of organic growth companies are evangelists for the organization. As a result, turnover is typically low because employees are passionate about positively impacting the goals and objectives of the organization.
- Leaders are committed to engaging employees and customers – CEO’s understand that business operates “through and with people.” Leaders of organic growth organizations devote a significant amount of time and energy to communicating with and engaging employees and customers.
- They focus on execution excellence – Most organic growth organizations do not provide uncommon products or services. What they do offer is consistently good performance. By utilizing technology to provide up-to-the-minute measurements, they quickly and effectively keep the company on course.
As we wind down 2011, one of the questions you may want to ask yourself in the New Year - “Is your community achieving sustainable growth from within to help achieve outstanding customer service and great performance?” The answer may be the very thing that sets you apart from the competition.