Tuesday, July 22, 2008

Organic growth in organizations

From 'The Hindu' ..Must read article .....

Staff alone can drive organic growth in organisations

Organic growth is the mantra companies are willing to follow these days going by the increased global competition. In their bid to find new ways of increasing profits they are looking beyond mergers and acquisitions.

Organic growth refers to growth of the core of the company and for this growth internal resources are used and the main resource are the people of the organizations. Mergers and acquisitions are not considered part of organic growth, it is the profit generated within the company through increased output and sales that truly indicate such growth.

Edward Hess in his book The road to organic growth defines organic growth as, “Growth achieved through a commitment to customer satisfaction, employee engagement, and core profitability—organic growth—is a smart long-term strategy for any company. Organic growth represents the underlying strength and vitality of the core business.”

Further he identified six common factors in companies that have shown such significant growth. One of them is the people in the organisation whom he defines as, “Employees in these companies ‘own’ their results and their careers, and most even own part of the company. Management teams of these organisations are frequently home grown, with long tenures.” Another interesting observation by Hess is that these companies typically have an entrepreneurial spirit where the employees feel a sense of responsibility to the customer, feel accountable for results and also share the credit for those results.

The main initiators for organic growth are the employees. Many companies have people who are the main catalysts for organic growth of the company and contribute in improving customer satisfaction.

A study found that these employees usually belong to the middle management level and have certain common characteristics and use certain identical strategies to make a significant contribution to the growth of their organisation.

These growth managers as they are called have usually had a varied experience early in their career. They explore areas unrelated to their career more out of interest and enthusiasm to gain additional knowledge and experience. This knowledge allows them to innovate.

Even though these employees may belong to a specific background they acquire knowledge in other areas so that they can identify opportunities or come up with solutions to any kind of problem in the organisation.

These managers also have a strong belief in their abilities and the confidence to meet fresh challenges. They are constantly looking for learning opportunities, love challenges and are willing to take action. These traits allow them to approach uncertainties in a positive manner. This in turn leads to seeking opportunities for growth.

Such employees also have an entrepreneurial bent of mind. They are unlike the typical managers who follow the guidance provided by the head office and cannot think beyond. They predict and plan based on known facts. This is not conducive for growth because the ability to visualise the unanticipated is far more important, which is a quality growth managers display. They do not solely rely on data to determine plans but their power to intuit where the business will go forms the basis of their decisions. They show initiative and usually start out with small ideas that are later expanded and prove to be profitable ventures.

When these managers undertake new projects they try to do it with minimum risk.

Their ventures are not started typically by calculating the ROI but by calculating the loss they could incur and so they do not invest more than they can afford to lose. This also allows them to pursue interesting business ideas without incurring loss.

The success of such ventures is based on their deep understanding of the customer as an individual. This understanding helps them to design products or services that are closely linked to customer needs.

Such managers insist on having a team where every member is accountable and at the same time they are able to inspire them to work passionately and collectively for new ventures. They are careful about hiring members who have the right aptitude and put them in roles where their talents can be fully utilised. At the same time they do not hesitate to remove those who are found unfit or lacking.

Corporate rules and regulations do not act as obstacles to these managers because they have support from their bosses who encourage their ventures and remove any limitations.

Companies that want to maximise organic growth should identify such employees in their organisation and give them the necessary resources, support and encouragement. This will lead to greater success.

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