The Organic Growth Challenge

Our clients span many different industries – technology, medical device, industrial, building materials, automotive, chemical and aerospace. Over the last few years, we have witnessed many, or most, clients and even non-clients in these markets actively engage in various organizational development, restructuring and change initiatives. Many of these initiatives are implemented with the goal of making organizations leaner, more efficient, less risk adverse or better positioned either internally or in a market space. The traditional short-cycle, long-cycle business plans don’t necessarily fit with today’s global variables and ever changing business landscape. Every leader will tell you that change is essential for an organization to thrive with the new dynamics of today’s global market.

But what we see is that as organizations grow and become more complex, with complicated matrix reporting structures and a strict focus on being “lean”, the unintended by-products are the slow death of internal entrepreneurism and other internal drivers of organic growth. The new change initiative challenge will be how to drive real organic growth in the new structures. Large organizations with talented business development, R&D and product marketing teams struggle with this task. Real organic growth does not mean growing by 4% when the market is up by 3% – it means adding substantive, economic value add to an organization. And it is becoming ever increasingly impossible to do.

The trend of late has been to add growth and value through accretive growth versus organic growth. Wall Street continues to punish CEO’s and stock prices continue to tumble for those companies that don’t demonstrate earnings growth. However, it’s a long-term risky proposition to rely on accretive growth when statistics show the small number of M&A deals that actually generate shareholder value and economic value add to an organization.

In our new “lean,” matrixed and specialized organizations, where organizations are delivering well on capital efficiency, how do we now tackle the great new change initiative of delivering on real organic growth? Those organizations that figure it out the fastest will probably be the biggest winners in the next decade.