Assessing growth readiness is a way to uncover those hidden elements and address them systematically to improve organic growth performance. While one growth archetype displays the highest strength in growth portfolio management and growth scanning activities, the other shows the highest strength in design and segment and target activities (figure 3). We labeled the growth portfolio management and growth scanning-led archetype as the see and select archetype and the design and segment and target-led model as the seize archetype. The see and select archetype corresponds to the two activities on the top left of the growth readiness framework while seize corresponds to the top right (figure 2).

It’s more difficult when they’re all over the board because you’re everything to everyone. Since the start of the current pandemic, market disruption due to Covid has become a common barrier to business growth. Andrew Kelley is a manager at Deloitte Consulting LLP in the Customer and Marketing practice.

Such a growth agenda is inherently integrative, crossing multiple functions and involving the entire management team. It often requires alignment and integration of disparate views of the top management team. By expanding the ambit of organic growth to include growth readiness, management teams can formulate a shared growth agenda that positions them to act systematically and collectively to raise their company’s rate of organic growth. From our experience working with many companies on organic growth, we know that organizations frequently struggle across these dimensions. They often have blind spots in how they scan for growth opportunities and may have biases in which opportunities they choose to pursue and which they reject.

  • Organic business growth is growth that comes from a company’s existing businesses, as opposed to growth that comes from buying new businesses.
  • This is seen as a much safer option, although it may take more time before it starts to pay off.
  • Organic business growth, as opposed to inorganic growth, offers a more sustainable and cost-effective approach to expanding a company’s market share, customer base, and revenue.
  • It’s important to note, however, that organic growth is not without its challenges.
  • If your company has already tried financial target-setting and growth opportunity identification and fallen short on organic growth, conducting a growth readiness assessment may be the first step to diagnosing why.

A company has been selling widgets for the last 10 years, and sales have plateaued. To generate more organic sales, it invests in an online store and markets it with online advertising, resulting in an immediate 20% jump in organic growth. Later, the company spends $5 million to buy a competitor, along with its annual sales of $3.5 million. These additional sales are classified as inorganic growth, since they were purchased, rather than coming from internally-generated sales. No single executive or function is likely to have the perspective required to integrate all the elements.

Three Primary Strategies for Organic Growth

It can include investing in research and development to create new products and services that meet evolving customer needs. This way, businesses can stay ahead of the competition and maintain their position as industry leaders. In this example, company A, the safer investment, grew revenue by 5% through organic growth. The growth required no merger or acquisition and occurred due to an increase in demand for the company’s current products. Company B saw a decrease in revenue by 5%, which is a decline in organic growth. Company B’s growth is completely reliant on acquisitions rather than on its business model, which may not be favorable to investors.

  • They represent two distinct ways of winning at organic growth by building strength in different combinations of activities and capabilities across the 10 areas.
  • In other words, comps do not factor in growth from new store openings or mergers and acquisitions (M&A).
  • Often there is a negotiation between those responsible for driving growth from the new opportunities and those setting the financial targets.

Here’s what you need to know to bolster your growth as a business organically. In other words, when it is building new markets and developing new products. Organic growth means that companies are using their resources efficiently to generate profit.

Private Companies

Some examples of businesses that have implemented successful organic growth strategies are illustrated in the charts below for Dominos UK, Apple and Costa Coffee. We do not include them because they do not involve internal efforts, i.e. the growth came from outside. Offering new products or services and moving into a different market, i.e., diversifying, are also examples. To sum up, organic growth offers slower, steadier advancement and allows businesses to retain autonomy over their activities and strategy. Relying on internal capabilities can also make you more vulnerable to market disruption.

Organic growth marketing

Organic growth occurs from the internal efforts of management to improve its current operations, resulting in increased revenue generation and operating profitability. Your website is the face of your business and the primary channel through which customers engage with your brand. Therefore, tracking website traffic can help you determine how many people visit your website, which pages are popular, and how long people stay on your website.

Growth scanning: Looking for growth opportunities

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. Boston Scientific Corporation engages in the manufacturing of medical devices and products that are used in various interventional medical specialties worldwide. The company provides implantable devices including heart monitors, technologies for treating coronary artery disease and other cardiovascular disorders, and devices for diagnosing and treating gastrointestinal and pulmonary problems. Keep up with the issues, companies and people that matter most to business in the Milwaukee metro area.

Organic growth is 100% internal growth, i.e., when a business grows thanks entirely to the effective use of its own internal resources. Having a good understanding of the market landscape, trends, consumers and competitors is key when it comes to successful organic growth. In order to align with your target market, you need to analyse your business’ position within that space. We spoke to Innovate UK EDGE Innovation and Growth Specialist, Dr Nanette Bartram, who has a background in biotech and commercialisation, about the importance of organic growth for businesses, common challenges and strategies for success. Organic growth – whether that’s an increase in efficiency, higher revenue or a growing team – is integral for innovation businesses looking to grow and scale.

We asked about nine types of business capabilities and companies’ respective skills in each one. The two capabilities that top-growth respondents cite most often, in all three paths to growth, are branding and developing the right mind-sets and organizational culture (Exhibit 4). For companies following the investing and performing strategies as their primary paths to organic growth, resource allocation also is a table-stakes capability that they need just to be in the game.

Achieving organic business growth means that the company has managed to successfully increase its output and sales using the resources and strategies it already has available. When a business does not engage in acquisition activities, all of its sales growth is organic, and so is easily measured. This is not the case when there are ongoing acquisitions, since the sales of the acquired entities are mixed into the reported sales of the acquirer. In the latter case, a good way to measure organic growth is by comparing same-store sales for the current year to the sales for the preceding year. This approach will only work in the retail sector, where such comparisons are common.

Also, the second and third strategies can be expensive, so a business may not have sufficient cash to pursue both. That being said, larger and more profitable organizations may pursue all options at once, since they have the financial resources to do so. Management teams seeking organic growth should consider the location and nature of the growth opportunities available to them while deciding which growth archetype may be appropriate for their company. While all of the 10 areas in the growth readiness framework are important—better performance in each of the areas correlates with higher growth—which activities/capabilities matter the most? This type of growth is often seen as a more sustainable approach than relying on external investments or acquisitions. It allows businesses to grow without taking on additional debt or diluting ownership.

So, defining dynamic growth-building strategies must be your primary responsibility to helm your enterprise. A well-rounded company will likely adopt or practice all of the strategies at some point. Generally, only the top-tier level companies opt to utilize more than one strategy at once. An organic method would be the american accounting association to purchase a fruit tree sapling, grow it, and then harvest the fruit when it ripens. In the inorganic method, you may be acquiring more fruit but you’re still not actually producing any yourself. In contrast, while you may not be gaining fruit very quickly with organic growth, your own productivity is much higher.

These strategies aim to utilize a company’s internal resources to drive growth by increasing the number of transactions and customer acquisitions and minimizing customer attrition. Some examples of internal strategies that can lead to organic growth include investing in content, customer service, and sales. The term “organic growth” refers to a company’s ability to expand its operations and increase revenue through its internal resources and efforts, such as efficient management, product development, and marketing strategies. This is where organic growth occurs, contrasting with inorganic growth, which relies on external resources like mergers and acquisitions.

Usually, market research can help identify potential markets and develop marketing strategies that will effectively trigger them. One of the key benefits of organic growth is that it allows companies to maintain their culture and values while expanding their operations. It also allows them to build strong relationships with customers and stakeholders, which can help to improve brand loyalty and reputation. Organic growth can be challenging as it requires a long-term perspective, a commitment to continuous improvement, and regular analysis of a business’s performance. Companies must be willing to invest in research and development, innovation, and marketing to stay ahead of the competition and grow their market share. Typically, one of the first steps to achieving greater organic growth is setting out a robust growth agenda.