Reprint: R1205F
Many CEOs don’t seem to care about organic growth. They either give up on it, in the belief that their companies will inevitably become low growth, or they cede responsibility for it to the operating units.
Those are big mistakes. In an uncertain business environment, all corporate leaders need to be actively engaged in organic growth. Four rules can help them support the operating units in the quest for the best opportunities:
Keep an eye on the big picture by setting standards and assembling data that steer the company toward promising areas, nurturing an enterprisewide organic growth capability, and looking across markets and businesses for small opportunities that can be bundled.
Fight the short-term pressures of the business cycle by earmarking local cost savings for local investment and demonstrating, through a special corporate fund, that good ideas can always attract resources.
Resist typecasting some units as “growth engines” and others as “cash cows.” Those labels shape beliefs about growth and affect the operating units’ behavior.
Create a language for organic growth that helps the company clarify its priorities and develop a coherent, high-performing pipeline of opportunities.
High-growth companies become low growth all the time. Many CEOs accept that as an inevitable sign that their businesses have matured, and so they stop looking internally for big growth. Instead, they become serial acquirers of smaller companies or seek a “transformative” acquisition of another large business, preferably a high-growth one.
