Posted: 15 Nov. 2021 4 min.

10 mindsets for organic growth

Topic: Operational Excellence

A few weeks ago, I wrote about M&A – an area with huge activity at the moment – so this time I thought it was only appropriate to write about the other big growth agenda, which is of course organic growth and the efforts to reconfigure companies to deliver continued commercial success.

There is no doubt that growth, in particular organic growth, is the lifeblood of any organisation. Organic growth may be slower to achieve than inorganic growth such as M&A, but it can frequently generate more value. Organic growth can allow companies to expand at a controlled pace, adapting their business models and structures along the way. It can also enable them to circumvent the cost takeout requirements and integration challenges associated with growth through M&A. A company focused on organic growth sends powerful signals to investors and talent alike about its health, its ability to innovate and its potential future performance. Understandably then, achieving organic growth is a priority for many top management teams.

However, many companies are possibly leaving value on the table when it comes to organic growth. They often have hidden blind spots around where and how to look for growth opportunities and select the best ones. They also can face biases and weaknesses in developing and executing strategies to exploit them, especially moving resources at scale and speed to such opportunities. 

They may not be fully ready to grow and this can inhibit them from achieving their full organic growth potential.

So, how can top management diagnose if and where they have such blind spots? What are the activities, capabilities and practices that underpin organic growth and how can they improve on them? How can they optimize growth readiness? And most of all, what steps can they take to achieve greater organic growth?

To answer these questions, some of my Deloitte colleagues in the US surveyed more than 1,200 executives not long before the pandemic hit and from that came some very interesting learnings that I want to share with you.

10 mindsets for growth
There’s not a fixed formula for success when it comes to organic growth, but based on our research we can now identify a set of distinctive practices that are implemented by growth overperformers.

Here are 10 of the most effective mindsets and practices for achieving organic growth:

  1. Correcting for blind spots: Every company has potential biases and blind spots in where it looks for growth. Growth overperformers do a better job of correcting for those, between the core and new businesses, across time horizons and across types of growth opportunities.
  2. Learning across the portfolio: Overperformers typically take a portfolio view on organic growth, incorporate learnings from previous successful and failed investments; they consider companywide factors such as alignment with the corporate mission and core competencies; and they look at how growth investments impact each other as a portfolio. In other words, they don’t just select individual opportunities, they govern across the growth portfolio.
  3. Resource flexibility: Overperformers can move resources such as talent and capital to growth opportunities faster and at greater scale. Underperformers have budgeting habits or other processes that inhibit moving resources.
  4. Clear and granular choices based on deeper insight: Growth overperformers make clearer, more decisive choices about targeting, for example, on specific segments to pursue. They also have more fine-grained insights into where and how to target, for example, specific stages of a customer journey or specific customer behaviours to influence. And they have a more detailed understanding of their customers that underpins their segmentation and targeting activities.
  5. Enablement through insights, data, decision processes and technology: Overperformers enable segmentation and targeting by leveraging complementary strengths in insights and data, decision-making processes and technology. Collectively, these can ensure that deep and granular customer insights are infused into segmentation and targeting decisions.
  6. Ingredients of winning value propositions: Growth overperformers generally excel at the design of brand positioning, customer experience and pricing. They ensure they have all the key ingredients to consistently develop winning value propositions, including disciplines such as design thinking, rapid prototyping, social listening and ethnographic research; they also have the talent to operate such processes.
  7. Shared growth agenda: Overperformers typically have a shared growth agenda, including shared ambition and aspiration around growth, shared accountability and a common view of growth priorities across the enterprise. Underperformers, by contrast, report misalignment of incentives and difficulty forging cross-functional alignment.
  8. Personal leadership of alignment: Many growth-driving executives – including CMOs, chief strategy officers and other C-suite leaders – personally create and convene forums to ensure alignment around the growth agenda. These leaders also make efforts to sustain alignment by spending more time in person with their C-suite colleagues.
  9. Test-and-learn approach: Growth overperformers use iterative, test-and-learn, in-market experimentation and piloting processes. This is consistent with their emphasis on in-market learning in growth portfolio management and on closed-loop, real-time measurement and adaptation in execution.
  10. Virtuous cycle of growth and talent: And finally, overperformers create a virtuous cycle of growth and talent attraction, in which growth attracts talent and shapes a culture of innovation, which in turn drive growth. They are also associated with advanced human resource policies around diversity, inclusion and social responsibility, which also contribute to talent attraction and retention.

A team effort
It goes without saying that no single executive or function is likely to have the perspective required to integrate all the elements. It will require cross-team and cross-functional deliberation and collaboration. Achieving organic growth, I would say, is always a team sport.

Management teams seeking to drive organic growth should come together to develop a shared view of the steps required to improve growth readiness: Diagnosing strengths and weaknesses across capability areas and setting priorities to optimise growth readiness.

This can help build a more coherent and robust organic growth agenda that complements other growth-oriented activities like financial target-setting. Perhaps more importantly, a focus on a growth mindset can enable management teams to approach organic growth as a shared accountability across functional and business-unit boundaries and help them align around the growth agenda.

Forfatter spotlight

Tore Christian Jensen

Tore Christian Jensen

Partner

As a part of the Strategy & Operations practice Tore has worked with analysis, development and implementation of operational strategies. Tore has deep experience with aligning business models to changing market demands through optimisation of business processes and aligning systems, organisation and governance accordingly. He has industry experience from manufacturing, transportation, consumer products and energy. His main focus is on on the operational core processes but he also covers administrative support processes. As a program manager Tore has been leading transformation projects for international clients heading multiple parallel projects and reporting directly to executive committee members. His responsibilities cover everything from initiating assessments, identifying opportunities for improvement to building business cases and following up by designing solutions and driving teams through implementation.