Monday, September 26, 2011

Are You and Your Organization Looking for Growth?

by Virgil R. Carter
Are you and your non-profit organization looking for growth opportunities?  Are you considering globalization?  A recent article “Drawing a new road map for growth”, by Sumit Dora, Sven Smit and Patrick Viguerie, published in the McKinsey Quarterly, reports on findings showing how large and small for-profit companies grow.  Are there some lessons here for non-profit organizations?

Finding 1:  Multiple avenues to growth produces better results in good times and bad.
Organizational growth has three traditional drivers, according to the authors.  These are:  1) portfolio momentum, or the market growth of the segments in an organization’s portfolio; 2) mergers and acquisitions; and 3) market share gains.  The authors cite their study showing that organizations outperforming their peers on two or three of these drivers grow faster and achieve better returns than organizations that outperform on just one driver.  Organizations that fared better in the economic downturn grew in multiple ways.

Finding 2:  Organizations in emerging market economies grow faster than those in developed economies.
Organizations in the study from emerging markets are outgrowing competitors from developed markets at a “startling pace”.  The wide gap in growth between emerging economy organizations and organizations in developed economies “suggests that companies should ask themselves whether they are paying enough attention to emerging markets and allocating sufficient financial and human resources to them.  Chances are the answer is no”.

Finding 3:  Smaller companies rely on market share growth and momentum for growth.
Small companies in the author’s study are growing by increasing their market share “to a much greater extent than large companies”.   Smaller companies, without the significant share positions in mature markets, usually grow faster than their parent industry or profession, according to the authors, because they “are not constrained by size, and their growth is often based on a new business model they can pursue without fear of cannibalizing revenues.”

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