Grow or die is the mantra of virtually all enterprises for a simple reason—the cost of everything constantly goes up; therefore, to remain productive an organization must be growing at a rate exceeding inflationary trends. If it doesn’t, it simply becomes less profitable year over year until calling it a day.
While a company can simply raise prices to accommodate the rate of inflation, or cut costs to the bone, there are competitive consequences to these actions. Much better, the argument goes, to create new products, enter new markets, expand into new geographies and do other new things to raise revenues. This explains the non-stop momentum (even during the recession) behind oft-difficult-to-achieve organic growth strategies and comparatively easier (but riskier) buy-your-own growth through mergers and acquisitions.
Not everyone agrees growth is all good. There are more than a handful of savvy academics who will argue that an overwrought focus on company growth will backfire and actually harm the business. They can point to companies that have been around for decades and count the same number of employees. Many CEOs and CFOs would beg to differ. Smart Growth is the goal, they contend, not growth for growth’s sake.
Organizations that decide they’re going to grow chiefly through acquisitions also may fail to build enough internal competencies to absorb what they’ve got. The authors cite Tyco as a poster child of a company that bought up businesses faster than they could integrate them, and subsequently split apart.
Obviously, growth is not for the fainthearted. In this eBook, we provide several chapters on growth strategies and risks, which we hope will open up your company’s resource pathways.