Saturday, January 19, 2008

The Six Keys to Organic Growth

In THE ROAD TO ORGANIC GROWTH, Edward Hess takes a Jim Collins-like approach to find 22 businesses that epitomize the organic growth model. With research backed by a comprehensive study, Hess set forth to explain the underlying qualities these 22 businesses have in common. Hess whittled his findings into a list of Six Keys to Organic Growth.

The Six Keys to Organic Growth
“Growth achieved through a commitment to customer satisfaction, employee engagement, and core profitability—organic growth—is a smart long-term strategy for any company. Organic growth represents the underlying strength and vitality of the core business.” (p. 1)
“Our investigation found that [high-organic growth] companies generally possessed the six keys discussed below.” (p. 20)

1. An Elevator Pitch Model“High growth companies have a simple, understandable business model that their employees can understand and execute—none has a complex or sophisticated strategy.” (p. 70)

2. Instill a “Small Company Soul” into a “Big Company Body”“High organic growth performers have a small-company soul housed in a big-company body. A small company soul is entrepreneurial, with employees having ownership of the customer, being held accountable for results, and sharing in the rewards of those results.” (p. 81) (we have talked a lot about this)

3. Measure Everything“One of the six keys to building a consistent high organic growth company is measurement—of everything. The 22 companies on the organic growth index (OGI) list track a variety of metrics—financial, operational, behavioral—to understand which areas of their business are not performing as efficiently as possible, and then they take action to shore up those numbers.” (p. 97)

4. Build a People Pipeline“All the high-growth companies have a high management and employee retention, high employee loyalty, and high employee productivity as compared with their competition. Employees in these companies ‘own’ their results and their careers, and most even own part of the company. These companies’ management teams are frequently home grown, with long company tenures.” (pgs. 22, 117)

5. Leaders: Humble, Passionate, Focused OperatorsRather than being overly confident about their success, at high organic growth companies, leaders are frequently paranoid about complacency, arrogance, and hubris. Although many leaders are very wealthy, for the most part, you would not know this from their dress, their office, their demeanor, their attitude, or any outward appearance. Few of the leaders, if any, take credit themselves. There is a sincere respect for line workers, where many had begun their careers.” (pgs. 139, 140)

6. Be an Execution and Technology Champion“The high-organic companies generally do not have unique strategies, products, or services, nor are they market-leading innovators. But they are execution champions—day after day, they have figured out how to get consistent high-quality performance from their people. These companies use technology to drive efficiencies across their value chain. To them, technology is not a service function; it is an operational function.” (pgs. 23, 161)


Bob Cooper said...

Great comment from Peter S. DaSilva of ING Canada....

This book is actually required reading for all ING Canada vice presidents (we actually had Professor Hess speak to us last September), in fact over the last 18 months we have tried to instill many of these concepts into our organization with varying degrees of success. As you would expect it is easier to say than to do. Especially how you instill entrepreneurial behaviour in a large company that is very results oriented, striking the balance has proved difficult to the point that we have separated out both physically and culturally some of our best organic growth experiments in order to give them room to breath and grow. But the result - yes we have stronger organic growth than ever before, but as we reach scale we do not fit back in very well, the circularity of the situation is that I believe we would never have reached scale within the organization. And now the most entrepreneurial parts of the organization are outside the core.
Overcoming this is the big challenge for us, But this piece of Hess'
perspective has not yet been achievable.

We have had a lot of success with the other Five elements throughout.
Primarily I believe because we started with a humble and passionate leadership group. Egos are not a big part of our culture, honesty, respect and trust are the basis of value system at ING and this base is excellent to move in a direction suggested by Hess, because it fosters an environment that allows for experimentation and failure without catastrophic ramifications on peoples careers. Of the six my opinion is this is the one to start from it makes all the rest do-able in a short period of time.

Peter S. DaSilva FCIP MBA
Vice President Ontario Region

bruce said...

Good question, hopefully it gets several good answers.
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