The growth imperative

I recently had a chat with some friends about how life happens to us at a tremendous rate. And the older we get, the faster time goes by. The factor that best shows this is the growth of our children. My oldest son is 22 years old. It feels like yesterday that I couldn’t tell my family over the phone that mother and daughter were fine because she had a tremendous lump in her throat.

Therefore, growth is a natural phenomenon for humans and even for animals, all other things being equal. However, we somehow make it a big problem for our companies. Investors demand that companies grow in order to increase their returns. They reward companies that provide their profits with a higher share price, and the management of the company is rewarded with high compensation and incentive packages.

Because of this, companies have a vested interest in ensuring that their revenues grow. At the same time, they must ensure that they are profitable as well. These 2 goals are often mutually exclusive. According to recent research by IMD’s Peter Lorange, only about 40% of companies manage to grow and become profitable.

Interestingly enough, from a value-based perspective, there are 3 financial drivers of value associated with growth:

• Duration of growth. This refers to the period during which you have as high a cumulative annual growth rate as possible. It is management’s job to ensure that they adopt projects that produce this result. In the absence of this phenomenon, eventually the best the company can hope for will be a growth rate at the maximum of the economic growth rate of the country in which the company is located. The management of companies that find themselves in this situation are in danger of being fired when their company is absorbed by the competition.




• Turnover growth. This factor seems pretty simple. After all, sales are about increasing volume at a given price, or increasing both volume and price. However, it is far from simple, as it requires many intangible factors to exist. Here we mean the optimal customer segments, with the optimal value proposition for the customer, utilizing the optimal distribution channels with the optimal marketing message, and linking the customer to you in a way that locks up competition and business. client lock.




• Profit growth. Profit is the difference between price and cost. Both variable and fixed costs. And volume plays a role in the case of fixed costs, on a per capita basis. The larger the volume, the lower the fixed cost per capita and the higher the profit per unit. The price-cost link is driven by efficiency, how agile and efficient its operating model is, and how productive and competent its employees are.

It is also very interesting that companies can grow too fast. Your investment needs may be outweighed by your cash flow needs due to a working capital requirement and a fixed asset investment requirement. Businesses should remember this when pursuing the growth imperative!

That said, the common denominator of all of the above growth types is the people in the organization. You need to have committed people who are committed to the vision, mission, purpose and strategy of the organization, who are productive and hardworking. You need people who are trained and developed, and who have an employee value proposition that is as attractive to the employee as the customer value proposition is to the customer. Without these types of people, there will be no long period of high growth, no revenue growth, and no profit growth.

Growth also requires the growth of the organization’s leaders. Strong and visionary leadership is a prerequisite for strategy implementation. And this requires the growth of the individual in a significant way, making him grow in an emotionally and spiritually significant way.

I was recently lucky enough to accompany a group of MBA students from the Stellenbosch University Business School on a study trip to France and Belgium. As part of the tour, we visited the European Commission office in Brussels. There I saw the following emphasis on growth:

• Smart growth: invest in knowledge and innovation. This is the type of growth referred to in the previous paragraphs. We need to be more informed and creative than we are today. And this is an ongoing truth. We never get to the point where we can relax when it comes to this! However, as companies and teams, we must also be aware of and concerned about Albrecht’s Law. Karl Albrecht stated that “intelligent people, when grouped together, tend towards collective stupidity.” To avoid this, we need people emotionally and spiritually who are capable of creating synergy, where the whole is more than the sum of the parts.




• Sustainable growth: promoting a greener economy. We must be aware that we cannot grow at the expense of our planet. However, sustainability also requires that our business models and strategies are good enough to ensure the survival of the company in a competitive environment. Of course, too often we emphasize the “sustainable” growth of our business models and strategies and ignore the needs and requirements of the planet. We do this at our own risk, hence the EC’s focus on a greener economy!




• Inclusive growth: fostering a high employment economy. Technology has become an asset and a curse, depending on how you look at it. We use technology to solve a myriad of problems, but we often create more problems in the process. Increasing productivity through the use of technology is great. However, this often leads to jobless growth, which can have a devastating effect on developing companies. So to be socially responsible, we must grow our businesses and economies with the caveat of fostering a high-employment economy in mind.

So far we have talked about the company. This does not mean that people can sit back and wait for others to take care of them. He or she also has a responsibility to ensure that they grow as individuals, develop their skills, and are and remain employable, regardless of the direction of the economy. Again, you must understand that this journey of personal growth is a journey without end. If they don’t, growth will happen to them, and not necessarily for them and often (mostly?) Not for their benefit!

The reality is that the absence of growth is not stasis, it is regression and, finally, death. Relative to others who do grow, you don’t stand still if you don’t grow. You stay behind. This is the case whether you are an individual or a company.

So growing up seems to be essential. But it seems to be like thinking, what Henry Ford said is so difficult that very few people get involved in it. People struggle to grow, which is probably why so few companies grow optimally and adequately.