Archive for the 'Organic growth' Category

Sustainability and organic growth

Sustainability and organic growth

It has always struck me that managers do not really like organic growth. Entrepreneurs of new start-ups do but, when the entrepreneur is replaced by a manager, when the CEO no longer has any commercial background, but is an accountant or a lawyer, the focus seems to shift to mergers and acquisitions and constantly restructuring and reorganising the complicated org-charts.

What is wrong with organic growth? Nothing, it is just difficult to get ever more out of a business unless the business is constantly reinvented, reinvigorated by innovation.
In the May 2012 issue of the Harvard Business Review, Ken Favaro, David Meer and Samrat Sharma (all of Booz & Company) describe how to refocus on organic growth. The article merits reading in detail but let me give you some highlights that are relevant in relation to sustainability.

Sustainability is the new growth market

1. Corporate leaders have to be actively involved in the business. I.e. it is not the right approach to be setting targets in the plush comfort of HQ and demanding detailed reporting on progress. It leads, according to Favaoro and associates, to managers of operational units who “would rather succeed conservatively than fail bravely. This might be good for their careers but does little for growth.” Corporate leaders have to ensure that the areas of growth are identified and acted upon.

This is where I think, sustainability comes in. Sustainability is the new growth market. Corporate leaders will have to ensure that the operational managers transform their product development and sales efforts in such a way that the company becomes more sustainable (in more ways than one). This will mean investing in new products, new processes, new staff and training of existing employees.

Anti-cyclical investment in sustainability

2. The need to invest is counter to the austerity Pavlov reaction shown by most managers when faced with a slow down of the economy. Favaoro and associates  call this, “Fight the Business Cycle”.

It is now the time to invest in growth by investing in sustainability. Production companies should actively look at bio-based resources, and service companies should look at reducing their carbon footprint and redesigning their product offering to include sustainability.

Wärtsilä and sustainability

The latter brings me to an advertisement at the back of the Elsevier (a Dutch weekly magazine).
Wärtsilä offers to reduce the ecological footprint of ships in operation. It really is a sign of the times if a main producer of ship engines offers clients not just a fuel efficient engine but offers its clients total solutions including ballast water treatment and oily water separators. Wärtsilä has taken the message to heart that to sell it has to focus on so the solutions customers want and nowadays that includes sustainability.

Felix Gruijters

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