News

Organic growth no longer optional for Australian businesses
February 2010

As many ASX-listed companies prepare for the half-year reporting season this month, a survey among 60 CEOs and senior executives of leading Australian companies has revealed organic growth as a key priority, ahead of mergers and acquisitions, in planning for the post-GFC environment in 2010. 

The survey, entitled Growth Insights, was conducted by Sefiani client thinkGROWTH, a high-performance business growth and innovation advisory firm.  Mike Kaye, thinkGROWTH’s managing director and former Accenture partner, said the GFC had changed the landscape for business growth in Australia.

“Access to capital has changed, driving an increased scrutiny of growth prospects for companies of all sizes, particularly the mid-market. Organisations will have to build a credible organic growth story. Should they fail to deliver, they will be punished.

“Companies will need to move away from their overreliance on M&A, which, at best, provides a testosterone-fuelled short term growth fix, with the vast majority of M&A deals failing to deliver significant and lasting value,” he said. 

“Instead, businesses need to properly embrace innovation and entrepreneurship to complement their analytically-driven processes as the market is demanding not just growth but sustainable growth.  There’s a big difference,” Mr Kaye said.

Despite their focus on organic growth, alarmingly over 50% of respondents described their companies’ current approach to organic growth management as only ad hoc or, at best, basic, while just 37% claimed any sophistication at all. The findings also revealed troubling gaps in Australian companies’ capability to successfully manage organic growth.

The research also showed that, while most Australian companies recognised the increased significance of organic growth, many are struggling to put this capability into practice.  Sefiani was engaged to raise awareness of the findings within key business publications to alert Australian organisations to potential risks they may face.