07/07/2019 How high-growth mature companies manage to do it | ACCA Global

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01 July 2019
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Written by
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Mature companies may lack the vaunted agility of startups but
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some have achieved remarkable growth figures. Tobias
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Kutzewski FCCA and Surja Datta ask how they do it
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"There is no evidence for the
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Growing a company is a challenge. To some fortunate startups and companies
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in thriving markets, it may come naturally, as part of a rising tide. But how can a
acc company in a saturated market grow profitably?
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07/07/2019 How high-growth mature companies manage to do it | ACCA Global

agloquestion inspired our research on the growth factors of manufacturing companies

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in mature markets. Based on an annual league table published by corporate finance
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 CFI Netherlands (you can find the 2018 list at bit.ly/CFI-2018), we identified a
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growth
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capital).
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These
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 2010s, in the aftermath of the sub-prime financial crisis. While the rest of the
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Dutch
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0.84%,
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busi posting average growth of 8.9%.
given,
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To
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advisers
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07-what they perceive as relevant growth facilitators. Second, we developed six
out
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detailed
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Three
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groexpected our research to reveal three general drivers for achieving growth:
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innovation, internationalisation and leadership.
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We ) separated innovation into three categories: product, process and organisational.
emexample of product innovation is a new and advanced product within an existing
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production line; process innovation relates to changes in the production process; and
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we defined organisational innovation as strategic alliances, joint ventures
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and outsourcing.
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ccoseparated internationalisation into global production and international sales
We
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activities. Leadership was separated into two variations: the behaviour of an individual
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key
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nesadvisers to mid-market companies and private equity investors who we
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interviewed stressed the importance of product innovation in achieving growth. This
19/ come as no surprise, since manufacturing companies in general are product-
should
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driven.
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dominate their business model.
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hts/ advisers generally emphasised the potential benefits of organisational
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innovation, such as the development of new business models and improvements in
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production processes – a strategy that found little support among the manufacturing
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businesses in our case selection.
gro
wth. and investors agreed that an internationalisation strategy involving countries
Advisers
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in close geographic proximity was frequently used. However, little evidence emerged
) cultural proximity plays any significant role when considering markets for
that
expansion.

The senior executives of high-growth manufacturing businesses differed in two

significant ways about how they thought growth could be achieved. First, although they
agreed that product innovation is pivotal in growth, they saw process innovation
principally as a cost-cutting response to price competition – a move that becomes
relevant only under external market pressure.

Second, they identified internationalisation as important to growth, primarily through

increased sales activities in geographically close countries and after careful analysis of
market entry conditions.

Business advisers and investors generally emphasised the importance of leadership

capabilities in achieving growth. Company executives, however, stressed the
relevance of collective efforts and general market conditions. The combined efforts of

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07/07/2019 How high-growth mature companies manage to do it | ACCA Global
the company tend to come together eventually under favourable conditions. It seems
that where preparation meets opportunity, executives understand that a little luck truly
 a company’s growth ambitions.
helps


Untapped areas of growth
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Surprisingly, the research uncovered areas for further growth that remained untapped.
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Organisational innovation, expansion into countries with strong cultural similarities and
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developing leadership capabilities beyond the level of the executive team were all
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identified as avenues for further growth.
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y=hsenior executive described his company’s efforts as ‘a continuous struggle with
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the idiosyncratic nature of growth’. Achieving growth through a set of distinctive tools is
//wa certainty but, with careful monitoring and orchestration, it is possible.
not
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Coordinating growth is not a leadership task performed in isolation. Our research
aglo that to be successful it needs to be orchestrated across multiple levels of a
reveals
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company. Production, sales, research and development and finance need to
com
coordinate their efforts to maximise the likelihood of success.
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tent growth is achieved from more than one source, this coordination of efforts
Where
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forms
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abilities.
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As our research shows, a detailed growth strategy is not a prerequisite for growth.
n/m high-growth companies do not follow any growth agenda. However, all
Some
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companies in our research perceive and address the need to define and carefully
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monitor
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business opportunities.
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The
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High-growth companies have always fascinated practitioners and scholars alike. Jim
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Collins and Verne Harnish, for example, have explored company growth and the
nes of businesses in depth. And as far back as 1959, in her book The Theory of the
scaling
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Growth of the Firm, Edith Penrose declared she had found no evidence for the
19/
assumption that a growing company is doomed ultimately to develop into an
07-
unmanageable behemoth.
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nsigresearch extends this view. Coordination of company activities and resources may
Our
hts/ contribute to efficiency and profitability when performed as part of a structured
even
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monitoring framework – a strategy that ultimately involves all organisational levels and
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facilitates the exploitation of new growth paths. Growing a company remains a
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challenge, but it is, we believe, a manageable one.
gro
wth. Kutzewski FCCA is an interim manager and part-time researcher in
Tobias
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entrepreneurship at Vrije Universiteit Amsterdam. Dr Surja Datta is a senior
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lecturer and researcher at the Business School of Oxford Brookes University.

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