Key Characteristics that Separate Growth Companies from the PackKey Characteristics that Separate Growth Companies from the Pack
Ever wonder why some companies continually seem to experience growth while others remain stagnant or hit a wall, and still others can’t stop the bleeding? While the right product and sophisticated sales strategies are certainly critical, there are other key factors that are common among growth organizations regardless of industry, specifically midmarket companies.
February 13, 2014
Ever wonder why some companies continually seem to experience growth while others remain stagnant or hit a wall, and still others can’t stop the bleeding? While the right product and sophisticated sales strategies are certainly critical, there are other key factors that are common among growth organizations regardless of industry, specifically middle market companies.
Management’s attitude and emphasis on execution can be the critical difference that separates growth companies from non-growers, according to a research report titled, “Pathways to Growth” from the National Center for the Middle Market, a partnership between GE Capital and Ohio State University's Fisher College of Business, along with middle market expert and Inc. magazine economist Dr. Gary Kunkle. The study leveraged available data from a database of 128,000 middle market firms covering a recent seven-year period, from 2006 to 2012. After following these firms and mapping which grew and which didn’t during two separate recession periods, the center then conducted a comprehensive survey of 247 middle market CEOs and other C-level executives to get a better understanding of the key growth drivers.
While most companies surveyed placed value on eight key areas of management, executives of growing firms rated their performance more effective in these areas, proving that having the right attitude and consistently executing is really the key, the research shows. Specifically, those companies that experienced consistent growth placed more emphasis on talent, innovation, vision, market expansion and internal processes, according to the study, while growers and non-growers alike placed similar importance on investment management, product and marketing and partnerships. Regardless, growth companies outperformed their counterparts in all eight areas, showing that all of these components have value.
One major difference in attitude: Non-growth companies don’t seem to hold themselves as accountable as growth companies do. They focus more on external challenges while growth companies hone in on execution, according to the study.
Companies in the decline attributed their fate more to external challenges such as customer loss or changes in customers’ buying patterns. They also tend to blame other business issues such as the rising prices of materials or technology or process changes, according to the survey.
Conversely, successful companies seem to capitalize and even thrive on changing market conditions. The survey noted growth companies take advantage of change and use the opportunities to innovate, improve processes and even restructure, according to the report.
Also common among growth companies is their performance evaluations on specific management practices. They defined their top capabilities along management dimensions:
for talent, retaining talent;
for innovation, process of idea evaluation;
for vision, management focus on growth;
for investment management, relationship with capital providers;
for market expansion, add headcount;
for product and market, core product focus;
for internal processes, agile decision-making; and
for partnerships, strategic alliances.
The report goes into further detail on other growth drives and can be found here.
The study shows there are certain characteristics that separate growth companies from non-growth entities that are well beyond product and pricing. Processes, management attitude, execution and even how employees are treated all are contributing factors.
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