When it comes to strategic growth, most leaders tend to focus on organic growth – hiring more sales staff, building a new branch or internally developing a new product. While there are many benefits to organic growth, there are times when relying on organic growth alone will not move the needle.
When markets are saturated and organic growth is stagnant, consider using external growth. External growth is partnering with another outside organization whether that’s through strategic alliances, joint ventures, minority investment, majority investment or acquiring one hundred percent of another company.
Many companies that would benefit from external growth shy away because it seems too intimidating, while others have tried external growth, but been disappointed. There’s a common misconception that only large companies execute acquisitions. That is simply not the case. It is more common to hear about large acquisitions because publicly traded companies are required by law to report any transactions. However, many middle market and private transactions go unreported as companies stealthily execute their growth strategy without broadcasting their plans to the marketplace.
External growth can help you rapidly enter into a new market, add a new technology, grab market share, or bring on talented people. Developing all of these initiatives through organic growth alone takes time and expertise that you may not have. By the time you figure out how to build your own solution, it may already be too late – or you may find it very difficult to be successful on your own in a new marketplace. On the other hand, with external growth you can react quickly to changing industry dynamics and leverage new opportunities.
If you pursue external growth, you don’t have to abandon your organic growth initiatives. In fact, external growth should complement your organic growth initiatives and both should be aligned with your overall strategic plan for growth.
Continue learning about new ideas for strategic growth in the next post on the power of teamwork.