Wholesome Organic Profits

From Edward D. Hess

Job Vacancy Indonesia, Employee, Vacancy

 

When the average joe thinks “big corporation,” the images that spring to mind are primarily negative: backdating of stock options . . . fat cat CEOs who jet around in luxury while workers barely scrape by . . . huge mergers that spawn both big bonuses (for executives) and layoffs (for lower-level peons) . . . companies reporting record profits while cutting employee health benefits.

Watch the evening news and you’ll see why so many people take such a grim view of the corporate world. But the depressing stories also lead us to believe that there just aren’t any good companies — those that prosper and grow the old-fashioned way — left.

Companies Do Grow Organically

Just because we don’t often hear about companies that thrive via positive, healthy, organic growth — by growing their customer base, creating new products, and mastering operational efficiency — doesn’t mean they don’t exist. They do. What’s more, these companies convincingly demonstrate that you can be a high-performance organic growth company without resorting to accounting and earnings manipulations and without commoditizing and devaluing your employees.

Intrigued by the financial scandals of recent history, I researched how many companies succeed by generating earnings primarily through organic growth. I found that in three separate studies of eight hundred value-creating public companies, only twenty-two of them, less than four percent, consistently created substantial economic value and out-competed their industry competition primarily by growing internally or organically.

How Companies Grow Organically

Surprised at the staggeringly low number of companies growing organically, I was motivated to find out exactly how the twenty-two high-performance organic growth companies could do it so well.

What I found surprising about the results was what isn’t required to grow a business organically. Common management theories and fads about strategy, superior talent, superior leadership, strong vision, innovation, globalization, outsourcing, offshoring, and unique products or services are not necessary if you want to grow an organization organically.

So what is necessary if you want to grow a successful big business organically? There are six areas in which many of these twenty-two companies excel. I call them the six keys to organic growth. I explain them in my book, and support my findings with detailed case studies of seven of the twenty-two high-performance organic growth companies from the study.

Compaines That Epitomize Organic Growth

My high performance companies are: SYSCO, Stryker, Outback Steakhouse, Best Buy, TSYS, Tiffany & Co., and American Eagle. Following are the six keys to organic growth and a few examples of how companies make them work.

The Six Keys to Organic Growth

1. Live by an elevator-pitch business model. Companies that grow organically have a simple, easy-to-understand strategy and business model. The strategy model can be easily explained to and understood by employees at any level. These companies are disciplined and focused. Big innovations and new business models are not prevalent. Examples of these elevator pitches follow.

• Best Buy: Best Buy sells and services branded customer electronics, appliances, home office equipment, and entertainment products.
• Harley-Davidson: Harley-Davidson manufactures and sells motorcycles, motorcycle parts, and related apparel and accessories.
• SYSCO: SYSCO sells food and restaurant-related products and services to food service establishments.
• Tiffany & Company: Tiffany designs, manufactures, and sells fine jewelry and luxury goods.

With simplicity comes employee understanding and engagement; employees know where the company is headed, how it will get there, and what their individual role is in that growth. Employees understand why their job is important and how it fits into the big picture. Simplicity is the key.

2. Instill a “small company soul” into a “big company body.” A small company soul is entrepreneurial. Employees have a sense of ownership of the customer, are held accountable for results, and share in the rewards of those results. Entrepreneurial employees are like - well - like entrepreneurs. They are energized and engaged in the day-to-day business because they feel they have some control over their destiny, they have autonomy and respect, and they feel rewarded for their efforts.

Take a look at a company like SYSCO, the largest wholesale food distribution business in the United States. SYSCO has infused its employees, from truck drivers to salespeople, with a sense of ownership.

SYSCO salespeople also take pride in the role they play in the company’s success. Each salesperson visits his or her customer an average of three times a week. They develop friendships with their customers, who are usually chefs or food establishment owners, and they feel a sense of responsibility to help them succeed. They go so far as to bus tables or wait on customers if the need arises.

What SYSCO and other high-performing organic growth companies have learned to do is to create a positive entrepreneurial environment that meets employees’ basic needs. As a result, they have high employee engagement and consistent high performance. High employee satisfaction leads to high customer satisfaction, which leads to profits.