The Formula to Improve Organic Growth Rate

The Formula to Improve Organic Growth Rate

By CFO Tech Outlook | Wednesday, May 29, 2019

FREMONT, CA: Undoubtedly, technology helps in growing any company’s business. Without any delay, technological solutions can meet the employee's needs. To make steady progress in an organization, it is essential to maintain constant and open communication.

Companies with higher organic growth can generate high returns from shareholders. Understanding business growth involves three strategies, including investing in high-growth activities, relocating funds, creating new products and services, and improving performance by optimizing their business capabilities. Many companies pursue at least one of the three strategies as the primary source of organic growth. More than one source of organic growth is considered by around 60 percent of companies.

Apple has also followed the concept of organic growth, which for the past 25 years has led one acquisition per year. Although the number of acquisitions is lower, the company spends less money on research and development. In the past four years, Apple has spent $4.6 billion on research and development, while revenue has increased to $43 billion by about $25 billion. Companies such as Microsoft, on the contrary, have followed the inorganic growth that has led to 45 companies in just four years. At the same time, it spends approximately 700 percent on research and development.

Based on the company's past performance, the development of a strategy can also contribute to earlier success. Talent is the primary source of innovation and the main driver of business growth. If a company has talented in-house work, the growth of the company is predetermined. Continuous recruitment of skilled work helps the organization stay on the path of growth. The company also benefits depending on talented employees it outsources.

Being unique in recent decades is the only way to be noticed by the outside enterprise realm. If a particular company continues to practice legacy activities, the challenges of today may not be overcome. For many companies, organic growth is the main factor. There is no single formula for growth in the sector. Each company follows unique yet diverse paths to achieving its goals, according to the McKinsey global survey. The destination is the success, although the companies ought to follow different paths.

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