Sustaining Growth

4 out of 5 • 1 rating

Optimum growth rates vary by sector and over the lifecycle of a company. A sustainable growth rate is the maximum growth which can be achieved without needing to increase financial leverage. Successful growth requires a focused strategy, but this needs to be matched by increase in capability, for example, investment in infrastructure including human resources. Growth strategy tends to be achieved in four ways, singly or in combination:

Launching new products
Expanding into new territories
Building capability or increased capacity
Improved competitiveness

Know Your Market

Knowing suppliers boils down to managing risk for the organisation. Supply chains are often long and complex but only as strong as the weakest link. There are two main types of risk resulting from poor supplier knowledge:

Financial Risk

Fraud
Interruption to supply chain
Shortages in labour / energy / raw materials
Political
Fines

Reputational Risk

Quality issues
Lack of ethical practice by supplier
Violations of international law
Environmental damage
Bad press

Minimising risk can involve many actions but are essential in a globalised economy. Financial risk is often easily quantified but reputational risk can be more enduring. Ill-judged practices or products can damage your company and the harm can reverberate around all media with serious consequences for the brand. There are key actions which any corporation must take to minimise these risks, these are set out below:

Know your suppliers

Develop a clear set of corporate values which all suppliers must adhere to
Conduct rigorous supply chain mapping to reduce risk
Quantify reputational risks so that informed decisions can be made
Consider carefully the risk of outsourcing labour and services
Any Service Level Agreement (SLA) to include right to audit including sub-tier suppliers
Link the businesses to your own so that transparency is achieved
Conduct rigorous due diligence testing before suppliers are on board

There is no excuse in law for ignorance. One of the main ways of knowing your suppliers is to conduct due diligence tests on all potential suppliers. Due diligence is a research task which critically appraises all available data on a supplier and will result in clear, defensible recommendations and improved knowledge of that supplier, its structures and links.

Environmental Sustainability

One of the main risks to growth in the global marketplace is looking after the environment, which is a current theme in business. Developing business practice which aligns with environmental sustainability is one way of attaining sustainable growth. A “slash and burn” approach to business is no longer acceptable, so Corporations are expected to lead on environmental sustainability both because of their current impact but also their power to make change.

For leaders, building a business case for environmental sustainability involves the following:

Environmental sustainability is risk-free and consistent with reducing business exposure
Initial start up costs will show longer-term cost savings, especially in energy
Offers a competitive edge in attracting new customers and investment supporting growth
Opportunity for business differentiation on the basis of sustainable environment offering

A word of warning though, in seeking to meet new customer demand for environmental sustainability don’t abandon products favoured by the existing customer base.

Tips for Achieving Sustainable Growth:

Make the most of big data analytics to develop your market awareness either by developing in-house capacity or purchasing third party analysis.
Know your suppliers by conducting rigorous supply chain mapping throughout your supply network.
Build capacity for innovation by spending money on succession planning through research or staff development. This will keep your organisation ahead of the pack.