A question on the minds of most organizations today—and an item that continues to be high on their agendas—is deceptively simple: “How do you drive profitable, organic growth?” Why is it that some companies tend to excel at driving growth while others struggle? What are they doing differently?

To start with, organizations successful at driving and sustaining organic growth do several key things fundamentally better than their competitors.

They use data to determine the addressable market.

Understanding which products are going to be drivers of growth is critical. But effective organizations also take a very data-driven approach to growth, investing in building a detailed understanding of sales potential for every customer and customer segment, including their existing customer base and prospects.

If an organization fails to accurately assess the addressable market, any number of issues can arise that will sidetrack its plans for growth, including a sales force that is too large or, worse still, too small.

They build sales teams aligned with growth targets.

Organizations with impressive track records when it comes to growth know that it is critical to design the sales organization appropriately to deliver on growth strategy and are adept at thinking through the technology and processes (e.g., CRM, or account planning) required to effectively manage the sales process.

They excel at determining what “footprint” is required to build the right sales organization to execute the strategy by answering the following questions:

• How many “hunters” are needed to go after new customers?
• How many “farmers” are needed to manage existing accounts?
• What number, type and quality of people do we need and where can we get them if they don’t exist in the organization today?
• How do we get the right metrics in place and the right compensation to drive the behaviors and results that lead to profitable growth?

They avoid the innovation “trap.”

Another thing high-growth companies do better is innovate. A recent Harvard Business Review article explored the four different types of innovation and how they can be successfully deployed to address specific organizational needs, concluding there was no single true route to innovation, and the chosen route must fit the problem or issue being solved.

The trap that many companies understandably fall into is assuming that innovation must be of the disruptive or breakthrough type—product overhauls, new operating models, major strategy shifts or a nebulous, “out of the box” solution to shake up the status quo. After all, innovation must be new, bold, groundbreaking and an about-face from everything we have ever done or known, right?

Not so fast—you don’t need to change the world just yet. Companies that drive incremental or “sustaining” innovation year over year have figured out that it can be very profitable, especially when it’s customer-driven and grounded in the ability to translate customer needs into products and services that deliver significant value. To do this, you will need two things: an innovation engine and a disciplined process (as well as a disposition to take a few risks).

So how does this incremental innovation actually work? Take the example of a large medical supplier with over $100 billion in annual revenues and a services line broad enough to incorporate everything from toothbrushes to large diagnostic equipment used in health care. Their innovation charter? To better understand how their customers were using their products and increase user efficiencies.

To do this, they spent considerable time in hospital operating rooms where they quickly sized up how typical surgeries were using their products. To their surprise, it turned out that an average surgical procedure needed upwards of sixty instruments, and nurse practitioners were selecting each one individually, essentially rebuilding the wheel each time they prepared for surgery.

How did they innovate? They bundled the instruments into procedure-appropriate packages, creating a far more efficient process for the nurse practitioner. While this may seem like an obvious solution, it created a more on-demand, as-needed inventory aligned with customer needs, reducing preparation time for surgery.

They understand which business capabilities are priorities.

One frequently seen dynamic in high-growth companies is that while leaders are adept at focusing on the revenue side of the equation, they also spend time thinking through the capabilities required to support growth. As a company grows, not all areas experience growth the same way. Highly effective companies think through the organizational-level capabilities that differentiate them and are truly critical to execution.

Consider a company like Apple. One could argue that the most valuable capabilities at Apple are product design and marketing. Consequently, organizations like Apple continue to invest in those capabilities ahead of, and then in support of, growth.

Also, to the earlier point about understanding the needs of customers and innovating around them, Apple managed the neat trick of not only understanding the current needs of customers but anticipating their future needs and, like only a handful of companies, shaping those future customer needs by creating products that addressed needs customers didn’t know they had—opening up a whole new addressable market for the business.

They get rid of walls.

All organizations—without exception—that achieve effective and sustained results have removed formerly existing barriers or silos which were preventing growth.

What happens if you don’t? Take, for example, Sony, a massive global behemoth that many agreed, during the 2001 launch of Apple’s game-changing iPod, had the requisite capabilities to come up with the next revolutionary music player.

So, why didn’t they? Because those capabilities remained locked, stuck within individual business units across the company and unable to synergize into an innovative, competitive product.

Lesson learned. Sixteen years later, many companies that have similar issues have now implemented growth and innovation “councils” to promote collaboration and help foster cultures that are better able to integrate capabilities and harness technologies across functions and business units.

It’s within reach.

Profitable growth is within reach for organizations that effectively integrate their customer needs, market dynamics and capabilities. Easier said than done, right? Yet by doing many of the same things you may currently be executing, but doing them in a more focused, integrated and customer-centric manner, you too can drive and sustain a growth engine just like your competitors.

Now you can answer the question of how to drive profitable growth—but will you?

By Garrett Sheridan, November 23, 2017