In the ever-evolving business landscape, growth is paramount. Every business owner dreams of expansion, of watching their company or project reach new heights. But how to get there?
In practice, I think there are generally two ways to reach these new heights, especially when it comes to focusing on growth. These two general ways are organic and inorganic growth.
In my mind, I basically try to define them as internal and external growth, since organic growth is more inward facing while external growth is outward facing.
However, a more standard definition for organic growth is the natural, internal expansion of a business. Akin to cultivating a garden, nurturing the seeds and watching them blossom. This usually involves improving your product or service, optimizing operations and building a strong brand reputation.
Like many natural processes, this type of growth is often slower, requiring patience and sustained effort. However, it fosters a deep understanding of your market and builds a solid foundation for long-term success.
Inorganic growth, on the other hand, is quite the opposite of organic growth. It's a bit unnatural and entails the external expansion of a business. A key aspect of this type of growth is leveraging external factors to speed up or skyrocket a business into the next level.
In a way, one could argue that without inorganic growth, a business can't achieve rapid expansion. But without sufficient organic growth, this rapid growth is often short lived as there isn't anything substantial to retain it.
In a traditional business sense, inorganic growth can happen through strategic partnerships such as mergers and acquisitions(M&A) and joint ventures.
The most successful businesses often employ a layered approach, combining both organic and inorganic growth strategies.
Disney built its foundation through organic growth with iconic characters and theme parks. It then used acquisitions like Pixar and Marvel to expand its market reach and intellectual property. Similarly, Microsoft started with organic growth in operating systems and software. Later, it acquired LinkedIn for professional networking and GitHub for software development, propelling its presence in these sectors.
Essentially, organic growth serves as a bedrock and provides a strong foundation, while inorganic growth helps you leapfrog to the next level.
This is also a reminder that inorganic growth is not a shortcut. It should be implemented on top of a healthy organic base for long-term success. In simple terms, don't put the cart before the horse.
While organic growth is typically seen as a long-term strategy, both growth strategies can be implemented in the short-term to create a balanced approach of sorts. However, it usually depends on the timeline, in terms of which growth to put more focus on.
I think a new business is better off going all in on organic growth in the first few months or years rather than dabbling with inorganic growth. Part of the reason being there's not yet a stickiness factor to capitalize on the expansion brought by inorganic growth.
Given its foundational aspect, organic growth is suited for both short term and long-term, as it builds a strong foundation and fosters sustainable success.
Inorganic growth is more like a strategic tool to use in the short-term, like filling a critical capability gap that would take years to develop organically.
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