A global study analysing entrepreneurial companies that have rapidly transitioned from startup to a turnover of more than $8 million a year has uncovered eight keys to successful growth.
“These are important insights because reviews of innovation in Australia have highlighted that the weakest link is management capability,” says University of Technology Sydney (UTS) Business School Associate Professor Danielle Logue.
There is a lot of attention in Australia on incubators and startups, but less on how to build high-growth firms and navigating the scaling process, Associate Professor Logue says.
Associate Professor Logue leads the Australian arm of the global project, which is overseen internationally by Professor Charlene Zietsma from Penn State University in the United States.
Professor Zietsma established the study because many entrepreneurial ventures fail and even more fail to grow.
“Scaling a business is difficult. Only 1 per cent of firms make it past the $10 million a year mark,” Professor Zietsma says.
“It is such an important part of the entrepreneurial process. It’s fine to start businesses but unless we grow them we don’t actually get the jobs and economic benefit that they promise,” she says.
The Growth Project analysed 45 companies across Australia, Pakistan, Canada, Israel, UK and the Netherlands. All had achieved more than 30% year-over-year growth for at least three years and had achieved turnover between $8 million and $200 million a year (AUD).
While the project is ongoing, initial findings identified eight important features that fast growing companies have in common – factors that transcend industries, countries and cultures.
The researchers summarise the eight keys to successful growth as:
• Begin with the end in mind: have clear long-term objectives
• Nailing it and scaling it: refine the business model, then scale up (and repeat the process)
• Pivot with a purpose: when a business model isn’t working, pivot to a plan B
• Let go as you grow: realise you can no longer do everything – hire, delegate and consult
• People agility: hire the right people – especially those who can be fluid in their roles
• Build scaffolding for growth: develop structures, systems & processes needed to scale up
• Cash rules: speed cash flow through the system, it is the oxygen that fuels growth
• Targeted execution: develop a metric driven culture and focus on key priorities
> For further information about the eight keys watch the video.
“CEOs and managers will be able to use the keys we have identified to ensure they are putting in place the principles needed to successfully grow their business,” Associate Professor Logue says.
The Australian companies in The Growth Project were from regional areas as well as capital cities, and included innovative firms in traditional industries such as hospitality, mining, agriculture, construction, tourism and manufacturing as well as high-tech startups.
“Overall, what we observed was that these firms are great at managing innovation, this was because they had leaders and managers who were personally reflective, they understood what they were good at and what they were not,” Associate Professor Logue says.
“We will continue analysing our data, comparing the Australian experience to other countries and generating further insights on how we can build management capability for innovation.”