It is argued in relation to the Social Progress that: “If people lack the most basic human necessities, the building blocks to improve their quality of life, a healthy environment and the opportunity to reach their full potential, a society is failing regardless of what the economic numbers say”. The case for change and the basis on which this has come about has been considered on a deeper understanding of the changes to the basic premise and assumptions underpinning the way in which our economies and businesses have been designed to operate for many decades; and therefore a deeper understanding of what needs to change and how is fundamental if we are to bring about greater alignment between business, economies and the societies within which they operate. The question is, how can we reconcile these apparently conflicting scenarios?
There is no doubt that sustainable practices can tackle the problems of humans through the collective deepening of ecological footprints that affect the socio-economic stability of businesses and lifestyles. The focus on reducing depletion of the natural environment, rejecting wasteful short-term processes and embracing the planet’s long-term well-being, or finding ways to reduce waste and utilising alternative energy source consolidate the unifying principle behind economic sustainability.
So much in business and economic thinking has for decades promulgated the need for profit-motivated businesses to equally deconstruct, redesign and reorient itself to remain successful and ultimately sustainable. The crucial term ‘economic sustainability of a business’ is the ability of a business to meet a need that is ultimately human in nature. In essence, the quest to meet the human or social needs of the people will create an opportunity for a business to respond, whether directly or indirectly, with the applicable principles for resilience and sustainable growth.
The problems for many companies when it comes to sustainability issues, however, are the rooted management decisions in acknowledging where the organisation is now; where it has been; where it is going; and how to grow and make it sustainable. The precise strategic answers and projection by management in fixing this fundamental identity of the business is crucial for keeping a steady growth in profitability and expansion.
This article is an invitation to recognise the need for fundamental systems to change the manner in which our economies must interact with our societies; consider some of the primary elements of such change and how they might be developed and adapted to allow systems to function more effectively for the benefit of businesses.
What accounts for Organisational growth?
Organisational growth is the stage companies reach when they can consider expansion, and may look for additional options to generate more revenue. Organisational growth is often a function of industry growth-trends, business life-cycle and the owners’ desire for equity value creation. However, there are many ways a company or organisation can achieve growth, including:
Growth through Joint venture alliance
This strategy assumes an effective partnership and pooling of resources by small and medium-sized businesses to keep up with the rapid changes in supply, demand, competition and other factors. Building joint alliances or ventures can provide organisations with the flexibility to move on to different projects once they complete the first, or restructure agreements to keep on working together. Joint ventures and other business alliances can provide partners with innovative ideas, new approaches, new markets and access to new technologies, which can help companies involved in the partnership to grow.
Tapping into new markets
Some companies are able to enjoy significant organisational growth by gaining access to new markets. Increasing the demand for a company’s service or product, especially in a market where competition is yet to fully develop, can spur significant growth for a small company for instance.
Many companies, especially smaller ones, utilise outside financing sources to fund their expansion. They search for capital from venture capital firms, government agencies, private investors or banks to grow their business.
Organisations use growth strategies that work with their products or services to support growth and boost revenue. Product expansion is one such strategy whereby an organisation can expand its product or services, or redesign products to boost sales and profits. For example, a tech company can apply product expansion strategies when a new technology emerges or when older forms of technology become outdated.
Organisations can also use mergers and acquisitions as means for profitability and growth. A forward acquisition growth involves buying component companies that are essentially part of an organisation’s distribution chain. For example, if you own a supermarket you can use a forward acquisition to purchase additional properties to convert to your supermarket brand. This allows your business to move competition out of the way while gaining access to new markets.
Attracting new customers
One of the best reasons for organisational growth is reaching out to new markets or a new group of customers. While a successful company may already have a solid customer base, there’s always opportunity to add more customers when it grows – especially if that growth involves the introduction of new services or products. And lastly…
Establishing revenue streams
Organisational growth may mean the opportunity to offer a wider variety of services and products. In doing so, your company can diversify its revenue streams – which means you are not exclusively reliant on selling one core service or product.
Phases of Organisational Growth
With the foregoing framework and understanding, it is highly imperative to underline the various stages or phases wherein organisational growth takes place.
In the birth stage of an organisation, the emphasis is on creating both a product and a market. The founders of the company are usually technically or entrepreneurially oriented, and they generally disdain management activities; their physical and mental energies are absorbed entirely by making and selling a new product. Communication among employees is frequent and informal. Long hours of work are rewarded by modest salaries and the promise of ownership benefits. Decisions and motivation are highly sensitive to marketplace feedback; management acts as customers react. At the Creative stage, activities are essential for a company to get off the ground – but as the company grows those very activities become the problem to signal the organisation has entered into a new phase that needs different sets of thinking and approaches to propel its growth.
Many companies which survive the Creative phase do so by installing a capable business manager or leader: usually to embark on a period of sustained growth under an able and directive leadership. At this stage, a functional organisational structure is introduced to separate manufacturing from marketing activities and job assignments become increasingly specialised; accounting systems for inventory and purchasing are introduced; Incentives, budgets and work standards are adopted; Communication becomes more formal and impersonal as a hierarchy of titles and positions grows.
The next era of growth, the Delegation phase, evolves from successful application of a decentralised organisational structure, and that is at the Delegation stage. Here we find exhibited characteristics such as much greater responsibility given to the managers of plants and market territories; Profit centres and bonuses are used to motivate employees; Management often concentrating on acquiring outside enterprises that can be lined up with other decentralised units; Communication from the top being infrequent and usually occurring by correspondence, telephone and/or brief visits to field locations.
The evolutionary period of the coordination phase is equally characterised by the use of formal systems for achieving greater coordination, and by top-level executives taking responsibility for the initiation and administration of these new systems. For example, we can see that decentralised units are merged into product groups; formal planning procedures are established and intensively reviewed; numerous staff members are hired and located at headquarters to initiate companywide programmes of control and review for line managers; Capital expenditures are carefully weighed and parcelled out across the organisation, etc.
The last observable phase, the Collaboration stage, emphasises strong interpersonal collaboration in an attempt to overcome the red-tape crisis. While the Coordination stage is managed through formal systems and procedures, the Collaboration Phase emphasises spontaneity in management action through teams and the skilful confrontation of interpersonal differences. Social control and self-discipline replace formal control. This transition is especially difficult for the experts who created the coordination systems, as well as for the line managers who previously relied on formal methods for answers.
However, the focus on solving problems quickly through team action necessitates that teams are combined across functions to handle specific tasks; formal control systems are simplified and combined into single multipurpose systems; frequent conferences of key managers to focus on major problems are held; behavioural skills through educational programmes for managers in achieving better teamwork are enhanced; and real-time information systems are integrated into daily decision-making processes for efficiency. The emphasis, however, is that experimenting with new practices at various stages of the organisation’s development is encouraged throughout the organisation.
Major Problems Encountered with Organisational Growth
Economists and business researchers contend that achieving sustainable growth is not possible without paying heed to two key factors: that is, growth strategy and growth capability. Companies that pay inadequate attention to one aspect or the other are doomed to failure in their efforts to establish practices of sustainable growth. After all, if a company has an excellent growth strategy in place but has not put the necessary infrastructure in place to execute that strategy, long-term growth is impossible.
That being said, when small organisations seek to guide their outfits through periods of growth, be it dramatic or incremental, there are usually some difficulties. After all, when a firm is small in size the entrepreneur who founded it, and usually serves as its primary strategic and operational leader, can often easily direct and monitor the various aspects of daily business.
According to Caplow, the quest for organisational growth sometimes triggers an almost inevitable distraction of its goals. He attributed this “in part to the inherent difficulty of getting a larger number of people who know each other less well to agree about anything; in part to the importation of new people and ideas, but mostly to the brute fact that as an organisation grows its relationships with its members and the environment necessarily change.
The growth challenge is usually articulated differently by different companies and within different industries. For some, developing and launching new products and services to meet the evolving needs of their customers is the issue. For others, capitalising on global opportunities is key. Some companies look to new business areas that will represent the next major thrust for their business. And for a few companies, all of these strategic efforts are simultaneously used – along with ongoing efforts to rebuild organisational capabilities to surmount the challenges to their growth trajectory.
How is Economic Sustainability a factor for Business Growth and Profit?
Looking at today’s world and the dynamics of business trends, all businesses buy into the notion that there is only one social responsibility for a businesses – and that is to use its resources and engage in activities designed to increase its profits and address the needs of a significant portion of the society in which it operates and threatens sustainability of the planet. Notably, a modern economy wherein businesses thrive in growth and profits applies the most extraordinary mechanism for matching human needs and opportunities to the business’s prospects and fortunes. Nonetheless, if a business or an economy fails to deliver on this purpose to meet the needs of its broader stakeholders on a sustainable basis, then the very existence of the business or the economic system is seen to be at risk.
The concept of economic sustainability represents a broad set of decision-making principles and business practices aimed at achieving economic growth without engaging in the harmful environmental trade-offs that historically accompany growth. Ideally, sustainable development principles create operational systems which consume natural resources slowly enough so that future generations can also use those resources. Here, the Economics of Sustainability may point to underscoring the primary concern for organisations to understand the economy and environment as a deeply interlinked complex system – working together to impact both how the human economic part of this integrated system might be transformed and what the sustainability fortunes of the organisation will become if they are adhered to.
Besides, economic sustainability can take many forms depending on how an organisation adapts: including devising less wasteful systems, prioritising low-impact economic development such as investing time and money in sustainable businesses to create a waste-free world necessary for shifting concentrations of capital and momentum for the future economy; and converting operations to run on energy produced by solar or wind-power rather than fossil fuels are all ways an organisation can prioritise the future.
Economic Sustainability and the Impacts on Businesses
A sustainable economy is essential for various reasons, with justifications ranging from high-minded environmentalism to corporate interest. The worldwide reliance on unsustainable practices has a necessary end date since the planet’s natural resources are not infinite. Developing new processes and investing in different resources is essential for any commercial activity to continue for the long haul. The global economy’s longevity is one significant impact of economic sustainability on businesses.
By this, we see that there is preservation of human life where Climate change caused by the overuse of fossil fuels has created a dire situation for the Earth and humans’ ability to inhabit it. By trying to limit energy consumption and adjusting the approach to food production, humans have an opportunity to preserve the planet for posterity.
Secondly, the natural environment has long been a source of discovery and innovation. Therefore, the constant degradation of natural surroundings jeopardises the opportunity to unearth new compounds and processes that could serve as the basis for new products or other economic benefits.
How to Implement Economic Sustainability
Creating the infrastructure for economic sustainability is a complex process that involves the full cooperation of both the private and public sectors. On the individual level, however, retail investors can direct their money toward companies whose values and practices align with their own. Citizens can also encourage their elected officials to create economic plans that include sustainable development goals.
In a more profound business studies, organisational growth and sustainability is manifested through an increase in the number of employees, income, profit, or market share. These are the measures of externally visible quantifiable changes of the organisation. These measures are consolidated by creating business opportunities for value creation, applying a research-based framework for strategy formulation and key strategic decisions to achieve the objectives.
As the organisation positions for sustainability, managerial problems and practices will be rooted out in time. The problems may not last throughout the organisation’s life, for the passage of time may also contribute to the institutionalisation of a strong and robust set of managerial attitudes. In simple terms and with reference to a business, sustainable growth – the realistic attainable growth that a company can maintain without running into problems – is the availability of funding and the ability to find an optimum growth rate.
In summary, companies must consciously introduce planned structures which not only solve a current crisis but also fit the next phase of growth, and that may require considerable self-awareness on the part of top management – as well as great interpersonal skills in persuading other managers that change is needed and crucial.
Discovery….Thinking solutions, shaping visions.
Frank Adu Anim in Collaboration with Dr. Genevieve Pearl Duncan Obuobi (Lead Consultant on Cx. Leadership & SME, Country Chair, Ladies in Business)