Optimizing organizations' growth activities by investing in skills
January 10, 2014
Why do companies such as Cisco and Dow Chemicals succeed in over 70% of their growth activities while many other companies fail in the lion's share? Companies must invest in skills in order to enable their organization to achieve optimal growth. Although companies control a large part of their growth potential, a suboptimal form of growth is often chosen and they lack the skills to succeed in alliances and acquisitions.
This is the view of professor of Strategy and Corporate Growth, Koen Heimeriks, linked to TIAS School for Business and Society. Heimeriks discussed this during his inaugural speech ‘Grow or Grieve: Understanding Corporate Development Capabilities’ on Friday 17 January 2014.
Companies should consider what the right form of growth is for each growth activity. Heimeriks distinguishes between three forms of ‘corporate development’ growth: organic growth (augment), alliances (ally) and acquisitions (acquire). Companies are generally aware of the different forms of growth. However, only successful companies consider which form is appropriate each time and often rely on a mix of the three forms of growth.
Skills for different growth activities
In addition successful companies also invest in developing skills related to the different growth activities. Relevant experience is important in this respect. Establishing guidelines for sharing acquired insights in the organization is just as if not even more important. There are two important preconditions for doing so. First and foremost manuals with guidelines have limitations; in contrast to the partner selection and assessment phases, establishing guidelines in the partner management phase can be damaging.
According to Heimeriks, companies that carry out acquisitions must also use guidelines in a flexible manner. Organizations that perform successful acquisitions adapt their guidelines based on the risks specific to the deal concerned. In other words they know exactly when to use their experience.
More research into corporate development
Heimeriks advocates for more research into corporate development. To what extent can individual experience act as a substitute for manuals with guidelines for successful alliances and acquisitions? To what extent does experience with 'augment' and 'ally' help in successful acquisitions. Does a corporate development department help or hinder successful growth activities?
Prof. Dr. Koen Heimeriks is professor of Strategy and Corporate Growth at TIAS. He specializes in strategy, corporate growth and organizational change. His work has appeared in publications such as the Academy of Management Journal, Harvard Business Review, Journal of Management Studies, Long Range Planning, Strategic Management Journal and Strategic Organization.