So far we’ve talked about affecting inorganic growth through changes to our products and changes to our markets. Could we bring about inorganic growth simply by changing our business processes? Naturally this is a rhetorical question. If you’re in a strategic IT role you probably have a backlog of systems to implement that will make it easier for your existing customers to buy your existing products, or for your operations people to produce more of those existing products for more customers. If you’re a marketing person there are always more venues, more advertising channels, and exploding opportunities in social marketing to consider.
In fact, I can break down inorganic growth through process change into three fundamental categories:
Automation – if you can make more product more efficiently you have more product to sell given the same resources. Those changes to supply may indeed affect pricing, but it would be a rare case indeed for the cost of the automation to exceed the cost of price dilution. Hence automation is probably the most common way of achieving inorganic growth through changing processes.
Process Improvement – while automation certainly holds great potential to improve a process, you can simply route out the inefficiencies in existing processes–without automation–and achieve improvements, often much more rapidly and cost effectively than with automation projects. This is the reason most enterprises have continuous process improvement initiatives.
Visibility – marketing is a dynamic activity, changing seasonally, with venues and channels coming and going, and the market evolving. The marketing department is right up their with IT in importance when bringing about inorganic growth through process change because if they aren’t simply staying on top of those changes, the organization will suffer negative growth. Today’s best example: if you haven’t figured out a social marketing strategy yet, you’re already behind.
You might also suggest expansion as a fourth category, but I’d put expansion (such as opening a new office or a new manufacturing facility) under the heading of inorganic growth through market change, or even organic growth if the new facility isn’t opening up a new market.
I’ll forego a specific blog on M&A because while I’ve been through a few of them now, there’s no shortage of blogging on M&A activity. Instead, I think I’ll just blog on whatever comes to mind, like how I’ve managed to lose weight (nearly 50 pounds and counting), my vacation this summer, and what I’m learning and hearing from my fellow entrepreneurs.