Tag Archives: Business Growth

What Should Companies Focus on to Grow?

By David Vicentin

Nowadays, one of the buzzwords in companies is growth. Companies want to be better today than yesterday, and tomorrow even better than today. But the challenge itself is not the need for growth rate. The challenge is related to how to achieve continuous and sustainable growth over the years in a scenario which constantly changes.

Several studies have been done analyzing the sources of growth, especially related to companies and countries. Centuries ago Adam Smith, David Ricardo, Thomas Malthus studied the elements which can influence growth in countries. These studies provided very rich knowledge when applied to companies of different sizes and industries.

It’s interesting to see how people explain growth. If you ask a company leader “What do you need to grow?” the answer might be “New investments.” If you ask “What kind of investments?” most will answer “New equipment.” If you want to be more specific and ask a colleague what should be done to increase sales, production or profit, he may respond “Buy new technology.” “Equipment or technology” may be correct, but it represents only one component of the answer.

Growth can also be explained based on the variables of Physical Capital (K), Labour (L) and Technology (T). So the idea behind this approach is a formula as represented below in which Y represents the results for each company in terms of revenue, output or even profit.

Y = f(K, L, T)

That means that a company output is influenced by different variables and not only technologies. The interesting point about this reflection is that one answer will not solve everyone’s problem. For over 15 years, working in different industries, my team and I were able to increase companies’ results 90% of the time, with ZERO investment in new technologies. So, what’s the miracle?

The answer is People. The eyes and expertise of a Consultant or a Coach can help your company, in a short-time frame, identify opportunities to increase productivity, quality, and much more. If we take a closer look at the Labour part above, we can identify new sources of growth. For example, labour can be seen not only as how many people you have under your organization but it MUST include knowledge acquired over time. Ask yourself: how is your team expanding their knowledge and understanding of methods and techniques over time? There are different ways of learning and once you create a learning organization you’ll start to benefit from it.

And if you’ve achieved the desired results, what’s next? Sustain the results. Whether the environment changes or not, it is important to have the right people (with the right knowledge) to respond properly to those variations. Training and “learning by doing,” as Agile proposes, can be very useful strategies to achieve long-term results.

In summary, growth is possible when you have the knowledge to achieve it. Consult experts and engage people toward your purpose and you’ll see the results.


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