A quick briefing in five—
or a fifty-minute deeper dive
What’s the best way to grow a company?
Many executives gravitate toward mergers
and acquisitions. But organic growth,
done right, delivers long-term value, too.
The organic path to growth
In this edition:
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M&A is a vital element of company growth. An aggressive approach to transactions sets the best CEOs apart. Top-quintile CEOs undertake more deals further into their tenure than do others.
Deals matter …
Article - McKinsey Quarterly
A deal-making strategy
for new CEOs
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6
7
5
4
3
2
4
3
2
0
1
Year 1
Ratio of deals: top- vs bottom-quintile CEOs
Index: deals for both groups in first year of tenure = 1
Organic growth isn’t easy, and may take more time and effort to affect a company’s size. But it often generates superior value.
… but organic growth
pays off, too
Article
The value premium
of organic growth
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Bottom third
Middle third
Top third
by revenue growth
The organic edge: percentage-point difference
in excess returns to shareholders for most vs least organic companies (1993–2013)
0.4
3.1
1.8
McKinsey research shows that the fastest growers often play two or more games at once.
How do you grow organically?
Article - McKinsey Quarterly
The roots of organic growth
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% who grew faster than the market average
Engaged across 2 or more dimensions
Reliant on 1 dimension
35
34
Performers
focus on sales, marketing, and customer-experience capabilities
19
35
Investors
focus on existing activities
31
43
Creators
focus on new products, services,
and business models
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