The National Center for the Middle Market, a partnership with The Ohio State University Fisher College of Business and GE Capital, conducted the largest survey ever taken of Middle Market businesses and presented their findings in October 2011. The Middle Market in the U.S. is defined as companies with annual revenues between $10 million and $1 billion. This segment consists of 195,000 businesses and represents 1/3 of private sector GDP and employs approximately 41 million people. This survey also identified characteristics of a segment of this market identified as “Growth Champions”, representing an elite group (9%) of Middle Market businesses growing at an impressive rate of at least four times the rate of U.S. GDP growth. This article focuses on the key characteristics identified by this survey as shared by this group.
Companies can choose from a range of strategies and tactics, which produce varying success. The “Growth Champions” amongst Middle Market companies which achieved 10%+ revenue growth 2010-2011 , while projecting the same for 2012 share certain characteristics that collectively, illuminate a framework for success. Growth Champions are more willing to embrace change and take calculated risks in running their businesses. They are significantly more likely than other Middle Market firms to compete globally, invest in innovation, have digital and social media strategies, and to have organizations that are prepared to respond quickly to both unexpected opportunities and challenges.
Growth Champion firms regardless of industry segment, geographic location or company size tend to strongly reflect the following qualities:
- Strong management culture and practices steer the company. They are nimble, operate efficiently, and have the ability to meet and withstand external challenges.
- Exceptional talent management and place a premium on attracting top talent with valued skill sets. They have the recruiting power to attract the necessary skill sets, and they reward their people for meeting growth targets.
- A formal growth strategy process as growth is planned and emphasized; it is not by accident. They set annual growth targets, effectively communicate those objectives internally, and then track their progress toward them.
- Sharper customer focus is paramount. They more successfully attract new customers and strengthen existing relationships, as well as focus on marketing and communications (including embracing digital and social media).
- A broader geographic vision key to growth. This often includes a global and/or national focus rather than a regional/local one.
- Focus on investing in innovation with a mindset toward future dividends. They invest in, and see, innovation in products and services and/or in business processes as keys to their success.
Implications for CEOs and other Senior Executives
The framework for sustainable success identified in the above research findings gives company leaders a valuable assessment and comparison tool. If you are a CEO or Senior Executive, it allows you to reflect on how your firm’s capabilities measure up in each area of the growth continuum. For example:
- Are the leadership skills of your management team appropriate to meet today’s global challenges, and primed to ensure tomorrow’s growth?
- What are your strengths and weaknesses, relative to key competitors and other peer firms, in your ability to recognize, attract, train, reward and retain skilled talent?
- How well do you perform not only at setting growth targets, but also at communicating those goals throughout the company, and tracking your progress toward them?
- How can you increase your organizational ability to bring in new customers and nurture existing customer relationships?
- Which markets offer the greatest opportunity for a new or increased presence, and have you been sufficiently aggressive in competing in them?
- Do you allocate and protect funding for innovation? How can you strengthen your innovation capabilities – making it a repeatable and measurable process to maintain a sustained leg up on your key competition?
Harvest CFO Consulting can provide your company with the financial leadership to enable you to improve your company’s attributes relative to the characteristics described above, and as a result your company will ascend a ladder to accelerated growth and success. To learn more about the National Center for the Middle Market and access more information regarding their research findings visit their website at www.middlemarketcenter.org.