Are senior exec­u­tives fail­ing to deliv­er on their organisation´s long-term com­pet­i­tive­ness? A recent McK­in­sey Quar­ter­ly arti­cle sug­gests that they are. If true, what does that say about the role of “suc­cess­ful” CEOs and their lead­er­ship teams? If they are not respon­si­ble for craft­ing the future com­pet­i­tive­ness of their organ­i­sa­tions, who is?

In their recent arti­cle, “The Per­ils of best prac­tice: Should you emu­late Apple?”, Mar­la M. Capozzi, Ari Kellen, and Sven Smit iso­lat­ed three dis­tinct types of cor­po­rate growth: mar­ket share growth (gen­er­at­ing organ­ic growth), seg­ment growth from exist­ing port­fo­lios (cap­i­tal­is­ing on over­all sec­tor growth) and growth from merg­ers and acqui­si­tions (acquis­i­tive growth). Based on a sam­ple of 750 com­pa­nies (includ­ing Apple) exam­ined between 1999 and 2005, they achieved an aver­age annu­al top-line growth rate of 8.6 per cent: dis­ag­gre­gat­ed into 0.1 per cent from mar­ket share per­for­mance, 5.5 per cent from mar­ket seg­ment growth, and 3.0 per cent from M&A respec­tive­ly.

The goal here was to fig­ure out just how grow­ing com­pa­nies grow? But I gasped when I saw that there was just 0.1 per cent aver­age annu­al organ­ic growth. Is that accept­able per­for­mance for a CEO? Worse still, only 28 per cent of the 750 com­pa­nies stud­ied were able to demon­strate any organ­ic growth at all. Does this mean that the CEOs of the remain­ing 72 per cent sim­ply focussed on acquir­ing their way for­ward? Sounds like a great busi­ness mod­el for invest­ment bankers and con­sul­tants, but per­haps less so for share­hold­ers and con­sumers who ben­e­fit the most from the mean­ing­ful prod­uct and ser­vice inno­va­tions at the heart of organ­ic growth.Crazy Apple

You can­not help but put Apple (sin­gled out as an out­lier in the MQ report) upon a pedestal giv­en that they grew almost entire­ly by share based organ­ic growth dur­ing the stud­ied peri­od, and six times high­er than any oth­er com­pa­ny in the study. Per­haps that is why Apple is one of the most valu­able com­pa­nies in the world today-sus­tained inno­va­tion based organ­ic growth. Yet the arti­cle asked a cogent ques­tion: should you emu­late Apple? In McKinsey´s 2012 Glob­al Sur­vey on “mak­ing inno­va­tion struc­tures work”, CEOs iden­ti­fied these as the two most impor­tant dri­vers of inno­va­tion suc­cess: (1) the inte­gra­tion of the inno­va­tion agen­da into strat­e­gy and (2) get­ting C-lev­el sup­port. That’s fine, but we know that the vast major­i­ty of com­pa­nies aren’t grow­ing organ­i­cal­ly, so my view is that what’s miss­ing here is not the lack of a good cor­po­rate role mod­el. (And let’s not for­get Emerson’s words from 200 years ago: “Envy is ignorance,imitation is sui­cide.”) What’s miss­ing here, to my mind, is top-lev­el lead­er­ship and com­mit­ment.

Maybe our “lead­ers” (or their boards) need to be much more clear on what kind of growth is both need­ed and accept­able. Maybe our “lead­ers” need more train­ing, expe­ri­ence or con­fi­dence to engage in organ­ic growth ini­tia­tives in today´s dynam­ic envi­ron­ment. Maybe even the cur­ricu­lum for B-schools needs to change, with less empha­sis on finan­cial engi­neer­ing and more on grow­ing com­pa­nies from the inside out. But what we need to acknowl­edge is that most busi­ness lead­ers aren’t lead­ing. Instead, they’re merg­ing, acquir­ing and allow­ing their oper­a­tional sta­tus quo to grow inch by inch. Acknowl­edge that, but don’t tol­er­ate it.

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