Time and time again over the past decades, academic research, consultancy studies, and empirical evidence have all pointed to the fact that organic growth as a core strategy for increasing value is more successful than large-scale M&A.
The argument is that those companies that pursue internally driven innovation led growth are the ones that outperform their peers: those that choose the organic option are now the more successful overall.
Reviewing the academic view on growth from the work of Gutmann in the 1960’s through work undertaken by the likes of Michael Porter, C. K. Prahalad, Gary Hamel, Clayton Christensen, Michael Tushman, John Bessant, Henry Chesbrough and Julian Birkinshaw, the consensus is clear: Innovation is critical, organic growth is pivotal, and without it companies fail and countries lose out to competitors.
The annual Innovation Leaders research that informs some of this book also provides evidence that successful innovators deliver above-average growth. Throughout the last 10 years, this research has identified the companies in 25 different sectors that have been making the most of their innovation resources. By creating compelling new products, services, and businesses predominantly from within the organization, they have not only outpaced their competitors on a year-by-year basis, but their subsequent share price performance has also benefited.