ACCORDING to the most recent Deloitte Western Australian Stock Exchange Index, public companies in Western Australia continue to achieve substantially faster growth than public companies in other States. Growth in the Deloitte WA Index in the past six months has been 17.2 per cent versus the ASX All Ordinaries Index of 5.7 per cent.
While growth is strong in the public company arena, there has also been strong and consistent growth in WA’s private sector.
The Rising Stars survey highlights the value-creating strategies being used by successful private enterprises. We all understand that spectacular growth performance is not easily achieved and even harder to maintain. The Rising Stars have achieved top growth performance via a commitment to growth that is embedded throughout their organisations.
The 2004 Rising Stars survey supports a key finding of Deloitte global research that suggests consistent profitable growth is achieved when an enterprise manages itself around three interconnected principles:
p A strategy to grow – this includes direction and an action plan to actually make the strategy happen and promoting these expansion activities.
p The capability to grow – this encompasses finding talented people, adequate funding for growth, expanding on current products, using technology intelligently and ensuring an organisation has foundations to support growth as well as a plan in place to actually change structurally as the organisation grows.
p A commitment to growth – employees need to participate and embrace the shared vision for growth and work together to achieve it.
Insights provided by the 2004 Rising Stars form a useful benchmark for all private enterprises aspiring to become tomorrow’s leaders. Key findings of the survey include:
p Over 70 per cent of the survey participants predicted growth rates of greater than 30 per cent. They are confident they can grow at a greater rate than the Australian economy (the 2003 Federal Budget predicted 3 per cent).
p Strong organisational culture is integral to the success of all of the top growth enterprises.
p Shortage of skilled expertise is impacting on business growth and profitability. Finding good talent within a limited domestic economy tends to limit growth prospects.
p A keen focus on product development is vitally important. Deloitte global research also demonstrates that a desire to translate research and development into market leading products is vital to a company’s sustainable growth strategy.
p Clear alignment of goals is essential to the effectiveness of all strategic alliances.
p Top growth enterprises use technology to leverage their growth.
The top two issues affecting the growth of these successful businesses over the next 12 months are the ability to raise capital and access to quality people.
Given the extremely positive outlook on growth, these are not surprising indicators.
The results of the Rising Stars survey complement research by Deloitte on the metrics that successful growth companies observe to predict their future success.
This breakthrough research found that companies overwhelmingly use leading indicators, or metrics, that act as predictors for future success.
They use leading indicators to monitor their progress towards goals, shape short-term strategy and adjust longer-term objectives and achieve balance between their productivity and growth objectives.
The indicators used by companies can be classified into five broad categories – strategy, finance, sales and marketing, product development and human resources. The focus on these categories at the various stages of a company’s growth does vary, however.
Finance, specifically the ability to raise capital and manage cash, is a key focus area for start up companies. Human resources, specifically employees and organisational matters, become more important when the company has completed the start up and initial growth phase.
This is likely as a result of the company trying to evolve its corporate culture while maintaining a focus on developing its customer base and becoming operationally sustainable.
By the time the company has become well established its focus becomes much more on striking an acceptable equilibrium between growth and productivity objectives.
Overall, most companies confirmed that leading indicators are, and will continue to be, a central part of their individual performance measurement system.
For more information about the Growth Companies Program, please visit www.deloitte.com/growth, or contact Deloitte Growth Solutions partner Luke Martino on (08) 9365 7138.