Three priorities to drive tech company growth

Do you want to focus on growth that is organic, or inorganic? “Many tech companies excel within their sweet spot, yet may overvalue their perceived ability to deliver at high quality across non-core capabilities,” said Grant Thornton Growth Advisory Principal David Koppy.

“This has practical implications when tech firms expand their product or service portfolios, or seek to open new markets.  A new or ambiguous path can create opportunities for tech firms to develop compelling solutions. But organizational blind spots and inconsistent expectations for quality can limit growth aspirations.” Koppy said. When a company wants to grow into new products or services, it needs to consider whether it should take an organic or inorganic approach. 

Organic growth

To prioritize organic growth, you need to examine the strength of your existing products or services and determine how you can further extend it. That can mean adding a new feature or solving a common problem with a new product or service. Or, it might just mean selling to untapped markets. Should you go international, or target a new customer industry? Questions like these form the basis of an your strategic intent.

“To generate organic growth, technology companies must understand each customer’s industry, along with the opportunities and threats they face — especially those that create a need for technology solutions. Technology companies also need to understand each customer’s current technology landscape and infrastructure. “With that information and some deliberate go-to-market planning, companies can bring their customers actual insights about how their software meets a critical need, or fills a gap in their technology portfolio,” said Grant Thornton Growth Advisory Principal Jonathan Eaton.

Another opportunity for growth is expanding the software footprint with a current customer. Customers might have affiliates, partners or other divisions or departments that can benefit from the same service or product that has already been sold in.

“Simply stated, do market and customer analysis to better understand the companies you sell to now — are they a part of a larger conglomerate, a larger holding company? Are they part of a private equity group?” Eaton said. “If so, try to identify where there may be unmet demand for your software solutions, within that broader entity. I think that's a creative way to understand the markets that you’re in, the customers that you have, and how you might generate new revenue.”

To expand into offering new products and services, a company must prioritize a transformation and evolution of the way that it creates value. “While organic growth is an essential core competency of technology firms, organizations need self-awareness to understand what is achievable organically versus the required effort,” Koppy said. “If the expected organizational lift requires too much investment, shift in focus, or time, then this introduces the potential to explore inorganic growth.”

Inorganic growth

Mergers and acquisitions can be powerful, but they come with overhead and risks. “Knowing that may of the best-intended inorganic acquisitions actually erode value, a lot of what you consider is the trade-off between the amount of effort required to stand something up on your own, or the speed at which you want to grow,” Koppy said.

“In the present moment, there's a lot more acquisition of companies that will help unlock next-level capabilities, like in AI, or companies that allow market consolidation and create a bigger footprint.,” Koppy said. 

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