Last year, the Financial Times and Statista partnered to identify the fastest-growing companies across 16 countries in Africa. They based this on revenue growth between 2019 and 2022. For South Africa, the list of 40 companies posted CAGR growth rates ranging from 15% to 543%. While an interesting data point, we believe further digging is required to present an accurate picture of the companies’ performance and current state to be able to label the fastest-growing companies. To understand growth, we first have to view the revenue number in context and identify what drives the growth. Only then can we use these numbers to draw conclusions and make informed business or investment decisions.

South Africa's fastest-growing companies

Danger: A single data point

As Hans Rosling points out in his surprisingly optimistic best seller, Factfulness, when looking at data, it is crucial to avoid lonely numbers – never leave a number all by itself. You need something to compare it with. In the case of the list mentioned above, there are six companies with over 100% CAGR from 2019 to 2022. However, we have no idea of the size and stage of the company (start-up, growth, mature) to be able to get a view of how strong the revenue growth was in context. A start-up can easily double its revenue compared to an established, mature organisation. Viewed in isolation, this single metric may be giving a distorted picture. To get an accurate view of how the business has grown, consideration should be given to the range of metrics relevant to the business, over and above revenue – a few have been listed below:

Financial performance: Earnings; free cash flow; gross and net margins; return on investment (ROI)
Market: Market share; performance against competitors
Customer: Customer acquisition, retention and growth
Team: Team size; retention rates

Drivers of growth

To understand what is driving business growth, we can look to understand the specific levers the business is pulling. When strategising with our clients, looking at future opportunities to grab and challenges to overcome, we utilise a framework of five levers to unlock growth, which can also be used as a guide to understanding why companies have achieved growth in the past:

Retire/outsource: Did they retire poor-performing or low-growth potential assets or value propositions to free up capital? This strategic move is not just about cost-cutting; it’s about reallocating resources – capital, talent, and attention – to areas with higher growth potential.
Improve: Did they optimise their business, making processes simpler, better, faster or cheaper? This can often be identified by improvements in margin, customer satisfaction, service levels, or product quality, to name a few. Operational excellence is a cornerstone of sustainable growth. This lever is about continuous improvement, leveraging technology and data analytics to enhance productivity, improve quality, and reduce costs.
Scale: Do they have a particular strength or competitive advantage that is driving their growth? A product or service differentiator, positional strength in the value chain, perhaps? Richard Rumelt speaks about identifying the strategic assets in a company that provide a sustained competitive advantage over the long term. These existing value propositions are generally then offered to new customers in new locations (geographies).
Innovate: Did they offer something new or different to the core, adjacent to the core, or transformational – for existing markets or markets that don’t yet exist? Innovation is the lifeblood of long-term growth. This lever extends beyond product innovation to encompass new business models, processes, and market creation.
Acquire: Have they made any recent acquisitions? In the case study, the revenue growth of many of these companies could have been due to acquisitions, which immediately boosted revenue. Acquisitions accelerate access to new capabilities, value propositions, customers, and geographies.

With this information, we can more clearly assess true performance and see potential growth over the next horizon.

Growth is the result of a good strategy

Too often, companies set a revenue target and call it a strategy. Setting a stretch target, a big, hairy, audacious goal (BHAG), is crucial, but it must be backed up with defined strategic choices to reach it. When we assist clients in crafting their strategy, we often craft a “formula for success”– the top three things that will enable them to achieve their ambition. As we see in the five growth drivers, there are many options available to business leaders, and it’s important to spend the time diagnosing challenges and identifying opportunities in a business, analysing them, debating potential solutions, and finally choosing the few big bets for growth. Our strategy facilitation process focuses on practical moves to make the big shifts happen.so that our clients can then go out and execute with confidence in their decision-making process.

In summary, when looking at this list of fastest-growing companies, the real value lies in asking, “what is really driving this growth?” Setting and measuring revenue targets alone is insufficient – they must be supported by defined strategic choices to reach it. A winning growth strategy is built on a few well-chosen, practical moves that propel you towards your ambition.

What is the next big move you need to make to achieve your growth ambition? Contact us to help you unlock the growth potential in your business.