The Growth Strategy Trap
Sometimes, businesses become stuck as they attempt to reverse their declining growth. Why are they failing to get beyond where they are today? Often, it is because they are focusing on their revenue stream, while their market-centered behavior is static or deteriorating. Revenue is an outcome. How effectively and efficiently a business adds value to the market impacts that outcome. When the value add stagnates and revenue declines, the factors causing decline are not generally clear, and often can be described as a loss in operational focus and efficiency.
Operationalizing is not a generic process. There are no quick fixes. Business leadership must first understand the reality of their current organizational design and the performance gaps required to address each initiative. After identifying their current state, the business must develop and operationalize their future state. It is critical to address the interdependency of their
- Future state revenue and earnings goals to achieve desired objectives
- Markets and customer requirements to achieve that earnings position
- Core work processes required to serve these markets and customers
- Learning and improvement tools that will enable the ongoing improvement of the core work
Our growth assessment tools and strategy mapping process address all of these factors. Output is organized into a set of defined objectives initiatives required to achieve the objectives, together with metrics to identify progress over time. Effort focused on learning and development is integrated into the process, eliminating the need for generic tutorials.
The Right Growth Strategy
Firstly, a company’s strategy must start with the right goal—a superior long-term return on investment. A strategy established in sustained profitability will generate real economic value. Economic value is created when customers are willing to pay a price for a product or service that exceeds the cost of producing it.
Secondly, a company’s strategy must enable it to deliver a value proposition, or set of benefits, different from what competitors offer. Strategy is not a quest to be all things to every customer. It defines a way of competing that delivers unique value in a particular set of applications or for a particular set of customers.
Thirdly, a strategy needs to be reflected in a distinctive value chain. To establish a sustainable competitive advantage, a company must perform different activities than rivals or perform similar activities in different ways. A company must configure the way it conducts manufacturing, logistics, service delivery, marketing, human resource management, etc., differently from its rivals and tailored to its unique value proposition.
Fourthly, a robust strategy involves trade-offs. A company must abandon or forego some products, features, services, or activities in order to be unique at others. Such trade-offs, in the product and in the value chain, are what make a company truly distinctive.
Fifthly, a strategy defines how all the elements of what a company does fit together. A strategy involves making choices throughout the value chain that are interdependent. All of a company’s activities must be mutually reinforcing. For example, a company’s product design should reinforce its approach to the manufacturing process, and both should leverage the way it conducts after-sales service.
Finally, a strategy involves continuity of direction. A company must define a distinctive value proposition that it will stand for, even if that means foregoing certain opportunities. Without continuity of direction, it is difficult for companies to develop unique skills and assets or build strong reputations with customers.