For a number of businesses, offering great customer service, creatively engaging existing and prospective clients, gaining more brand visibility and improving efficiency, are top priorities. However, based on my findings and observations, most business owners and leaders are more concerned and focused on extending their offerings, entering a new market, gaining and retaining a dominant market position, generating more revenue and increasing their profit margin. Therefore, in most organizations, the pursuit of growth often outweigh the quest for operational effectiveness. Even though both are important.
Having established the fact that most organizations pursue growth than almost anything else; the big question is, “where does growth come from,” and, “how can you practically generate and drive growth for your business”? Bearing in mind that the definition of growth is relative, organizations sometimes define growth as revenue increase, physical/ geographic expansion, or increase in the size of workforce. In addition, the metrics for measuring growth is usually a function of the objectives of the organization.
First, growth comes from two primary sources and an organization can facilitate growth by exploring either one or the combination of these sources:
For instance, under Jack Welch’s leadership, General Electric became the most valuable company in the world. GE grew from $26 billion in revenue to $130 billion and from around $14 billion in market value to over $410 billion. A notable volume of Welch’s achievements spanned from what I termed “Strategic Disengagements.” Part of proactive steps GE took in achieving this level of growth was that it decided to “fix, close, or sell” any struggling business that was unprofitably syphoning funds from the company’s purse. In addition, GE fired the bottom 10% of its entire workforce. It was a tough call for the management, but they were necessary decisions for the management to take if the company would ever achieve its goals.
According to PWC 18th Annual CEO Survey, 70% of CEOs globally expect to enter into alliances with suppliers (77% in the US), a move that could potentially help them to build new capabilities, gain flexibility, and keep costs down. In addition, 71% of CEOs globally plan to initiate a cost-reduction initiative in 2015 (65% in the US), consistent with trends over the past five years.
However, managers and leaders must be careful when embarking on this route, because viewing everything from the lens of money can destroy the very future an organization is trying to build. Simply put, growth metrics goes way beyond revenue. Revenue can be a sign of healthiness, but should not be mistaken as the only imperative for measuring growth. Competitive advantages are built on key factors such as capabilities, strategic partnerships, business models, strategic positioning and so on. But unfortunately, these things never reflect on balance sheets or financial statements.
***Strategic Disengagement is the proactive and intelligent approach an organization can employ to replace or end toxic, non-productive business activities, investments, endeavors and relationships that stands in the way of growth.
Introducing both the alcoholic and non-alcoholic Origin drink was a major revenue generating investment for Diaego/ Guinness Nigeria PLC. Guarantee Trust Bank’s diversification into online retailing (via its SME Market Hub platform), Amazon’s entry into cloud computing, Apple into automobile software system, Google into creating driverless cars and so on, are remarkable examples of extensive revenue generating investments and strategies that companies over the world have executed.
Things you should stop doing in order to create and drive growth for your business:
Embrace strategic disengagements. For some organizations to experience growth, shutting down declining business units or outlets, replacing archaic systems with speed-enabling and cost-reducing technologies, cutting investments from bad projects, and winding up toxic business relationships that are shredding the growth of the organization are major steps to consider. In some cases, the founder or leader’s approach, paradigm, lack of sagacity and incompetency is the main impediment to the organization’s growth. Therefore, while leaders and key decision makers are looking around for growth impending entities, they should also look within for the “prospective traitor disguising as hero.”
***Bad Projects could be dead ideas or investments in which an organization continues to invest despite obvious indications that progress or success has vanished. Sometimes, organizations continue to invest due to the position (e.g. founder, c-suite executives, or unit heads.) of the initiator of the project, obsession, sentimental attachments or ego, especially when a company has made audacious media statements or gain huge media coverage regarding the project.
Stop waiting for your offerings to start declining before creating new ones. Cannibalization is better than disruption. Like they do in the automobile industry (where manufacturers create new models to replace old ones), it is wisdom when you replace your own products or services with either an improved version or an alternative; but when you allow (either a direct or indirect) competitors swallow up your offerings and market share, it is called indolence.
Stop looking for more to do more. You can do so much with what you already have. Sometimes, the resources at your disposal; a phone that can capture and upload pictures/ videos online, a flier designed with Microsoft PowerPoint, a protégé’s support, a friend’s spare time, a fresh graduate seeking an intern opportunity, an accessible project-based professional and the likes, is all you need to leverage on, till you have grown your business to a viable point. The same applies to big businesses. This is not an antagonistic statement against getting help when it is necessary. It is about avoiding the trap of the ’insufficiency paradigm’ that most entrepreneurs, leaders and employees creep into.
Things you should start doing in order to create and drive growth for your business:
Competition is increasing, so should your innovativeness and collaboration. To catch up with the current wave of change, the heat of disruption, and the intensity of competition in your industry, innovation is not an option- It is a necessity. Moreover, innovation is not only about “what you sell;” it is about how you run your entire business. It is about configuring your processes, products, packaging, outlets and other essential elements of your business for the creation, delivery and capturing of remarkable advantages.
In addition, in determining how fast and how big your business will grow, your collaboration with your entire value chain (i.e. your suppliers, employees, partners, community, and even competitors) goes a long way. Report shows that 51% of CEOs worldwide (44% in the US) said that they plan to enter a new strategic alliance or joint venture in the coming year. Sometimes, collaborating with players within and outside your boundaries to offer extensive services they currently do not have the capabilities or intentions of offering, is all you have to do for an upturn in revenue generation.
Create an enabling environment for growth. For humans, physical growth is a gift; but for business, growth is a reward. First, in creating an enabling environment, clear vision and communication of the goals-at-hand cannot be overemphasized. In addition, you need to create a healthy, competitive, accountability, entrepreneurial, innovation enabling and risk rewarding systems that can spark the kind of fire that is required for your business to gain significant market position.
Things you should consider doing in order to create and drive growth for your business:
Build innovation capabilities. Creating an innovative product does not necessarily make you an innovative organization. To be a pioneering brand, building innovation capabilities and integrating strategic innovation drivers into the very core of your organization is the most meaningful, most rewarding approach.
Think beyond conventional industry practices, strategies and business models. For your organization to be at the forefront of your industry, you need to ignore conventional thinking, approaches and ways of doing business. Nevertheless, do it within the confines of the law. Although, industries like healthcare (in Africa) has been long overdue for overhauling. For instance, regulations barring service providers from providing adequate information about their offerings is killing more people than the industry can imagine. Someone really need to contend these obsolete practices and create new ways for patients to become aware of what is probable and achievable.
Reward initiatives, not outcomes. In building a growth engine or system within your organization, allocation of key resources, which includes time and money, for exploring growth opportunities and ideas is necessary. Second, employees must be confident that they will not be punished for taking risks, experimenting or improvising. Third, employees should be recognized and rewarded for making attempts and driving new initiatives, not necessarily for the outcomes of those initiatives. Companies that punish instead of embracing failures never create novel solutions.
In conclusion, I anticipate that with this level of elucidation, business leaders will be able to reconfigure and redesign their organization for growth by prioritizing and channeling their resources into investments and activities that will truly create competitive edge and future for their business.