Business Growth Strategy

 

If your business is anything like those of our clients, then you know the feeling all too well: your company is successful, but you are always looking to grow even more.  You probably also know the question that always follows that sentiment: how do grow?  What does it take to reach the next level?

 

Kellogg Business School professors Thomas Hubbard, Paul Leinwand, and Cesare Mainardi, sought to answer exactly that question.  In a recent story examining super-competitors, the three identified four characteristics typical of the most successful companies in their industries—staying true to the business, remaining coherent, looking at a bigger landscape, and playing on strategic advantages. 

 

Staying True

 

As it turns out, the advice your friends always gave you when you were having relationship problems is also true in business.  The Kellogg professors discovered that many companies that have failed to reach the competitive plateau spend too much time analyzing what other businesses do well, and not enough time thinking about they themselves do well.

 

The researchers suggest compiling three to six of your business’ greatest strengths that help your company run in a powerful and diverse way.  Operate your company around those traits, and not around those in which you see other companies involved.

 

Remaining Coherent

 

This trait is similar to the one above, but the professors make the distinction between what your business does well and what it does not.  As one of the researchers cited, many businesses’ rely on the growth strategy of throwing a whole bunch of darts to the board and seeing which ones stick.  The problem, of course, is that while some of the darts hit the mark, other do not, and it takes time and effort to pick those darts up from the floor.

 

Consider the business analogy.  If your company attempts to jump into many spaces, and then only succeeds in a few, the cost of having tried those unsuccessful ventures could be quite high.  The professors recommend that you remain focused on the aspects of your business that work—and if you happen to have a profitable business that is not in line with your strengths, the researchers suggest considering selling it to another business that does have those capabilities (as they note, you might make more money selling it than trying to make it work).

 

The Bigger Picture

 

Once you have identified what works for your business, then it is time to check out what the competitors in your industry are doing.  Don’t use this reflection as a chance to figure out what you should be doing, however (as evidenced above, you should avoid thinking like that).  Instead, use this as an opportunity to identify what types of capabilities or business aspects are scalable.

 

In other words, if you want your business to grow, you have to focus not only on what you do well, but also on what you do well that has the prospect to help your company grow.  Confused about the distinction?  Take a simplistic example.  Let’s say you have really great handwriting (but also assume, for the sake of the analogy, that you aren’t particularly talented at graphic design or creativity in general).  People always complement your handwriting, and so you think you’ve found what you are really good at—but what then?  Aside from a limited number of job opportunities, that skill really isn’t scalable to where you (and a business you create) could grow exponentially.  So, when you’re thinking about your company’s talents, you have to see what your industry does in order to figure out which capabilities are capable of helping your business grow (and there is no better way to measure that than to find out if it’s already happened).

 

Play on Strategic Advantages

 

Put everything together, and you have this tactic.  Once you know what you do well and what will work in your field, consider putting capital toward those abilities.  Figure out what your consumers want (and, thus, what your business will profit from) and direct your company in that way. 

 

But, how do you do that, you ask?  Many years ago, we started our work in Voice-of-Customer research.  Among other things, this strategy helps to identify what your customers want, and compares it to the exact services/products you actually offer.  Too often, we meet with executives of large companies who work with firms who think they understand the makeup of the client, but they operate from what they think of the client, instead of what the actual customers think.  This is a critical distinction, and if you’re not involved in this type of research, you should be.  It could make the difference between being a competitor and being a super-competitor.

 

Want more information?  Shoot an email to Mike Reiber  at mreiber@axiomcom.com