growth is an imperative, not an option
For businesses to survive, growth is an imperative, not an option . Often, the most straightforward way to increase shareholder value is top-line revenue growth, which is also usually less painful than alternative methods of value creation (such as cost reduction or changes in ownership structure). However, for all its positive implications, achieving growth is a complex and difficult task. Only a small minority of companies succeed in their attempts at sustained growth.
For companies selling into mature, or even worse, declining markets, profitable growth can be a particularly tall order. Finding creative ways to increase the size of the pie, rather than new ways to cut up the old one, is the challenge facing many of today’s senior managers who want to avoid a zero-sum game with competitors.
We see two emerging school of thoughts in formulating growth strategies. The first one is very much market-based, whereby a company would identify the available opportunities in the markets that are related to the business and then think through about the development and/or acquisition of capabilities that are required to capture those opportunities. We call this the Opportunistic Approach . The second one is what we call the Growing from the Core Approach , whereby a company would first identify what they are good at and then try to leverage these competitive advantages to capture “adjacent business opportunities” that a company can pursue to strengthen its core and grow its revenues. This second approach focuses on locating and expanding the strongest assets of a company’s core businesses, which is often suited for companies whose core businesses don’t operate at their full potential .
The question is then, which one is better? Our view is that neither one is better than the other. In fact, our experience in helping several companies reveal that growth strategies should adopt a hybrid-approach. That is, we hold the view that although a company should always be ready to capture the “next waves of opportunities”, it should never go too far away from what they are really good at. Stretching your competencies too much will break apart any organization, no matter how strong and solid it is. What we know for sure is that growth strategy formulation must be based on a fact-based and rigorous process, although management wisdoms of the senior management team play a lot of role in making the final growth strategy decision.
That being said, the development of growth strategies usually involves three generic phases, which can be tailored into different company situations: (1) growth strategy identification and profiling, (2) core capabilities assessment, and (3) growth strategy evaluation and selection.
to be continued.. >> Growth Identification and Profiling
