Take Control and Increase Growth – Article 3
The purpose of this article is to help business owners understand the key daily decisions that influence dependence on external funding and either limit or expand the growth potential of a business. There are essentially 4 decisions: 1. cash; 2. people; 3. strategy; and 4. execution. This article (#3) addresses strategy, which is the primary driver of growth. If you are not growing in the top tier of your industry segment you have a strategy problem.
The first and most common strategic move for most CEOs in a difficult economy or a sales stall is to “do nothing,” the definition of which is “insanity.” The CEOs won’t admit they’re doing nothing. They will make minor tweaks to their existing strategy, if they even have one, and delude themselves into believing they made significant changes. Or, their big changes only affect the internal company. Growth and sales are always about the customer. The root to a growth issue is the customer’s perceived value of your product or service and whether someone is willing to invest/spend their money with you. When customers stop spending money with you, what they are really saying is that they don’t see enough reason (e.g. value) to give their money to you. This is why this intense focus on cost control today is a big problem. While it is important to manage businesses in a prudent manner, we must balance that with addressing customer needs and wants. Many of the changes companies are making today actually exacerbate their growth problem, negatively affecting customers by reducing the quality of the products and services they receive. What their customers need is more value and service, but companies are moving in the other direction. Rather than cut costs, I suggest spending what it takes to address your customer’s changing needs. Otherwise someone else may get your customers.
In the typical “do-nothing strategy” leaders believe that their growth issues are due to external forces, everyone else is experiencing sales declines, or some other self-limiting belief. So they keep doing the same things, cut costs, and try to wait things out. This strategy has some hidden costs that are never measured such as:
- Lost customer goodwill;
- Increased mistakes from exhausted employees;
- Loss of good people;
- Sloppy decision-making from a tired management team;
- Missed business opportunities because the “cost control” mentality prevented an “investment” mentality; and
- Lost market share because new companies entered your market space, and old competitors took some of your market share.
The second path that many CEOs take is to try to redefine their business model. This strategy rarely works, is highly risky, and almost never necessary. It assumes that what the company currently does and its core competencies have no value in the marketplace. This is highly improbable.
The best strategic course of action for a company to take to reignite growth is to utilize strengths already possessed in ways that are important to a specific target customer base. Many times companies define their target customer too broadly or use the wrong criteria, such as company size, geography or some other inappropriate specification. The secret to dramatic increases in growth typically already lies dormant inside your company. You need to recognize it and match it up properly to customer needs. A book called The Inside Advantage by Robert Bloom has captured the essence of identifying more clearly your desired core customers and aligning their needs with your capabilities in a way that dramatically increases growth. If you have a strategy problem here are some thoughts from Inside Advantage and some additional ideas to consider:
- Can you describe your strategy in one sentence? If you can’t you do not have one.
- Can you vividly describe your core customer in one sentence? This may not represent your predominant client mix today.
- How can you adapt your unique offering to this core customer in a way that you can own and leverage and cause more of them to buy from you?
- What will your persuasive strategy be to convince your core customer to buy your uncommon offering instead of the competition’s?
- How does everyone in your organization need to change the way they do things to own this strategy?
- How are you going to make your strategy well known to your target customer?
- What are your brand promises, and how will you measure them?
- What is the X-factor/bottleneck/shortage/chokepoint in your industry, and how are you going to control it to give yourself an exponential advantage?
- What are your top 5 external opportunities and threats?
- What are your top 5 internal strengths and weaknesses?
- What are your core competencies?