Updated: Nov 30, 2020
Growth is a booming industry. Everywhere you look, there are coaches, consultants, recruiters, and more telling you they can help your business grow. The reality is there are both Micro and Macro Dynamics that impact growth. Micro Dynamics are the aspects of your growth you can control, and Macro Dynamics are those you can't.
Micro Dynamics are what you hear the most about: messaging, marketing, sales, culture, and more. Given the right situation, each of these can be a lever that helps your busines grow.
Macro Dynamics aren’t discussed as much, mainly because they are harder to impact, but awareness of them is important.
The five Macro Dynamics, each capable of igniting or killing growth, are:
Second Curve Dynamics
Understanding the current situation within the Macro Dynamics is the best way to know whether a Micro Dynamic solution would be your best path for growth, and potentially which solution. Or, it will help you recognize that you need to get strategic about growth on the Macro side, and start thinking about your next growth curve.
This article will provide an overview of the five Macro Dynamics, to help you start assessing your current status for each of them and to understand what that may mean for your growth prospects.
This article will provide an overview of the five Macro Dynamics, to help you start assessing your current status for each of them, and to understand what that may mean for your growth prospects.
The concept of product-market fit was popularized in the start-up community by Marc Andreessen. It became broadly accepted within the Lean Start-up community.
There are three critical aspects of Product-Market Dynamics:
1. Product: The offering you sell, the value you provide. The more value you provide, the more you could potentially charge.
2. Market: A group of customers with a similar set of needs, interests, and motivations. The more similar customers, the larger the potential market.
3. Differentiation: Unique capabilities, assets, or technology that enable you to separate yourself from the competition. The more the market values your differentiation, the better your chances of becoming a leader.
The better the alignment of these three, the better your opportunity for growth.
The worse the alignment of these three, the worse your opportunity for growth
How well aligned are your Product, Market, Differentiation?
Once you have achieved product-market fit, the next Macro Dynamic that could significantly impact your growth opportunity is the competitive dynamics within that product and market and your market position.
In most markets, there tends to be a clear market leader with a series of challengers and followers.
Geoffrey Moore called the leader “the gorilla,” the challengers “chimps”, and the rest of the followers “monkeys.”
Once a product and market have achieved its fit, the market leader gains many advantages. They can demand a price premium as compared to the competitors. Their margins are higher, due both to the higher prices, but also due to lower costs from economies of scale. But perhaps the most critical factor is that they tend to grow at a rate faster than the rest of the market.
Where are you on the Market Position ladder, and how could that be impacting your growth?
Every Product and Market goes through a maturity lifecycle, often visualized as a bell curve or sigmoid curve. The maturity cycle goes through inception, early/hyper-growth (when the hockey-stick starts), late/stable growth, maturity (where growth flattens), and finally to decline.
Through this maturity cycle, the market goes from barely penetrated to fully penetrated.
If your growth has slowed, that could be an indicator that your product-market may be mature or even in decline. There are not many growth options outside of price increases and stealing or buying competitors' market share.
Where is your product and market in its maturity curve, and could that be impacting your growth?
Products and markets do not live in a vacuum. External forces can impact the need for a product or the value of a product, and in turn, either accelerate the opportunity for growth, slow growth or even eliminate markets.
Understanding how external forces can impact your customers, suppliers, and entire value chains is critical to understanding how these external dynamics could impact your growth.
Common external forces to monitor include:
Political: How could existing and evolving politics impact your growth potential and cost structures?
Economic: How could economic factors, such as a recession or change in interest rates, impact your growth potential and cost structures?
Social: How could social, cultural, or demographic factors impact your growth potential and cost structures?
Technology: How could technological changes and advancements impact your growth potential and cost structures?
Legal: How could labor, environmental, discrimination, and other new or changing laws or regulations impact your ability for growth potential or cost structures?
Environmental: How could ecological and environmental factors like weather, climate, and climate change impact your growth potential and cost structures?
A key for assessing external dynamics is examining your product and market and your full-value chain from raw materials to an end-consumer. Could end-consumer demand be impacted, and how would that affect you? Could your supply chain be affected and limit production capability?
How are external forces (say a pandemic or climate change) impacting your growth?
Second Curve Dynamics
The first four Macro Dynamics focus on the growth opportunities for a specific product and market. The fifth dynamic, Second Curve Dynamics, is about your ability to create a new growth curve when your first (or existing) growth curve has slowed due to one of the first four Macro Dynamics.
The ability to identify, define, and start to execute on a Second Curve provides you with the opportunity to achieve sustainable growth. Finding new markets to take your existing product into or identifying new product opportunities to sell into your existing market is the best way to find your Second Curve.
Unfortunately, there is no clear indicator or sign to tell you it is time to start your Second Curve. Most companies wait until their growth is fully stalled or even in decline before they start on their Second (or next) Curve, which makes their chance of success that much more difficult. Just look to the failures in formerly successful companies like Blackberry and Kodak. The Macro Dynamics shifted, and they were unprepared to shift with them.
How well prepared are you to start your Second Curve?
What Should You Do Next?
With a high-level understanding of the 5 Macro Dynamics of Growth, you now have a chance to evaluate your current situation. We have created an Assessment Worksheet to complement this article and help you assess your current situation within each Macro Dynamic. You can download the Assessment Worksheet here.
If you are in the process of finding product-market fit, in the early/hyper-growth phase of maturity, or a leader or close challenger in the late/stable growth phase, one of the Micro Dynamic growth solutions could be a great fit.
Market segmentation, branding, and messaging can help you get to product-market fit.
Sales training or marketing programs could help drive the growth phases.
Culture, vision, and talent programs could also be critical to extend your growth in those phases.
But, if you find your growth stalled by one or more of the first four Macro Dynamics, it is the Second Curve Dynamic that is going to be critical for your business to return to growth.
Is it time for you to focus on Macro
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