In Part 1 of The Growth Strategy Imperative series, I talked about why companies need to get strategic about growth and adopt a “growth strategy mindset.”
In Part 2, I carried this theme of getting strategic about growth and focused on the fundamentals of where growth can come from and the origins of growth strategy.
In Part 3, I will focus specifically on the how: How to get strategic about growth; and How to build a growth strategy capability in your organization with Effective Growth Strategy™.
Growth is hard.
While most companies dream of hockey-stick growth, the reality is that it is not in the cards for most. As per the National Center for the Middle Market, the average growth rate for middle-market companies in 2019 was 6.75%. Not quite a hockey stick.
That said, many companies are happy with even low single-digit growth as they know peers who are stagnant or shrinking.
Sustainable Profitable Growth is Harder
Research from Bain Consulting showed that only 18% of companies were able to grow revenue and profits at 5.5% a year or more over ten years. Just over 10% did that and earned back their cost of capital.
Think about that; only 1 in 10 companies grew revenues and profits at 5.5% annually AND earned back their cost of capital.
To grow sustainably, a company has to have both the capabilities and the capacity to be strategic about growth.
The capabilities include the ability to identify and evaluate growth opportunities, the ability to prioritize and focus on the opportunities with the best chance of impact and success, and the ability to do this consistently.
As for capacity, it is essential to take time to think strategically about growth. Take the time to step back from the day-to-day of the business and adjust your lens to be more as you evaluate the current situation and opportunities for growth.
Many companies struggle with this as they do not have the capabilities, nor do they take the time to be strategic about growth.
One in four of the lower middle market CEOs, I talk to say they have the capability, and less than one in ten think they have someone on their leadership team who does.
Even for those that do have the capability, research from The Strategic Thinking Institute shows that 96% of executives lack (or don’t take) the time for strategic thinking.
Effective Growth Strategy
With this in mind, I set out to create a practical approach to growth strategy.
A simple and straightforward method that could enable any company, regardless of size, industry, or leadership team pedigree, get strategic about growth, and develop an Effective Growth Strategy.
A method for growth strategy that provides focus to the organization’s commercial efforts. A method for growth strategy that defines expectations that can be monitored and measured. A method for growth strategy that focuses on the two or three opportunities that have the best chance of impact and success.
A method that provides a process and system for developing and evolving the growth strategy based on changes that occur in the market.
I went back to my foundations. I looked back at how I approached growth strategy as an executive and consultant. I read the leading books and research on growth. I talked with over a dozen leaders of Inc. 5000 companies to learn from them.
I shared my learning and approach with many leaders and coaches, distilling and refining it down to the basics, five key elements. Each supported by research and each building on each other.
The result is Effective Growth Strategy, a systematic and straightforward approach to growth strategy that anyone can use to build successful growth strategies and attain sustainable profitable growth.
5 Key Elements of Effective Growth Strategy
1. Define your core. A well-defined core strategy that you utilize to evaluate and prioritize growth opportunities, as well as to provide focus to your organization and ensure everyone is rowing in the same direction.
2. Know your playing field. A strong knowledge of your playing fields, the specific products you sell into specific markets.
3. Evaluate growth opportunities. An ongoing approach to identify as many growth opportunities as possible, define them at a high-level, score them objectively, and manage them in a prioritized pipeline.
4. Focus your strategy. From that prioritized list of growth opportunities, only focus on two or three that you can fully resource and that have the best chance of success.
5. Make it an ongoing process. Markets and customers are continually changing. Make growth strategy an ongoing process of evolving your core, knowledge of your playing fields, and your focus based on results and new knowledge.
You Can Do it
Growth strategy has historically been only available to the elite. Fortune 1000 companies and Private Equity firms hand over hundreds of thousands, if not millions of dollars to pedigreed MBAs at McKinsey, Bain, BCG, and the like.
The thing is there is no reason why every company cannot or should not be doing a growth strategy.
Growth strategy does not need to be something only available to the elite and delivered by pedigreed MBA from high-priced consulting firms in 500-page PowerPoint decks.
Every company can be strategic about growth and have a Growth Strategy.
Better yet, they can do it themselves. 80% of the knowledge and ideas needed for an Effective Growth Strategy are already in your business.
With a systematic, straightforward, practical approach to it all, you can do it. You can get strategic about growth and attain sustainable profitable growth.
To learn more about Effective Growth Strategy and how you can get strategic about growth, download the eBook “5 Keys to an Effective Growth Strategy: A Practical Guide” here.
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