By Steve Strelsin

 

A growth strategy narrative starts with a simple, three question exercise that gets the leadership team on the same page about how to grow the organization.

 

It seems that top-line growth is integral to almost every executive’s plans, and in a lot of cases it’s simply taken as a given. But when we ask executives why they want to grow, why they believe that their growth objectives are within reach, and how they are planning to manage the change and adjustments that naturally come with growth we often get silence or poorly thought-through answers. Often the answers to these questions differ meaningfully across a leadership team and, of course, further down the organization.

There simply is not a clear or consistent narrative about the growth imperative or journey within many organizations. As a result, leadership teams are not prepared sufficiently to pursue the growth they all agree is so important. So, what are leaders to do?

We suggest starting with a simple exercise to test the alignment and readiness around a clear growth strategy. First, ask all members of the leadership team to briefly document their specific answers to the following three questions that are the basic elements of a growth narrative, including:

  1. Why do we want to grow?
  2. To what extent are the growth opportunities within reach?
  3. How will we support and sustain the desired growth?

Second, compare the various responses to these questions and identify any inconsistencies, lack of clarity or weaknesses in the responses overall. Finally, spend time gathering additional information where there are gaps, and discussing and further considering the collective thinking around these three questions until the growth narrative is clear, compelling, defensible and representative of the entire leadership team’s thinking. Only then will you be able to effectively pursue the growth strategy, explain it to others in the organization and, most importantly, achieve the growth objectives.

Now, let’s explore these questions a bit more.

Why do we want to grow?

In our experience, few leadership teams address this basic question even though it is the critical starting point for any serious growth discussion. Without alignment around this question it is difficult for leaders to guide how they will grow. As a result, they risk going off course quickly.

For starters, let’s acknowledge that there are appropriate reasons and some inappropriate reasons for growth. Among the inappropriate but far too common driving forces for growth are the desire to lead a larger organization for ego reasons; a general belief that bigger is better; and concerns about keeping up with the growth of other organizations. Pursuing growth for any of these reasons sets your organization down a path where, at best, you’re playing someone else’s game. At worst, you commit significant focus and resources on actions that fail because they don’t reflect market, competitive and/or internal realities.

Conversely, there are several valid reasons for wanting to grow, including:

  1. Ability to achieve economies of scale that meaningfully drive down unit costs;
  2. Achieving the pricing power that often comes with greater market share or achieving greater placement power that often comes from product line breadth and brand strength;
  3. Reflecting and satisfying customer demand for a broader array of products, and services, or pursuing vertical integration.

Each of these reasons (and others) is only valid for your organization if market, competitive, and internal realities provide necessary evidence of validity. Furthermore, each of these reasons suggests a different way to grow and likely dictates a possible or desired growth rate.

For example, growing to achieve pricing power often requires greater concentration in core products and may be limited in degree and duration of growth by the longevity of demand for those core products. Growth for the sake of achieving economies of scale also usually involves greater concentration in core products. On the other hand, growth through vertical integration involves expanding offerings and requires broadening core capabilities and often brings new competitors into play.

To what extent are the growth opportunities within reach?

This question needs to be divided into two parts: internal and external. The external part relates to clear indications that growth opportunities are available in your relevant market space. Here you need data-driven evidence of 1) structural opportunities in the market (e.g., overall, and predictive market growth rate); 2) unmet/under met needs in your markets or customer base; or 3) indications of future market shifts in needs and buying behaviors that can be realized through new forms of differentiation. Through sound market sensing and strong voice of the customer analytics your organization can find and size possible growth paths on which at least some organizations can capitalize.

The internal part of this question relates to how your organization is positioned to capitalize on the market opportunities uncovered in answering the external question. After all, many organizations have failed by pursuing real and well-analyzed market opportunities for which existing or new competitors are better positioned.

This internal assessment is based around two basic analyses. First, an organization must determine the critical success factors or necessary circumstances to capitalize on a particular growth path (e.g., what skills, resources or positioning with key stakeholders are pre-conditions for success). Second, the organization must do a brutally honest assessment of internal strengths and weaknesses and, more importantly, map those to growth opportunities and pre-conditions for success. Only then can you gauge the likelihood for success down a particular growth path and address any risks inherent in following that path.

How will we support and sustain the desired growth?

 Growth, for all its advantages, can put tremendous strains on an organization due to the nature of change and added complexity. These strains come in several varieties, ranging from infrastructure to culture to talent. A checklist of the four most important factors (and points of stress) for supporting and sustaining growth includes:

  1. Leadership skill and capacity—It is common for organizations to outgrow their leaders. Sometimes this is just a function of leaders who have not led this type of growth journey before or have not been a leader inside an organization with the size and complexity you are trying to achieve. Other times, the challenge stems from changes in leadership skills and success drivers associated with the growth initiative.
  2. Talent planning and deployment—Growth initiatives often require rethinking staffing levels, organization design, and the critical skills and core competencies needed to reach the end state of the growth journey. The obvious areas that are affected are market and account coverage and the deployment of customer-facing roles, but the changes in talent are usually more pervasive than that.
  3. Culture—An organization needs to assess whether it has the right amount of accountability and “performance tension” to drive the growth strategy. Other cultural considerations involve the nature and degree of autonomy, collaboration, innovation, and transparency that are required to support and sustain the organization going forward.
  4. Analytical processes and tools—Most growth strategies require a significant enhancement in getting, analyzing, and drawing insights from internal and external data. Furthermore, better goal setting and performance monitoring, measurement, and reporting are required.

In short, it is important to anticipate the changes and stresses associated with your growth plan, and prepare adequately to handle these effectively.

Conclusion

Asking the right questions about growth and answering them in the right order as a leadership team is a simple but powerful starting point for thinking about top-line growth. The process of discussing these questions will help create the clarity and commitment from the leadership team that are necessary ingredients for success. Finally, the growth narrative that results from answering the three questions will help to 1) establish the most appropriate growth plan and objectives for your organization; 2) effectively communicate the plan to ensure the full understanding and support from others in your organization; and 3) help ensure effective execution of the growth plan.

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