By Adriano  Allegrini

“Grow, now. And preferably much faster than the market.”

If that directive sounds familiar, it may be because it is a commonly issued challenge senior leaders receive from their Boards, stakeholders, activist investors, and CEOs. It is also one that can be perceived as a set up for failure, even for the most aggressive senior leaders.

Many leaders choose to address this challenge by avoiding it altogether. In perceiving the task as near impossible, they busy themselves preparing cursory spreadsheet exercises and generic answers, hoping to avoid meaningfully addressing the real issues, and that they will eventually be replaced by something else on the agenda.

Another ineffective approach is to face the growth imperative too literally, taking actions — like price cuts and deep discounts — that can damage the organization’s long-term outlook to deliver short-term growth.

And even when there is a growth strategy, there are often difficulties in getting the organization aligned and selling the vision to the Board and investors. Success is a function of both the growth strategy itself and the ability to characterize it in a digestible, compelling way — the growth narrative.

Keep in mind that while a growth challenge may initially feel unpleasant, it can present a unique opportunity to have a candid discussion, and permission has been granted to bring innovative options to the table.

A compelling growth strategy and its associated growth narrative is built around the answers to 3 questions:

Why do we need to grow?

To what extent are the growth opportunities within reach?

How will we support and sustain the growth?

If you can answer these questions for your organization, you will improve the quality of the dialogue with your stakeholders, making you more likely to achieve alignment behind the growth agenda, and ultimately experience better execution of your growth plans.

Why do we need to grow?

Few teams try to address this question even though it is a natural starting point for a discussion on growth. Achieving a shared understanding of why we need to grow will help us decide how we will grow. As a result, you will have your team better aligned around the growth plan.

To answer this question, we can start by acknowledging that there are appropriate reasons and inappropriate reasons to grow. Among the inappropriate (but common) driving forces are the desire to lead a larger organization; a general belief that bigger is better; and concerns about keeping up with other organizations or the market.

The failure of many roll-up strategies illustrates the perils of pursuing growth merely for growth’s sake. One marquee example is the roll-up of funeral homes a few years ago: there are minimal operational or revenue synergies in operating funeral homes in multiple markets.

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 resources to actions that don’t reflect market, competitive and/or internal realities.

Conversely, some examples of common appropriate reasons for growing are:

  1. Attaining economies of scale
  2. Achieving pricing power, often through improved market share
  3. Increasing placement power and distribution, through portfolio breadth and brand strength
  4. Satisfying customer needs for a broader array of products and services
  5. Pursuing vertical integration

In order to identify why you need to grow, you can start by looking for evidence that any of these (or other) reasons is applicable to your organization.

For example, growing to achieve pricing power often requires greater concentration in core products, but degree and duration may be limited by the core products’ life cycles. On the other hand, growth through vertical integration normally requires expanding offerings and broadening core capabilities, likely bringing new competitive dynamics into play.

To what extent are the growth opportunities within reach?

This is a complex question more easily addressed by breaking into two pieces:

Market and competitive space. You should be able to build a point of view by using your own data-driven evidence of:

  1. Structural opportunities, e.g. organic growth rates in the various segments of the market, and realistic acquisition options
  2. Unmet / under-met needs in your markets or customer base
  3. Future market shifts in needs and buying behaviors that you can capture through differentiation and innovation

Through market sensing and voice of the customer analytics, your organization can find and size reasonable growth paths.

Take a deep look into your organization. How are you positioned to capitalize on the market opportunities? You can answer this question through two analyses:

  1. Identify the critical success factors to capitalize on a particular growth path, e.g., what skills, resources or positioning with key stakeholders are pre-conditions for success
  2. Execute an honest assessment of its internal strengths and weaknesses and map those to growth opportunities and pre-conditions for success

One word of caution when executing these analyses: it is common to be overly optimistic and underestimate your own weaknesses or competitors’ strengths. This has led many organizations to failure by pursuing real market opportunities for which competitors are better positioned.

Only with a realistic assessment of your own capabilities and positioning you can gauge the likelihood for success of a particular path and address any risks inherent in following such.

How will we support and sustain the 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.

Important points of stress for supporting and sustaining growth are:

  • Leadership skill and capacity. It is common for organizations to outgrow their leaders. You will need to be alert to signs this is happening to your organization and be willing to make changes. Sometimes this is just a function of leaders who have been through this transformation before or do not have the experience of operating in an organization with the size and complexity you are trying to achieve. The challenge can also stem from changes in leadership skills and success drivers associated with the growth initiative: someone who excels at running and fine-tuning an established operation is not necessarily the right leader to be at the helm of a growing or fast-moving operation.
  • Talent planning and deployment. You will likely need to rethink staffing levels, organization design, and the critical skills and core competencies needed to execute your growth plan. The most common pain points are market / account coverage and the deployment of customer-facing roles, but the changes in talent can be far more pervasive.
  • Culture. You should assess whether you have the right amount of accountability and “performance tension” to drive the growth strategy. This includes the nature and degree of autonomy, collaboration, innovation, and transparency that are required to support and sustain the organization going forward.
  • Analytical processes and tools. Your growth strategy is very likely to require a significant enhancement in analyzing and drawing insights from internal and external data. You will need to focus on enhanced goal setting, performance monitoring, measurement, and reporting.

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

What’s the bottom line?

Being presented with a growth challenge from your stakeholders is an excellent opportunity to look at your operation anew, identify and understand your paradigms, and see what you can do differently.

Following the suggestions in this article will increase the quality of your growth plan by approaching it in a holistic, organized fashion, ultimately increasing the chances your growth objectives will be achieved.

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