Growth Strategy and Planning
Every company faces a growth gap—a disparity between its desired trajectory and business capabilities. Whether your business is experiencing stalled growth, seeking ways to achieve profitable growth, or facing a turnaround required in a deteriorating situation, we provide a unique and carefully crafted growth strategy. This strategy is tailored to your unique challenges, utilizing our Business Situation Framework, lifecycle model, and a comprehensive and meticulous analytical tool. This ensures every aspect of your business is thoroughly evaluated and every opportunity is capitalized on from multiple perspectives, instilling confidence in the accuracy and reliability of our recommendations.
Core Business
Full Potential
Adjacent Business
Performance & Capability Development
It’s important to keep score, and its significance cannot be overstated. Strong performance management is a fundamental principle and cornerstone of a company’s business growth and potential. Remember, “what gets measured gets done.” A performance culture is more important than any strategy and planning. Growth is achieved through capability development.
Business Model Innovation - Non-R&D Led Innovation
Business and Executive Coaching and Competence Focus
Objective
Every company faces a growth gap—a disparity between its desired trajectory and business capabilities. A formal growth strategy is essential for success. It guides your business through the changing market landscape and applies to products and companies. Factors such as products, customers, and competition can influence the market.
What Challenge(s) do Our Clients Face?
- What is 'the Core' of the business? What are the business Core Capabilities?
- What 'Differentiates' us in our customer's mind? Who are the business' core customers?
- How do we define our core customer segments? Who are our most profitable customer segments?
- What other potential customers do we touch? What do our core customers most value about us?
- What are the business's core products/services? What are the sources of full potential to 'deepen' the core?
- Which products/services are most profitable? Which products/services generate the most sales?
- What products/services have allowed the business to grow? What do our competitors offer that we don't?
- Are we maximizing our revenues? Do we have a high-performance culture?
- How do we use analytics and external data sources to understand current customers?
- What are your primary sources of differentiation? Are they gaining in strength or waning in strength?
- Does the company make money in ways that are different from competitors or industry norms? (for example, selling a service when everyone else sells products)?
- Are margins (particularly gross margins) significantly higher or lower than competitors?
- Does the business generate cash quickly (or immediately)? Are working capital requirements low?
Why Does Business Need a Formal Growth Strategy?
Factors such as products, customers, and competition can influence the market. A premium business can become a commodity and innovators may need continuous innovation to stay caught up.
The process of a product moving from innovative to commodity is due to changes in customer preferences, market evolution, and competitor response. Companies compete based on performance through product innovations. When the basis of competition shifts to reliability, they respond with process innovations. Once the basis shifts to convenience and cost, business model innovation often comes into play.
- Fading/Eroding Competitive Advantage:- Due to fast-moving competition, a company's competitive advantage can quickly fade. To stay ahead, companies must adapt and adjust strategies. In uncertain times, leaders must optimize resources to remain competitive. The competitive advantage period typically lasts several years and can be divided into hold and fade periods.
- Porter Industrial Forces:- The Porter Five Forces framework includes competitors, new entrants, substitute or complementary products, buyers, and suppliers. These factors determine an industry's competitiveness and profitability. Companies must use strategies to overcome these forces and achieve better profitability.
- External Environment and Growth Gap:- Markets and customer demands evolve. Keeping up with these changes is essential for continued growth and success. As a company grows, it may reach a point where new product development slows down, creating a growth gap that needs to be addressed. Factors such as intensified competition can widen this gap, significantly diminishing the company's ability to grow.
- Value Migration:- Value Migration involves the transfer of value from one industry to another, creating value in the receiving sector (obsolete business models to new, practical designs). A company's competitive advantage depends on its business design, and value migrates if changes are not made.
- Shifts in the Basis of Competition:- As industries develop, the basis of competition shifts through different kinds of innovation. Companies compete based on performance predominantly through product innovations. When the basis of competition moves to reliability, they tend to respond through process innovations. However, once the basis shifts to convenience and cost, business model innovation often also comes into play.
How Do We Help?
We understand the concept of the business lifecycle, and our goal is to stay in a strong position for as long as possible by continually innovating. How can we ensure that businesses remain strong and avoid decline? What options are available to achieve this?
Growth Strategy Chessboard
- Competitive Advantage is a concept and a tangible pathway to market success. Every business, including yours, must understand and leverage its unique competitive Advantage, as this sets you apart in the market.
- Your company’s Core Business, with its well-established product, customer, and market, is a testament to this. Operational Excellence is pivotal in driving business growth, enabling you to achieve low-cost competitiveness, a critical factor in today’s competitive market.
- The adjacency growth strategy is a systematic approach to achieving incremental growth. By sticking close to your roots in the customer base, service lines, value chain, technology focus, vertical focus, and more, you can ensure that you’re always utilizing your strengths. This boosts your confidence and makes your business decisions more secure, leading to sustainable growth.
- Core and niche are the catalysts for growth. The strategy shifts towards reinvesting in growth areas, optimizing commercial Excellence, creating solutions for customer needs, and continuous innovation to leverage the business cycle.
- In the business landscape, there are three horizons: Horizon 1, which manages the present business cycle, and the existing Product Life Cycle. Simultaneously, we must focus on Horizon 2, the emerging business, and take initiatives towards Horizon 3, the future business/technology.
- Research and Development only sometimes means innovation. Non-R&D innovations can include configuring internal systems (Profit Model, Network, Structures, and processes), offering products and services focused on core products and services (Product performance and Product systems), and delivering customer experience (Service, Channel, Brand, and Customer engagement). Innovation helps develop and sustain capability, a sustainable competitive advantage.
- The capability-based Business Model innovation can reinvent the rules of an entire industry and make competition less relevant, with high upsides in growth and profitability. The most significant advantage of business model innovation may be that it is much harder to copy competitors.
- Value Chain upgrading helps you participate in the wider Industry profit pool.
- Mergers and acquisitions help you consolidate and lead the industry; you can also acquire and add capability. Pure tones: Search for what is successful in the market, study your business model, and reorient it accordingly.
How Do Our Clients Benefit?
A broad approach to achieving growth now and in the future: Invest, Perform, Create, and sustain.
- Companies can immediately invest in growth by reallocating funds from inefficient or ineffective activities to more promising opportunities. Investing in existing products, services, and commercial activities that have generated past organic growth.
- Performing better on commercial capabilities. Optimal performance in commercial functions enables companies to generate new revenues and contribute to medium-term growth.
- Creating products, services, and business models to exploit new growth opportunities. Developing new offerings and business models tailored to meet unfulfilled needs more effectively, quickly, and flexibly than before can establish a pipeline that drives growth well into the future.
- Sustain. All the above three strategies ensure the sustainability of growth in the long term.
The most successful companies combine these approaches to drive rapid growth and reinvest the released funds into future opportunities to support long-term growth.
Invest: Put your money where the growth is. When considering investments, focusing on successful companies that can generate significant incremental revenue by pursuing relentless efficiencies and reallocating resources to new initiatives or emerging proven winners is essential.
Companies can invest in growth immediately by reallocating funds from inefficient or ineffective activities and investing them in opportunities.
Put your money where the growth opportunity is. Successful companies can capture significant incremental revenue through the relentless search for efficiencies and reallocate the resources and capital to promising new initiatives or proven winners.
- Investors recognize growth sources from current products and services and redirect funds from low-growth initiatives or unproductive spending to focus on winners.
- “Investors” tap new funding sources or reallocate existing funds to capture new growth.
- Companies achieving revenue growth operate with an investor mindset. They extract funds from underperforming activities and invest in new ventures or programs with the potential to expand.
Perform: Optimize your commercial capabilities. Great growth companies achieve commercial excellence by constantly optimizing their marketing, sales, pricing, and promotions capabilities. This approach helps them grow from existing capabilities while generating more revenue to invest in growth opportunities.
- Dynamic pricing is another essential source of growth that can be automated and driven by an algorithm.
- Omnichannel sales and analytics can be critical growth enablers for B2B companies that understand when to use digital and when to rely on traditional channels.
- Embracing new digital channels can enhance efficiency, lower costs, and improve customer service. Our research highlights three crucial traits for an optimal digital strategy: speed, transparency, and expertise.
Create: Create and Innovate by design with the customer at the center.
- A business must innovate to meet customer needs, uncover new opportunities, and use technology to enter new markets or adopt new approaches that help compete effectively.
- Redesigning business models, creating new products or services, and exploring disruptive services to develop new sources of growth.
- Top-tier companies utilize design thinking to innovate and develop new products and services by understanding customer purchase journeys, allowing them to effectively address unmet needs and enter new markets.
Why Choose Us?
We have created a Growth Strategy Chessboard centered on two main pillars: Competitive strategy and its impact on the company’s Growth Rate. There are three drivers of growth: Organic Growth, Capability Development, and Innovation. These drivers enable business growth over time.
The outcome of this strategy is profitability, demonstrating that a more decisive competitive advantage and more significant innovation lead to higher profits. Higher profits offer the potential for positive cash flow, which can be reinvested into the company to fuel further growth, creating a self-sustaining and repeatable model. Many successful companies have embraced this strategy.
Check out this simplified chessboard with four quadrants that make it easier to understand.
Performance & Capability Invest. Perform. Create and Sustain
Inorganic Growth M&A and Diversification
Organic Growth -Core Business Focus
Innvoation – R&D-Led and Non-R&D-Led Business Model Innovation
Organic Growth
Core Busines Focus
- Competitive Advantage – Reinvest in your Competitive Advantage:- A real competitive advantage means that compared with rivals, you operate at a lower cost, command a premium price, or both, creating superior value for the business. Your profitability will be sustainably higher than the industry average. Price premiums offer any business the most significant scope for achieving an attractive ROC but are usually more challenging than cost efficiencies. Also, the companies or products with the most impressive returns often combine more than one advantage.
- Scaling – Revenue Growth outspace Costs:- Achieving business scalability involves expanding the company to facilitate broader market penetration and increased profitability. This can be achieved through increasing the customer base, entering new markets, or introducing new products and services. Business scalability is often essential for staying competitive and maintaining strong financial performance. However, it is a task filled with challenges. Successful business scalability requires thorough planning and readiness to address the obstacles that come with growth.
- Core Business – Focus:- Every business has its core: products, customers, and markets. The first growth strategy is to improve the core business. This can be achieved by focusing on operational efficiency, reducing costs, and improving the quality of products and services. Developing operational efficiency also makes low-cost competitiveness possible. This strategy helps maintain the existing customer base and expand the market.
- Core Business – Achieve Full Potential:- To succeed in business, it’s important not to abandon the core business too soon. Evaluate the full potential of your core and growth opportunities within the company. Leadership economics (Market Shares, Higher ROC) involves building on unique strengths, such as specific customer situations or products where the company has an advantage. Analyze these strengths to determine effective strategies for success.
- Adjacency Growth -Adjacent Business to the Core:- This growth strategy aims to expand incrementally by staying close to the core business’s roots without overreaching competencies. This means expanding into related areas within the core business’s scope, leveraging existing capabilities and customer relationships, and minimizing risks. Often, they have their roots in customer requests in a way that leads customers to use the product, in next-generation needs, or ideas from the front lines of future market requirements.
- Repeatability – Adjacent Business to the Core in different Sector/Markets:- One of the most consistent characteristics of the best-sustained growth companies is that they have developed a repeatable growth formula that fuels their adjacent moves or even characterizes their additions of new capabilities to evolve the core over time. Finding a repeatable method of moving into new adjacencies, one after another has several clear benefits, each of which contributes to competitive advantage. The natural standout growth generators tend to build their adjacency moves around the principle of “relentless repeatability. They have a strong core business and then clone it into new arenas, repeating the process repeatedly. They focus more on the repeatability of what worked in the past and less on trying to find “the next big thing.”
Performance & Capability. Invest. Perform. Create. and Sustain
- Niche Market:- Targeting a niche market helps acquire unique customers and expand the market. This strategy is about finding a specific market segment that existing businesses need to serve better. It also provides a competitive edge through differentiation. By focusing on a particular market segment, companies can tailor their products and services to meet the unique needs of their customers.
- Niche Market Expansion – (Wider Market Presence & Deeper Technology/ Product Expertise)
- Sales and Marketing (Wider)
- Product (Deeper)-narrowed down to a particular market or few customers Strategy is seemingly contradictory, being narrow, focused, and deep regarding product, technology, and customer needs, and wide, broad, and global concerning the regional dimension of business activities. As the Narrow market challenges its survival, keep innovating, meeting customer needs, and lowering the risk in a focused market.
- Achieve Outstanding Performance
- Reinvest – Investment (CAPEX) as a Growth driver
- Commercial Excellence – Customer Strategy, Sales Force Effectiveness, Pricing Strategy. Service Portfolio Achieving business growth requires strategically focusing on the core business and niche markets. A significant factor in achieving this growth is reinvesting profits into the business, thus fuelling its expansion. Moreover, the delivery of impactful performance is contingent upon commercial excellence. Therefore, companies must prioritize commercial excellence to sustain growth and remain competitive. Commercial excellence focuses on Customer Strategy, Sales Force Effectiveness, Pricing Strategy, and Service Portfolio.
- Create and Sustain the Outstanding Performance
- Create – Innovation, New Product Development
- Sustain -Adaptive, Agile to sustain Are you looking to take your business to new heights? Focusing on core and niche markets can be the key to achieving significant growth. You can deliver outstanding performance by investing in commercial excellence and reinvesting in your business’s growth. However, don’t stop there! Creating innovative solutions that meet your customer’s unique needs is essential to set yourself apart. Remember, the key to sustained growth is innovating and staying ahead of the business cycle. Sometimes, fulfilling your customers’ requests can reveal white space within your business, which can help take it to the next level!
- Portfolio Growth- Product Life Cycle
- Development Stage- Market Penetration, KPI -Milestones for revenue and profits, CAPEX=Minimum
- Growth Stage- Market Development, KPI-Growth Rate, ROI, CAPEX > D&A
- Maturity Stage- Product Development, KPI-ROI, Free Cash Flow, CAPEX=D&A
- Decline Stage- Business Model Innovation, KPI-Free Cash Flow, ROI, CAPEX<D&A
Innvoation – R&D-Led and Non-R&D-Led Business Model Innovation
- Horizon 1-Existing Business:- Defend and Extend Core Business. This category contains the businesses that generate profits and cash flow today. These businesses may still have some growth potential, but eventually, they will flatten out or decline. They provide the skills and resources for growth. More importantly, they generate cash that is supportive of future business.
- Horizon 2 Build Emerging Business:- Build Emerging Business—This category contains businesses on the rise: fast-moving, entrepreneurial ventures that may or may not be generating profits in the short term. They need continuing investment to finance rollouts but are expected to become significant profit generators over the medium term.
- Horizon 3 Future Business:- Create options for future business—This is the Domain of embryonic businesses—options for pursuing future opportunities, some of which will prove successful and contribute significant profits in the long term. These are more than ideas; they are actual activities and investments. Rarely proven opportunities have the support of management without committing too much capital or other resources.
- Innovation (Non-R&D):- Non-R&D-led innovation is crucial for tweaking the business model. While innovation has traditionally focused on product and service offerings, innovation in customer experience and networking can have a multiplier effect on business growth. The ten types of innovation include business model innovation, networking, branding, customer experience, and others.
- Value Chain Upgradation:- Value Chain upgrading helps to participate in the wider Industry profit pool. This strategy involves finding ways to add value to the existing value chain by improving processes, reducing costs, and developing new products and services. Businesses can tap into new markets and customers by participating in the global value chain.
- Business Model Innovation:- Business Model Innovation helps develop and sustain capability, a sustainable competitive advantage. Capability-based Business Model innovation can reinvent the rules of an entire industry and make competition less relevant, with high upsides in growth and profitability. The most significant advantage of business model innovation may be that it is much harder to copy competitors.
Developing a capability-based business model helps sustain competitive advantage. This approach drives the business faster, ignores competition, and creates white space in the industry. Companies can develop unique strengths that set them apart by focusing on capabilities. This, in turn, helps sustain a competitive advantage over the long term.
Inorganic Growth M&A and Diversification
- M&A (Bolt-on Acquisition):- Inorganic Growth—Mergers and acquisitions (M&A) can be an effective strategy for gaining access to new markets, customers, and capabilities. While they can be a fast way to achieve growth, they also carry risks and challenges.
- M&A-Acquisition (Synergy):- Synergies are the sources of improvement in earnings or cash flow (Calculated as an annual run rate) that occur when two businesses merge. Companies can achieve recurring revenue, cost synergies, and balance sheet synergies. Overall revenue increases via cross-selling, upselling, Price increases, and a broader customer base are challenging to achieve in the short term. Cost Synergies reduce variable and fixed cost bases and are relatively easy to reach. Capital Synergies are Benefits of prudent tax planning, debt capacity, and improved credit ratings.
- M&A-Acquisition (Consolidation):- Inorganic growth through mergers and acquisitions can help a company become a dominant player in the industry. However, this strategy has risks and challenges.
- Diversification:- A diversification growth strategy involves a business growing by offering products or services different from its core business.
Traditional Growth Strategy
Traditional growth strategies focus on new products, services, and markets.
Intensive Growth Strategy An intensive growth strategy focuses on cultivating new products or markets, sometimes both. Businesses use this strategy when they believe they have not fully realized their strengths or markets. This strategy is best described as “doing more of what you are good at doing.”
- Market penetration emphasizes more intensive marketing of existing products. This strategy has two goals: selling more to existing customers and selling to new customers in existing markets. Market penetration can also involve pursuing new customers in current target markets and using marketing tactics to gain customers from competitors. This increases a business’s market share, the percentage of the total sales captured by a product or a business in a particular market.
- Market development focuses on reaching new target markets, such as customers in another geographic area or customers with different demographics from current customers.
- Product development focuses on new products or enhancing existing products. Enhancements may include bonus features or new packaging.
Integrative Growth Strategy. Vertical and Horizontal Integration
- Inorganic Growth- Acquisition-Integrative Growth Strategies An integrative growth strategy emphasizes blending businesses through acquisitions and mergers. It is typically more expensive than intensive growth strategies and is usually practiced by mature companies with large cash flows.
- Diversification Every business has a core business, which is its most important focus. A diversification growth strategy involves a business growing by offering products or services different from its core business.
- Global expansion is another strategy based on offshore outsourcing.
Coaching and Competence Focus
- We begin with Fundamental training in Sales and Customer performance management. We focus on making your managers understand the depth of Customer Strategy, Sales Strategy, Pricing strategy, and the importance of Service Portfolio.
- We added the necessary competency-building workshop, which included analyzing, planning, and tracking performance.
- We offer tools to use, improve, and use for regular analysis and insights. Many times, different companies have specific requirements. We can guide your team in developing those tools. Tools built in Excel are an excellent beginning. Once the understanding and processes reach proficiency levels, automation, and software systems can enhance their value.
- During the assignment, we encourage your team to take some initiatives and projects under our supervision. That will be an excellent chance to showcase and apply their recently enhanced competence to the company's requirements. We review their performance and guide them toward continuous improvement.
- We hope to provide sustainable client deliverables by mentoring key personnel, known as super users, who will master specific skill sets and internally train others. This approach allows the company to build competence internally without relying on external advisors.
How Do We Serve Our Clients?
Frequently Asked Questions
Organic growth involves four core strategies: market penetration, market development, product development, and diversification. Many options are available. The critical issue is whether the strategy fits the existing company’s products, customers, competitive advantage, and capabilities. Assessing a company’s current business and future market opportunities determines the right growth strategy.
Many big companies strive to dominate their industries by expanding their market share and providing innovative products and services. However, small companies need time to acquire the resources necessary to dominate the market. Small businesses adopt core business strategies to reach their full potential. Achieving this full potential leads to an improved market share, similar to the path taken by large companies. Growth initiatives require substantial funding to support these efforts.”
Implementing a growth strategy comes with its own set of challenges. Expansion often leads to new business opportunities, but these require extra expenses. Cash flow problems are a typical issue that arises. Meeting market and customer demands necessitate the availability of skilled resources and investment. A comprehensive service portfolio is also needed to support the product portfolio, ensuring customer satisfaction and fostering customer retention.
There are two types of growth strategies: organic and inorganic. Organic growth strategies include market penetration, product development, and diversification. On the other hand, M&A enables inorganic growth.
Based on our study and experience, we have confirmed that market penetration is an effective business strategy. It allows a company to increase its market share and better serve existing customers. However, increased competition and the need for customer retention are the challenges. Addressing customer churn, a significant issue, requires improving customer satisfaction through an enhanced service portfolio and better customer experience.
