The Run, Grow and Transform Business Strategies
Highlights
- Business growth is the direct result of the business strategy. The two are inextricably linked.
- Operationally run companies are the norm. Their focus is mostly within their four walls. They apply more effort to efficiency than growth. They are generally incapable of sustained organic growth. They deliver the customers that help growth companies grow.
- Growth companies are more externally focused. They have an outside-in market perspective. And above all, they are customer centric. Their growth strategy, business processes and technology systems are built around solving for the customer.
Is your business strategy to run, grow or transform the company?
Why is it that well-run companies are less likely to achieve growth? Well, it's because the business strategy to run a company is very different than the strategy to grow a company.
Here's how the three primary business strategies produce very different business growth results.
Run the Company
These are operationally run companies. Most management teams fall in this category, which explains why a minority of companies are growth companies. When operational companies grow, it's by merger and acquisition. Most are incapable of sustained organic growth.
These management teams have an internal, operational perspective. They focus on process standardization, procedures, internal controls, metrics and deviation management. Their priority is efficient operations. Some seek efficiency because they are inefficient. Others are efficient and seek business as usual. The irony here is that the longer they've been well run, the more unlikely they will ever become growth companies.
Their affinity for the status quo and their inexperience with any other strategy holds them back. Their biggest risk is clinging to past success. The danger is maintaining the status quo in changing markets.
With consumer technologies, such as mobility and social media, customers are more connected, informed, empowered and demanding. They have more information and choices and they know it. This has forever changed the balance in power from suppliers to consumers. Well run companies ignoring this fact have fueled the trend of customers switching vendors at an increasing pace – a trend that will surely continue.
Being complacent, inert or passive when facing unprecedented levels of customer disruption and fundamental industry change is a one-way ticket to irrelevance and business decline. Management teams focused on running the company deliver their customers to growth companies.
Grow the Company
These executives take a market-based perspective. Their business view extends from what's happening in the company to what's happening in their markets. They don't just monitor market movements because it's interesting, they experiment and implement programs to take advantage of market movements. They implement a mix of new products and new markets to grow faster than their competitors and markets.
A fundamental difference between growth and operational companies is customer centricity. Most operational companies say they are customer centric because to say otherwise would be embarrassing. Unfortunately, self-proclamations don't make something true.
Companies don't get to decide how customer centric they are; customers do. While customer centricity is often an empty talking point for most operational companies, it's an active strategy for growth companies. They put the customer at the center of everything they do. The proof of being customer centric is revealed in the business outcomes of increased customer acquisitions, customer share and retention.
They apply technology differently. For example, instead of applying CRM software for internal, operational purposes such as tracking sale opportunities and producing the forecast report, they use CRM to achieve user and customer objectives. Growth companies recognize strong customer relationships are a sustainable competitive advantage because they aren't easily copied by competitors or displaced by new technologies.
They also use data and analytics differently. Customer data is an asset that enables growth companies to deliver differentiated customer experiences. Data shifts their decision making from intuitive, gut-based, trial and error decisions to data-driven, fact-based and objective decisions. They use analytics to move from backward to forward looking reporting and distribute more information to more people.
The Best-in-Class performance archetypes cited in the Business Growth Report are entirely growth companies using growth strategies.
Transform the Company
These executives supplement their growth plans with innovation, disruption or transformation strategies.
Their corporate culture is holistically customer centric. They are relentless in their pursuits to solve customer problems and create new customer value. They don't seek incremental improvements. They are after order of magnitude impact.
They know their customers are not homogeneous, so they identify their ideal customer profile (ICP) and segment their customers. They replace assumptions with data. They don't assume they know what their customers want, and they know customer preferences shift over time. So, they implement programs to capture customer insights.
They use CRM software to capture the Voice of the Customer (VOC) and tabulate what their customers most want – by customer segment and at any point in time. They take VOC a step further to identify problems that most matter and turn these into innovation opportunities. They know they don't have to guess what new creations or innovation will be enthusiastically embraced by customers; they just have to ask their customers.
Business transformation requires solving problems or creating new value for customers. That means you have to figure out what really matters to customers, exactly what they want or what they find to be frustrating, and the top criteria they apply when making purchase decisions. Then you can innovate for your customers, deliver more value, disrupt your industry, and leave the operational companies wondering what happened.
See how the growth strategies used by high growth companies are different than the operational strategies used by low growth companies.
Click to Tweet