Guiding growth is your first responsibility as a business leader. The reason is very simple: growth is the fastest and safest way to achieve profitability in a sustainable way. Betting on the path of growth far exceeds the rapidly depleted cost-cutting strategy. For this reason and others that we will analyze in this article, growth is the preferred option for most leaders who lead successful companies. However, growing today with models and strategies that were successful in the ’80s and ’90s is no longer possible. Traditional business models no longer work, and the economy is becoming increasingly complex. Randall Castillo Ortega, the founder of SME lender RACO Investment, discusses how businesses can overcome challenges in the current environment to see more growth.
Your company may have a great product or service, but if it doesn’t have a growth strategy to compete in a digital world, it’s going to be very difficult for it to be geared towards ambitious goals in the long run. A good growth strategy goes beyond short-term sales and marketing plans. Says Castillo, “A good growth plan in a digital world should include, for example, entering one or more digital ecosystems through building strong partnerships. In this new environment, it is very difficult to continue the path alone.”
You should start asking yourself better questions to discover better answers. It is the alternative that has worked best for us when we help our clients transform their businesses. Asking better questions is crucial to creating new product and service offerings, forging new alliances, leading employees, and getting their intrinsic motivation to give them more satisfaction and commitment. Asking good questions requires questioning with absolute honesty how value is created for each stakeholder who interacts with your business.
The pursuit of operational productivity and product quality has led leaders to focus too much on operational efficiency. Very little time is devoted to the strategic reflection that is what causes growth. Operational effectiveness is not a strategy; both operational efficiency and strategy are essential for higher growth, but both work very differently.
This exercise is fundamental to acquire greater efficiency in those critical variables that define your competitiveness in your industry. Growth will drive you when you develop core competencies that allow you to stay ahead of your competitors. You’ll be able to outperform your competition only if you’re able to make a difference that you can keep. The competitive strategy is to be different.
Serving the 80% of customers who make 20% of sales usually leads to a loss of sales with your most profitable customers. The latter demand greater attention and service. “The pressure to grow can lead to expanding new product lines, new services and making acquisitions, which raise your costs,” asserts Castillo. Attempts to compete in multiple ways simultaneously create confusion and affect motivation and focus. These messy efforts to grow dilute differentiation, generate concessions that affect profitable growth and impair competitive advantage.
Designing product and services offers where the ability to differentiate is evidenced and is the best marketing tactic to get customers and retain them. Underlying differentiation is a great opportunity to grow. Developing a clear growth strategy is a matter for the organization’s leaders.
There is a great lack of knowledge about the scope of each of the levers of growth: marketing, branding and sales. You must develop separate strategies and actions for each lever, either to deepen your current markets, or to develop new markets. A weak value proposition is not fixed by running a good marketing campaign or designing a good visual identity, or developing a nice website.
The development of a growth strategy requires a demanding and permanent coordination of the leadership team. Everyone must understand what they are doing their job for and why, as well as what they are expected to contribute to the strategy and implementation of the growth plan. This team must develop and execute at all times of the journey. Those moves to grow are marketing to create value, branding to build trust and sales to grow. Integrating them is the secret of the formula for outstanding growth.
The focus on growth produces sustainable results and makes it easier for your company to achieve long-term goals. To know if you are moving in the right direction, it is necessary not only to measure success with outcome indicators (at the end of the road), but very important to do it with prediction indicators (at various points along the way).