Far too many companies fail to achieve their growth goals in revenue and profitability, no matter what the economic climate. In fact, some studies report success rates as low as 20%. Those companies included in those studies being ones that although they achieved some growth, but did not deliver their actual targets. The question is 'Why is growth so elusive for many companies?'
Through our analysis assignments, we continuously identify the three major reasons for failure as:
- Inadequate consideration of opportunities for the business and a desire to retain traditions,
- A lack of understanding of the requirements to achieve growth through new channels
- A sales organizational infrastructure that can not support successful execution.
Some companies may have only one reason; others are operating with all three. CEOs can do certain things to improve the chances for success.
There are three fundamental strategies for growth and three key elements for successful execution. If you have this right, you will increase the probability for success.
Three Customer-Focused Growth Strategies
1. The process of identifying profitable growth opportunities most often begins with your core business. That is, the products, services, customers, channels and geographical areas that generate the largest proportion of revenue and profits. An evaluation of their overall performance involves measuring and benchmarking fundamentals such as profitability, rate of revenue growth and share of wallet. The overall process need not take a great deal of time, but can yield significant returns. These include:
- A renewed commitment to operational excellence within the core business,
- Insightful conversations on the growth potential of the core business, or conversely,
- An urgent need to make significant changes to the core or even a plan for abandoning the present core and exploring more profitable growth options.
2. A second customer-focused growth strategy is based on the company's existing customers. This strategy involves creating High Impact Value Proposals for new customer sub-segments. A process can be created to assist both sales leaders and team members at the customer interface gain fresh insights into customer needs and preferences. This is a necessary first step in discovering underserved customer groups and hidden growth opportunities. CEOs that frequently interact with customers can make a significant contribution to this process.
3. A third customer-focused strategy is to enter businesses that have strong strategic links to the core – adjacent businesses. This is a particularly appealing alternative when the core business is approaching its full potential, operates efficiently and generates surplus cash for reinvestment. It is also an important option when it is clear that the core's future growth potential is weak.
When considering ordinary growth alternatives, the relationship to the core business requires special consideration – specifically an assessment of the major strategic differences and similarities with the core. Too many differences can overly tax the organization's capabilities. To minimize this risk, CEOs may wish to test their organization's capacity by pilot adjunct growth initiatives in stages.
Executing growth strategies
The three Customer-Focused Growth Strategies described above require a supporting sales infrastructure to increase the chances of successful implementation. Lack of an adequate sales infrastructure is the second reason cited for not achieving growth objectives.
Quite often we find that strategies have been well researched however the next phase of implementation is based on continuing behaviors that aligned to last year's (or some cases several years ago) strategy execution.
A supporting sales infrastructure includes organizational capabilities that are valued by customers, a management-performance system and scorecard which focuses on leading indicators and the drivers of growth and strong leadership practices.
1. Organization capabilities are processes that are strategic and deliver a high level of value to customers. For example, a company may have the capability to:
- Contribute knowledge and expertise that the customers do not have internally,
- Create excellent new products or services which appeal to customers, or
- Provide an outstanding level of customer service.
It's widely accepted that a sales organization's success is rooted in its competitive-edge and organizational capabilities. Therefore, a major challenge that companies face is to clarify, assess and continuously strengthen their organization's strategic capabilities.
2. A second key element of infrastructure necessary for successful execution is the Performance Management system and scorecard. Performance Management systems are based in the widely held belief that “what gets measured has done”. A leader not actively engaging in Performance Management is negligent in their duties of execution. This is a primary contributor to strategies going off-mark or failing to adequately ignite with respect to new products and services.
3. The third key ingredient of a support infrastructure is leadership.
The abilities of the leader are arguably more transparent within the sales organization than any other part of your company. Their ability to execute can affect the entire organization. They are the people who influence the attitudes and actions of teams that are responsible for execution on a day-to-day basis.
Great leaders are best identified by their behaviors and influence rather than the hierarchical position. The leader guides people through 'who we are, where we're going and how we'll get there'. They work closely with their teams to remove barriers and drive growth. This perspective on leadership significantly differs from the more traditional 'leader as hero'- the person who fires-up the troops, leads the charge and performances' heroic' feats. The person who was reliant on their own relationships with customers as savior to flagging company results.
In summary, we can say that the probability of achieving profit growth is heightened whenever an organization has a clear growth strategy and strong execution infrastructure. One without the other impairs the probability of success.
Sales Focus International assists companies in developing the right sales infrastructure that will dramatically increase the probability strategy execution.