Be Inspired Read
Three Strategies for Achieving and Sustaining Growth
by: Bill Liabotis Issues: July / August 2007: Strategy.
25+ years of high-level strategic leadership experience to develop sales targets, goals, and expand an organizations customer base, fiscal revenue and profitability, budgeting processes and business best practices.
INVEST TIME TO LEARN & DETERMINE WHERE YOU ARE.
An accurate assessment of where your business is, conduct external and internal audits by experiencing the current processes on how you serve customers with their products & service needs. Time needed to get a clear understanding of the marketplace, the competitive landscape, environment & differences (strengths & weaknesses), and the organization and team’s competencies.
IDENTIFY WHAT’S IMPORTANT.
Focus on where you want to take the organization over time. This sets the direction of the enterprise over the long term and clearly defines the mission (markets, customers, products, etc.) and vision (conceptualization of what the organization’s future should or could be). From this analysis, we can determine the priority issues—those issues so significant to the overall well-being of the enterprise that they require the full and immediate attention of the entire management team. The strategic plan should focus on these issues.
DEFINE WHAT WE MUST ACHIEVE.
Define the expected objectives that clearly state what the organization must achieve to address the priority issues.
DETERMINE WHO IS ACCOUNTABLE.
This is how we are going to get to where we want to go. The strategies, action plans, and budgets are all steps in the process that effectively communicates how we will allocate time, human capital, and money to address the priority issues and achieve the defined objectives.
REVIEW. REVIEW. IT’S NOT OVER. IT’S NEVER OVER.
To ensure the plan performs as designed, we need to hold regularly scheduled formal reviews of the process and refine as necessary. When involving all managers suggesting at least once a quarter,
When managing each department or as in the sales operations team, preference is to manage weekly meetings – first thing Monday morning to kick off the week. These meetings last anywhere from 45 minutes to 2 hours periodically pending any special training or resources needed to move the sales forward that week, month or quarterly. They are to compare, contrast and manage actuals sales to ideal sales performance path plans. If applicable, manage weekly Installation meetings where both the sales and technical service teams discuss each particular sold account contracts, expectations and deliverables to assure resources are in place.
ACHIEVING STEPS FOR GROWTH
THE STARTING POINT
The commitment of key employees at all levels, individuals who are willing to step forward and lead.
Strengthen the execution infrastructure by investing in proven Team know-how.
- Eliminating departmental silos by implementing transparency.
- Utilize leading key performance indicators and drivers that align with the strategy.
- Growing leaders at all levels – managerial and non-managerial for succession planning strategies.
Initiate a FOCUS Group process to identify and complete Team strategies with a high probability for success.
- Growing the core business
- Growing by sub-segmenting customers
- Growing adjacent opportunities
Begin the process by considering the growth potential within the present core business and/or the opportunities and growth potential associated with creating innovative value propositions for underserved customer groups. As the FOCUS Group moves through this process, it will become clear if and when adjacent growth options should be considered.
CUSTOMER-FOCUSED GROWTH STRATEGIES
Core Business and proportion of revenue and profits:
- Geographic areas
STRATEGY TO MEASURE
The overall performance of the core business
Benchmark profitability, rate of revenue growth and the service reputation
- In what direction is each of these key indicators headed and why?
- Who are and who are not the core customers? Why?
- What is the firm’s key competitive market differentiator? How can it be strengthened?
- Is the core business under major threat?
- Are there attractive growth opportunities within the core?
Processes are created to help refocus on the core business – Define the number of market platforms on which the core business is based:
- IT CONSULTING
- HARDWARE & SOFTWARE
- CLOUD SERVICES
- PROFESSIONAL SERVICES
- SERVICE & SUPPORT
Define and if necessary eliminate products and markets that don’t fit on these platforms, adding new products to augment the core and strengthen market coverage with significant investments in the major marketing channels for distribution.
- Direct Sales
- On-line digital media – website & social networks
STRATEGY TO ASSESS
The organizations existing customers
This strategy involves creating High Impact Value Propositions for new opportunities through existing customer relationships or new customer’s sub-segments. Underpinning this strategy is the willingness to view customers through a different set of lenses.
A process can be created to assist both managers and specialists 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. (Senior leaders who frequently interact with customers can make a significant contribution to this process.)
Key elements of this process include:
- Sub-segmenting existing customer groups based on newly discovered needs, buying patterns and contribution to profits and/or revenue,
- Creating innovative and high-impact value propositions for the most attractive sub-segments,
- Field-testing the new value propositions and
- Scaling-up based on the results of field tests.
In addition, choosing to focus on lower end customer sub-segments where these are usually a group of customers for which the cost of supplying and servicing exceeds the revenue the customer generates. In such cases, value propositions when using return on investments can be designed which will move the customer to a profitable position or at least minimize the losses. For example, direct sales calls can be replaced with web online ordering systems for supplies, product/service features that can be easily purchased through digital websites.
These actions not only lower the costs of serving customers but they often speed up the service for the customer. After the initial shock, many customers welcome the new value proposition. Many growing businesses often owe their success to delivering attractive value propositions to different customer sub-segments.
STRATEGY TO BUILD
Strategic relationships and links to core adjacent businesses
When the core business is approaching its full potential, operates efficiently and generates surplus cash for reinvestment.
- Focus on current customers. A series of meetings with the most innovative customers can be a valuable source of opportunities. Alternative channels, new products or services or even new joint ventures may be suggested as well as entering new geographic markets, serving different customer segments and redesigning the customer’s value chain.
Another alternative is to consider the non-core businesses of the organization. Is there the potential to leverage present positions into attractive growth opportunities?
- When considering adjacent 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, the organization may wish to test their capacity by piloting adjacent growth initiatives in stages.
- Adjacent growth options can be an opportunistic one-off. This often results in disappointment. Initial successes with one or two close customers can soon fade under the onslaught of strong established competitors. To prevent this, “organize to suit the new business as much as the core”.
In the short term, adjacent growth initiatives that leverage a strong position with existing core customers have a higher probability of success. The alternative of expanding into new geographic markets provides the advantage of building a larger customer base, but often at the cost of a longer payback period and higher risk.
EXECUTING GROWTH STRATEGIES
The strategies to Measure, Assess and Build described above require a supporting infrastructure to increase the chances of successful implementation. It is important to have an adequate infrastructure to achieve these growth objectives.
A supportive infrastructure includes:
- Organization capabilities that are valued by customers.
- A management-performance system scorecard which focuses on leading key performance indicators and the drivers of growth.
- Strong leadership best practices at every level of the organization.
CAPABILITIES & PROCESSES
Strategic and deliver a high level of value to customers
- Successfully entering new markets.
- Create excellent new products or services which appeal to customers.
- Provide an outstanding level of customer service.
Each of these capabilities is rooted in processes that move across the organization and require the expertise and commitment of various individuals and departments.
Strategic positioning requires the team to Measure, Assess and Build to clarify and continually strengthen the organization’s strategic capabilities. An important aspect of clarifying and assessing process is to step outside the organization and evaluate both the companies and the competitors’ through the eyes, mind and heart of the customer. Success is rooted in the competitive-edge and organizational capabilities.
The following guidelines will help with such an assessment.
The capability should be:
- Highly visible to key individuals within the customer organization, and acknowledged as providing exceptional value.
- Difficult for present and potential competitors to replicate.
As an example, the capability to provide an outstanding level of customer service in a manner that would make it difficult for competitors to replicate. In order to provide such a high level of customer service, employees from different departments (not only the Customer Service Department) must be involved in service delivery.
- Employees throughout the organization should connect quickly and collaborate willingly. Collectively, relevant information and insights about customers and product or service delivery must be shared.
- The high level of cross-departmental collaboration can prove challenging, particularly those with rigid vertical structures. Such structures make it difficult for employees to adapt and respond to special customer service requirements. *Note that under these conditions, an employee’s loyalty often shifts from the company to their department or profession.
- Delivering a superior level of customer value requires uninterrupted flow across the organization. Eliminating barriers to flow – breaking down departmental silos- is necessary to build organizations strategic capabilities, regardless of the specific capability.
BUILDING STRATEGIC DIFFERENTIATING CAPABILITIES
How difficult should it be for a competitor to replicate a best practice?
- It should be very difficult! The organization capabilities are the key elements of the business strategy continually building and leveraging the organizations’ capabilities to drive new business growth.
- Performance management processes, software and systems provide the capabilities to track, manage, support, and coach individuals, teams and partnership through scorecards. (Note: A Performance Management system provides the accountability and in many cases the transparency of “what gets measured gets done”.)
THE PROCESS STARTS BY ANSWERING THE QUESTION, WHAT SHOULD BE MEASURED AND WHY?
The following guidelines help answer this question.
- Scorecards depict key strategic relationships, particularly between the desired performance outcomes such as revenue and profit growth and the drivers of performance (e.g. new market entry, service quality, customer loyalty, and employee engagement).
- Performance of both individuals and departments is directly linked to the growth strategy and successful execution.
- Company scorecards should provide a balanced perspective based on the needs of key stakeholder groups and/or major organizational processes – internal operations, value provided to customers and employee development.
Let’s assume that the overall strategy of the company is to grow the core business and that growth will be achieved through increased market penetration of existing products. What are the drivers of growth that must be measured, monitored and managed?
This question is best answered by those directly involved.
Precise measurements are not always possible but proxy indicators established in a thoughtful and open manner are. Let’s assume that increased market penetration will be driven by the strength of the company’s brand and customer loyalty.
- What drives customer loyalty and brand strength?
- Is it the quality of service provided, the reputation of the sales staff or the depth of knowledge of the customers’ business and requirements?
When there is confidence that the above questions have been answered, the process shifts to:
- How and when will performance be measured,
- How will those directly responsible access the performance measurement and
- What follow-up action, if any, is necessary?
Performance Management System based on the processes described
A brief description of the approach:
Company utilizes performance-based scorecards to link execution with overall business strategy. The performance-based scorecard is aligned with major support teams, workgroups & partnerships:
The focus is on measuring and monitoring leading key performance indicators for example:
- The drivers of customer loyalty
- Employee engagement
- Financial results
Considerable input from many expert resources are solicited & collaborated before these measures are set and appropriate action undertaken to continually improve performance.
A key ingredient of a supportive infrastructure is Leadership
- Who are the leaders and what do they do? Leaders throughout the organization, who influence, coach and develop the attitudes and actions of colleagues.
- Organizations should consider all employees’ potential mentors, making everyone both advisors and learners.
- As such, they help colleagues understand the many why’s of organizational life.
- Why the organization must perform at a high level in the increasingly competitive and global business environment.
- Why barriers to cross-departmental collaboration are harmful and weaken the organization’s ability to adapt.
- Why, when a colleague’s performance appears to fall short, it may be preferable to view this as an opportunity for learning and professional development rather than expulsion from the organization.
- Why the ultimate success of the organization is rooted in its ability to continually be innovative in delivering value to customers.
WHEN GROWING AN ORGANIZATION OF LEADERS
All employees’ are potential leaders & mentors, who are found at all levels in the organization, including, non-titled, non-managerial positions. They are best identified by their behaviors and influence rather than the hierarchical position. Together, such leaders create a network that reflects the very essence of the organization – ‘who we are, where we’re going and how we’ll get there’.
- Companies owe their success to being able to recognize that the organization is a lab for leadership development. The process of leadership development starts with an assessment of an individual’s emotional intelligence. Hands-on learning experiences with one-on-one mentoring & team coaching are vital elements of the process.
- Senior leaders ultimately set the overall direction and create conditions that encourage others to join in and lead – particularly with respect to executing the strategy.
- The expectation that all employees should exhibit leadership behaviors. With persistence, the growing network of leaders will tip the scales as other members of the organization from every level and in every role join in and commit.
- When employees share identical values with the values of the company founder and connect at a very basic level with the organization’s core business strategy, it can be expected that each employee will step forward and lead.
The process of expanding the organization’s leadership mindset and behaviors.
- Teaching employees how to think like a business person.
- Provide all employees access to information & tools to perform job.
- Employees at all levels and in every role receive performance-related information and discuss how to solve problems and capitalize on opportunities.
- These beliefs are continuously demonstrated at well-attended regular scheduled meetings.
- Diligent efforts are made to make all employees feel they have vested interest as a company owner.
Notes and References: Bill Liabotis is Partner, Incite Leadership and the practice’s leader in developing processes for creating and executing strategy.
Be Inspired Read
Three Strategies for Achieving and Sustaining Growth
by: Bill Liabotis Issues: July / August 2007: Strategy.