Most organisations have an ambition to accelerate their strategic growth planning. Most fail dismally.
Each year, a curated rinse and repeat strategic process delivers a plan that is remarkably similar to last year. Executive teams sign up to new lofty forecasts with a view that this year will be different, but ultimately end up with a growth performance that both underwhelms and is no different to what they have achieved in the past.
Our experience suggests that most executive teams are asking themselves the right questions but answering them in the wrong way. Roger L. Martin in his book Playing to Win talks about the power of ‘where’ and ‘how’ as questions when it comes to creating a business growth strategy, but many organisations start too narrow and as a result, fail to consider many of the growth opportunities available to them.
‘Where to play’ is often interpreted as which markets, industries, domains, products or customer segments, while ‘How to win’ typically focuses on the internal execution of growth initiatives. We believe that there are higher level strategic considerations for both ‘where’ and ‘how’ that when combined, create an entirely new way of looking at growth.
We call this Growth Orienteering.
Agreeing The Destination
When we ask clients to describe their growth options, we never get the same answer. They understandably dive into the minutiae of their industry, strategic priorities or ongoing initiatives, but there isn’t any consistent structure or language with which to explore their growth ambitions and communicate them across the organisation.
Our approach to Growth Orienteering stands on the shoulders of other thought leaders by combining the two above mentioned dimensions - the where and how of growth - into a Growth Map. This approach is relevant for any organisation and as we will see below, can help expose the blindspots that inevitably constrain an organisation’s ability to realise their growth aspirations.
Dimension 1 – Where to grow
We can derive growth from our Core business
We can unlock growth from Adjacent areas to our core business
We can explore completely New areas outside of our current focus
Dimension 2 – How to grow
We can Build it ourselves
We can Partner with others (think ‘colabs’ and building ‘ecosystems’)
We can Buy or invest in others (think ‘M&A’ or ‘corporate venturing’)
Fig 1. Growth Map
By combining the dimension of ‘Where’ and ‘How’, we can actively explore the opportunities that exist at each intersection such as:
Build-Core: Building something yourself within your core, e.g. an enhanced customer experience or product/service variation. Think Amazon introducing Amazon Prime as a membership service offering free two-day shipping within the United States in 2005.
Partner-Adjacent: Establishing strategic partnerships with other organisations to extend your product or service into new markets. Think Amazon partnering with Best Buy on Amazon Fire TV Edition smart TVs in 2018, providing potential buyers in North America with a bricks-and-mortar location to check out the product before making a purchase.
Buy-New: Acquiring a start-up or an established company to take the first step in exploring a whole new industry or establish yourself in a new sector. Think Amazon acquiring Twitch in 2014 to step into the gaming industry.
What is your relative focus across these nine growth areas? Very few organisations engage in this conversation and make active choices. Most simply default to familiar growth levers such as operational excellence in core business or digital and data initiatives to enhance existing experiences and unwittingly ignore the other growth options at their disposal.
We refer to these as ‘growth blind spots’. Instead of lifting the strategy conversation up a level to truly consider the growth options available to a company, most strategy discussions start from a position of constraint that anchors them towards the Build-Core area of the Growth Map.
Given the focus of most senior executives, this is not overly surprising. Rarely does a growth strategy specify what quantum of growth will come from partnerships and the associated risks and returns. Likewise, we rarely see organisations that have actively considered the percentage of growth that needs to come from adjacent or completely new types of business. In other words, most growth strategies only consider a few of the nine potential areas of the Growth Map therefore limiting the true quantum of opportunity.
Charting The Course
The Growth Map starts to really become impactful when used as a mechanism for setting targets. This process involves growth ambition alignment to ensure that all strategic goals are consistent with the organisation's long-term vision.
It starts by aligning on a growth ambition for the organisation that is typically revenue based (although other metrics such as customer volume can also work) over X number of years where X is the timeframe of focus and typically falls between 5 to 10 years.
We can then explore the ‘natural gradient’ based on historic growth rates for the company and the industry extending out from today to the end of the focus period. For companies looking for a step change growth, this can mean redefining traditional approaches and seeking out transformative opportunities that will have a significant impact.
What remains is how to overcome the “growth gap” – the difference between where an organisation aspires to be and where it will end up on current course and speed.
How to close that gap is where the Growth Map plays an important strategic role, especially in the context of business transformation. By leveraging the right growth initiatives strategy, organisations can effectively bridge this gap.
Fig 2. Growth Gap
We find that populating all nine areas of the Growth Map can be a little difficult and arbitrary as a starting point. Rather it is more effective to approach one dimension at a time. What percentage of your growth gap will come from your core business, adjacencies and completely new areas? Separately, what percentage of your growth gap will come from doing things yourself, partnerships, and M&A/Investment? Precision is not the end goal here. Rather, we aim to surface unspoken assumptions and biases to facilitate a dialogue.
Having arrived at ballpark percentages across both dimensions separately, simple maths allows us to calculate the percentage of growth that should come from each of the nine boxes and multiply that by the dollar value of the growth gap. That puts a dollar target across each of the nine areas on the map.
This can be an uncomfortable process. For example, a Head of Innovation we worked with who was focused on Adjacent and New growth areas felt like she suddenly had a target on her back. However, attributing a growth target to these areas in the context of a whole of organisation ambition suddenly allowed her to challenge the executive team on how little resource she had allocated.
It was alarming in this particular case (a mature incumbent in a stagnant market) just how much of the growth gap needed to be filled by new areas of growth, and yet almost all resources were focused on growth from the core. It also allowed her to reconsider her own team composition and augment largely digital and data profiles executing on new features in adjacent areas with M&A capabilities to actively pursue acquisitions in new growth areas.
Navigating The Terrain
While identifying and aligning around the sources of growth is incredibly important, it is not in of itself a guarantee of achieving growth.
There is a pesky little thing called execution that can never be taken for granted.
The choices around growth programs, innovation vehicles, operating model (i.e. organisation structure, funding processes, approach to talent, ways of working, risk management, governance, resource allocation), culture, leadership, ROI timeframe expectations… and a number of other practical considerations have a significant impact on the ability to realise growth. For example, organisational capability development plays a crucial role, ensuring that the company is equipped to implement the strategies necessary for success.
The importance of Growth Orienteering is making conscious choices about where to venture across the Growth Map and pave the way for enablement approaches that support those choices. An operating context that works for running the core business cannot simply be applied blindly to other areas of the Growth Map.
One size does not fit all, and yet too many organisations attempt to close their growth gap without redesigning their delivery vehicles to suit the terrain they are navigating.
Growth Orienteering removes the unconscious constraints that limit most growth strategy processes and provides the best opportunity to set and realise ambitious growth ambitions.
Growth Orienteering is all about widening the “where” and “how” of strategic growth to go beyond the default comfort zones of most executives and consider new potential sources of growth. Its holistic growth approach allows organisations to fully explore and capitalise on all available opportunities
Growth Orienteering allows us to specify targets which in turn allows greater scrutiny and ultimately customisation of the delivery approach(es) being applied.
Source: Playing to Win by Roger L. Martin, A.G. Lafley. The Innovator's Guide to Growth: Putting Disruptive Innovation to Work by Scott D. Anthony, Mark W. Johnson, Joseph V. Sinfield, and Elizabeth J. Altman. The Invincible Company by Alex Osterwalder, Yves Pigneur, Fred Etiemble and Alan Smith
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