Growth is an outcome of a complex combination of the environmental conditions and the actions at the business level. Since, too many variables are involved, a holistic theory of growth at the firm level has not been created yet. Each business’s growth happens in a unique way and no two stories can be compared. However, there are certain aspects identified as essential elements in creating this story. But how they are played out is always unique.
I talked about the five aspects of growth readiness in one of my previous articles. I bring another perspective here by talking about five essential elements of growth These growth elements are essentially structure, process and practice oriented. It’s only a generic definition of these elements. How these pillars are created and played out is a matter of both the circumstances and individual choices.
1. Customer Intimacy
Customer is the focal point of any growth story. How well does the business ‘intimately’ understands her is a crucial aspect. I have seen many businesses, which are very complaisant in their approach that they lose connection with their customers. With time, their customers change and it’s too late by the time they realize it.
In B2B situation, the relationships with key people in the customer organization are not renewed regularly. I know some organizations, which in the past had very deep relationships with key people in client organizations. However with time they became passive with these relationships and could not continually nurture them. This resulted into a complete disconnect with the client organizations.
In a B2C situation, customers’ tastes and preferences change and the business needs to have adequate sensors in the marketplace to keep themselves abreast of the same. The revolution in digital technologies helps not only communicate real time but also get feedback real time. The pertinent question is whether the business has its ears to the ground.
2. Mainstreaming Innovation
Innovation is about new products and services for the customers befitting their needs, new ways to serve them or new ways to create products and services. Creating innovations is important but exploiting innovations for commercial gains is equally important. In many organizations, innovation remains a chance outcome but it remains at the periphery, under-utilized and under-leveraged.
In order to make innovation provide boost to business growth, the structures to bring it into the mainstream need to be created.
3. Change Structures
In contemporary organizations, change is a rule not an exception. Organizations need to be continually changing and change is not seen as an event but rather an integral part and parcel of managing. The structures of change like review mechanisms, feedback processes, role realignment deliberations, performance management system recalibrations, communication structures etc. are all key aspects of the change structures. The change structures enable the organization to readily cope with any kind of change in response to the external environment and allow innovation to come into the mainstream.
Without adequate change structures, an organizations tends to be become rigid and out of synch with the external changes.
4. System of Capabilities
Business capability is the new cornerstone of business strategy. Capabilities, which can enable a business to create customer value before the competition does, gives it rent generating strategic advantage. Moreover, if such capabilities are long lived, it gives sustained rent generating competitive advantage.
Capabilities are a complex mix of resources (financial, physical, human), people (skills, competencies, knowledge, and motivation), processes (structures, practices, agility, management, and optimization) and technology (automation, integration and information). The cohesive mix of these factors makes it complex and context specific. They may be residing in a function (e.g. capability to turn around a marketing campaign in a few hours) or at the organization level (e.g. capability to acquire and integrate companies fast). Capabilities require a thorough introspection to be able to be defined and identified in a particular context.
Capabilities need to be in response to the competitive forces, market opportunities or other environmental shifts and indicate the organization’s internal readiness. So is a way, they integrate the outside in view with inside out view, the two old paradigms of strategy.
5. Options for Future
Growth comes to those businesses who invest in building options, which can be leveraged in future. They are not caught unprepared when the organization’s strategic response requires a particular capability. Hence, capabilities are also like the options, which can be exercised in future. In a way, growth requires agility and agility requires it to be ready with future capabilities.
Which capabilities do the organizations need to prepare in advance is an outcome of the leadership’s view about the possible markets and industries evolution. Now, that surely requires foresightedness and foresighted businesses grow for certain.
It’s not an easy task to understand the theory of growth, but it surely is not impossible. Through these simple concepts, let’s create a new discourse and drive organizational energies towards growth.