According to Bloomberg, the SBA and other industry experts, 80% of businesses fail within the first 18 months, 50% fail within five years and 96% of all businesses fail within 10 years. The journey to start, grow and sustain a business is a rocky road. But why? What can we learn from all those failures and apply to our own business ambitions?
There is one thing every business should do, regardless of size, and that is create a sustainable growth strategy. A sustainable growth strategy involves more than simply envisioning long-term success. If you don’t have a tangible measurable plan, you’re likely losing business or you’re increasing the chance of your competitors taking your business.
1. Use More Than One Lens
Your growth strategy should be developed looking across multiple perspectives: Financial, Process, Customer and Talent. Often strategies are developed using one lens, but integrating all four of these will make it more complete and help ensure success. Understand the financial requirements for revenue growth and productivity. Nail down your ideal customer/market, and revert-back to this audience as you evolve your business to stimulate growth. The process perspective evaluates the critical organizational activities needed to increase customer value and operational excellence. Your employees have direct contact with your customers, so you need to hire and develop people who are motivated, inspired by your company’s value proposition and invest in them.
2. One Size Does Not Fit All
Your growth strategy must change as your company moves through the business lifecycle. A strategy that worked well during the startup phase of a business is not the best strategy when you are in the mature phase of the business lifecycle. Knowing where your company is in the lifecycle allows you to evolve the growth strategy to properly align with your strategic goals and objectives. You need to quantify the risk and reward of various goals of your growth strategy. It is critical to understand where focus should be placed to avoid setbacks when executing your strategy.
3. Use a Roadmap, Key Indicators and Communicate, Measure and Adjust
Too often strategic initiatives are driven by individual agendas. Using the right strategy tools and quantitative analysis will help identify which initiatives should be performed, and how risk could impact your strategic roadmap. A well-developed growth strategy must be measurable. If you’re unable to measure your strategy and roadmap, you have no way of knowing whether it’s effective. Identify which key indicators will provide the best insight to what affects the growth and operation of your business. Use indicators that span the Financial, Process, Customer and Talent perspectives. A good rule of thumb is to Identify no more than two or three per perspective. Executing a strategic plan requires a level of change management and ongoing communication. Too often only a few know and understand the strategy; you want everyone to know the strategy, understand how it is being measured and adjusted due to changing market conditions.
While there are many other areas and steps to consider when developing a growth strategy, hopefully these will help you to make yours sustainable. Our Strategy Framework evaluates 10+ areas as part of a growth strategy. Our approach leverages the four perspectives outlined in #1 above. We evaluate these perspectives using several crosscutting dimensions, like business objectives, time horizons, cost, investments, and market trends to create a quantitative strategic plan. We apply our proprietary scoring algorithms to measure the strategy and roadmap across business value, cost, risk and strategic alignment.