A client recently posed the following question to me:
It’s Labor Day, and for my company, that means we get into the growth planning cycle with a vengeance. We’ve already seen the guidelines that say that the goal is to deliver growth that is five points above our blended-market forecast. And with us already pretty strong in the emerging markets, that target isn’t an easy one. What’s the secret sauce? What should we be focused upon to develop growth plans that can achieve that goal?”
With today’s challenging markets and the full roster of political, economic and other uncertainties that we read about every day, the 2013 growth challenge will be a formidable one for most companies. I think about three factors when working on growth plans -- ones that I think can be applied, with care, to the 2013 business environment.
Sell Into Growth
First is the fact that selling into growth should always be a cornerstone to your own growth. The potential for success when selling into growth is much greater than what exists when you are trying to take share in a mature or declining market. Know how much each of your market is going to grow and look to capture a share of that growth as a first step in the planning process.
Selling into growth currently spotlights emerging markets. David Hartman presented a statistic in a recent paper that we need to always keep in mind:
“While the world’s developed country markets account for roughly 70% of the world’s total base market demand, the emerging country markets will account for roughly 70% of all the new growth going forward.”
That defines opportunity and also the challenge.
The companies that have been active and successful in the emerging markets know that each successive increment to growth involves a new segment of the emerging middle market that has reached the income level at which they can participate and become interesting prospects.
The strategies and offerings that were successful in the previous segments of the market probably won’t translate easily into the new growth segments. And the competitors, channels and even the regions within the emerging countries in which that growth will take place will often differ from those of the past.
But where the customers are new to the market, the market is “up for grabs”. Growth of 10% can mean that 10% of the market is available. It could be more plausible to double your 10% market share in such a market than to grow slightly faster than overall growth in a mature market.
Growth segments define the first and best opportunity, and the challenge is to find ways to overcome the obstacles.
Build on Major Customer Relationships
The second cornerstone of growth strategy is to focus on your largest customers. Over and over we see that while the grass looks greener with your competitors’ customers, some of the strongest pockets of growth exist within your own major customer relationships, the ones that are already in place.
Applying the concepts developed over 50 years ago by Igor Ansoff to specific, individual major customers often yields strong growth plans.
Think about Ansoff’s growth matrix on a customer-specific basis, looking at all of the divisions, locations, and other segments of your customer’s organization.
Where can you gain share with existing products with those you are already doing business with? Which new units of your customer organization might be prospects for the products you already have? What new adjacent products and services could be sold to the units and divisions you already serve?
Major customers can be a wonderful source of growth, often with a relatively low cost to sell and a low cost to serve, especially for business-to-business suppliers.
Focus on Fit
The third theme to emphasize in growth planning is to focus on Fit in your growth plans. In an Industry Week article several years ago, I noted that it wasn’t just you that had identified growth opportunities like China, renewable energy, nanotechnology, or 4G phones.
Your competitors have also identified those opportunities.
What will determine whether it is you or they that realize the growth potential associated with such opportunities is the degree to which your firm has a better “Fit” than those competitors.
Look for situations where your firm best responds to the factors that drive purchase decisions. Ask yourself whether you can win on cost competitiveness when that is the basis on which purchases are made. If not, you need an action plan to get there. Find areas in which you are ahead of the pack in technology, if that’s what customers want.
Where do you have a better starting point than your competitors? The gold medal awards in London last month would have gone to different people if some of them were given a ten meter lead in the sprints.
Established relationships with the customers or channel organizations will be critical to success in the fast-growth markets. In fast-moving markets involving new technologies, there is huge a premium from getting to market ahead of your competitors.
Determine where your expertise ensures sustained success based on the underlying business drivers that are creating the growth opportunity. Beware of those cases in which you likely to at best enjoy transient success – and dig a growth hole for yourself next year – as other firms that are better positioned eventually capture the market. In growth planning, play where you can win next year and continue to win thereafter.
With planning season now underway for most firms, attention to the three themes outlined here -- selling into growth, spotlighting opportunities with existing major customers, and focusing on Fit as a basis for prioritization among opportunities – can create the foundations for success.
The year 2013 can be a rewarding for those firms that can develop plans that are built upon those three foundations.
George F. Brown, Jr. is the CEO and cofounder of Blue Canyon Partners Inc., a consulting firm working with leading business suppliers on growth strategy. Along with Atlee Valentine Pope, he is the author of "CoDestiny: Overcome Your Growth Challenges by Helping Your Customers Overcome Theirs," published by Greenleaf Book Group Press of Austin, Texas.