What's Your Growth Challenge?

"Be not afraid of growing slowly, be afraid only of standing still."
Chinese proverb

Despite today's challenging economic environment, forward-looking business leaders can't forget about growth. Why?

• There are still pockets of growth in the economy (e.g., pharmaceuticals, clean tech)
• If your balance sheet is strong, this is an ideal time to make strategic moves to enhance future growth prospects
• If your balance sheet is weak, remember that the objective of a turnaround isn't just survival -- it's the resumption of sustainable, profitable growth.
  

However, growth is not homogeneous. As companies mature (see technology adaption life cycle and product life cycle) they face six discrete growth challenges. The chart below provides a brief overview of each growth challenge and a sample of the associated issues and pitfalls. (Note: while the chart frames growth from a product perspective, it applies equally to services.)

Challenge	Description	Common issues	Common pitfalls
1. Creation	Creating a new product and/or business model that provides a compelling value proposition to a target customer / market space Relevant to both start-ups and turnarounds Example: Aquarius Consulting Group	Capturing unarticulated customer requirements Acquiring initial customers Maintaining market (vs. technology) focus	Overemphasis on product (e.g., technology) at the expense of customer needs Failure to envision / develop a sustainable business model
2. Breaking out	Transitioning from early adapters (visionaries and tech enthusiasts) to fast followers (pragmatists) Particularly relevant for discontinuous innovation (i.e., Crossing the Chasm) Example: Tealeaf Technology Customer Experience Management Solutions	Adjusting to changes in customer purchase criteria Completing the “whole product” Maintaining market focus, not sales focus	Failure to target a specific (and strategic) market niche (i.e., pursue any sale at any cost) Refusal to adjust sales model (e.g., direct consultative sales)
3. Scaling	“Stepping on the accelerator” by selling more products (including product extensions and platforms) to existing customer segments within existing geographies Examples: Google AdSense; BMC Service Resource Planning	Formalizing processes Attracting talent Maintaining core elements of culture Upgrading infrastructure	Failure to adjust leadership and management styles Underinvestment in post-sales customer support Channel conflict as market saturation increases
4. Replication	Replicating existing product portfolio and business model in a new geographical area Examples: McDonald’s franchise; new consulting office	Developing extensive documentation on business model / processes Replicating culture in new locations Maintaining product consistency	Replication before readiness Lack of tailoring for local requirements Failure to leverage legacy talent in new locations
5. Stepping out	Establishing a presence in a new market segment (e.g., new product in a related market, derivative product in a new market) Examples: Cisco blade servers; Oracle database 11g Enterprise vs. Standard vs. Express	Tailoring existing go-to-market strategy Positioning product against entrenched competitors Sustaining commitment (e.g., budget, leadership bandwidth) for new market segments	Attempt to step out on 2 or more dimensions at once Reflexively applying legacy business model to new segment Failure to gain support of sales force / channel
6. Cross-selling	Capturing synergies by bundling or cross-selling related products to existing customers Examples: Solution selling; cable television and VoIP	Overcoming resistance of incumbent account owner Navigating customer accounts with multiple points of purchase Providing incentives to sales channel to overcome inertia	Insufficient incentives for channel Failure to frame value proposition from customers’ perspective

Start-ups typically face the growth challenges sequentially. However, mature companies pursuing simultaneous growth initiatives will likely encounter more than one challenge at a time.

For all challenges, growth is not just about hiring more people and pumping more product through the system. More often than not, there are material issues the business must overcome and pitfalls that must be avoided. Despite the current economic environment, it's our job as business leaders to overcome these challenges and position our companies for future growth.

Monday Morning Actions

• Identify in which phase(s) of the growth life cycle your company is operating. What systemic issues are you facing that jeopardize success?
  
• Drill down on key challenges. What current initiatives are addressing these areas? If possible, incorporate growth elements into these initiatives.
  
• If your balance sheet is healthy, launch initiatives to address key challenges that have been neglected.