Five great tips to build your path to success
As the economy shows signs of economic recovery, many companies are considering more aggressive growth strategies. After years of risk aversion and cost-cutting, it may be difficult to pursue such a decisive change in strategic direction. In fact, many companies may find that they are no longer equipped to identify and assess potential growth opportunities, or that key stakeholders are hesitant in the face of significant market volatility and uncertain economic indicators.
The following approach will enable your organization – regardless of size – to uncover opportunities, evaluate prospective growth initiatives and build confidence in your path to success.
1. Evaluate your strengths. As the job market becomes more dynamic, all companies should execute a down-to-earth skills assessment. While the chief goal may be to develop and retain key staff and ensure that organizational needs are met, it will help you to benchmark your operations against the competition. Other critical strengths – such as customer loyalty and market perception – should also be inventoried. Be critically honest about your strengths and gaps and, if necessary, seek an outside opinion to minimize bias.
2. Assess the market. Though most executives keep up to date on industry news, it is still important to execute a comprehensive market analysis. Doing so may help you to identify high-growth markets, while crystallizing your understanding of industry trends, underlying drivers and critical uncertainties. Similarly, an assessment of the competitive landscape may reveal under-developed market segments, provide more clarity on the relative positioning of other industry players, and suggest potential partners for strategic alliances. This will either affirm existing views, shed light on new opportunities, or both.
3. Identify growth initiatives. Now that you have articulated your company’s unique value proposition and its position in the market, it is easier to envision growth opportunities, such as expanding geographically, developing additional distribution channels, targeting a wider customer base or rolling out new products to your existing customers. To assess the viability of each initiative, you must address certain fundamental questions: How will these initiatives contribute to the strategic goals? Do we have the necessary skills and resources? How much investment is required? What are the associated risks? Answering these questions will help you identify key opportunities and avoid costly distractions.
4. Develop environmental scenarios. To ensure your company is resilient to change but still capable of exploiting opportunities, you should play out all major strategic decisions under a variety of realistic but challenging scenarios. Specifically, each growth initiative should be tested in the face of key uncertainties and fundamentally different future environments. Consider how the following external impacts could transform your existing business forecasts:
• Alternative macroeconomic cases: Traditionally, scenarios were focused on identifying risks in the case of an economic crisis. These days, short-term projections should include the differing impacts of a rapid economic recovery versus an extended recession. More sophisticated scenarios could consider dramatic changes in commodity prices or property values, or even the effect of political instability on globalization and outsourcing.
• Industry-specific uncertainties: The key factors here relate to political forces, technological advances, or changes to industry trends. Critical historical examples include the influence of online advertising on traditional media, or the impact of the iPhone on conventional mobile phone manufacturers.
• Company-specific concerns: Here, you should develop scenarios to explore the particular risks facing your company. For example, can you recover if you lose your best customer? What would be the full impact to your operations if a key supplier went out of business? How much would margins drop if a competitor entered the market?
5. Simulate performance. Once you have outlined the possible futures facing the business, you can use them as a framework to assess each growth initiative. A detailed financial performance model enables you to simulate the impact of the unique business drivers of each scenario, and calculate the cost/benefit range. More qualitatively, this analysis challenges leadership to revisit assumptions, recognize potential disruptions, and prepare for the future.
This five-step approach provides a well-reasoned structure to identify potential growth opportunities and gauge their capacity to drive sustainable growth. Once completed, you will be able to recognize which initiatives are the most likely to succeed under a variety of circumstances, ensuring a focused and manageable implementation.