Four Tools for Achieving Spectacular Growth
Opportunities for growth abound, and every organization wants to position itself to take advantage. But the failure rate of growth strategies, especially for mergers and acquisitions, is high. How can you determine which opportunities hold the most promise, and how do you balance the need to judiciously choose an opportunity with the need to beat the competition to it? Ian MacMillan, Wharton professor of management and co-author of Market Busters: 40 Strategic Moves that Drive Exceptional Business Growth, says the answer is having a structured system in place.
“If it becomes part of your organization’s routine to seek appropriate ventures, you can locate the best ones and exploit them quickly — ahead of your competition,” he explains. That means moving from an unstructured, “pie in the sky” method for identifying growth opportunities to a highly organized internal mechanism.
MacMillan, who teaches executives how to build this mechanism in Creating and Implementing Strategy for Competitive Advantage, stresses that it must begin with the creation of a small multi-functional team. “Get people from marketing, finance, and R&D, and make sure at least one team member has deep knowledge of your industry as a whole,” he says. That team should then apply four tools, which, MacMillan notes, are insight-generating rather than quantitative. “The point is to think through growth opportunities. The more you explore, the greater the possibility that you’ll arrive at one that works.”
Once the team is established, it can take on the work of applying the four Market Busting tools:
Take the point of view of the customer. What is his or her experience with your company, including delivery, service, financing, and ability to purchase? What significant change can you make that will improve the customer’s experience, and resonate meaningfully with him or her? MacMillan explains, “The beauty of this tool is that by making a significant change you put into place a system that your competition cannot replicate quickly.”
- What changes can you make in your offerings? That could mean adding features that the customer needs (based on the analysis done with Tool 1) or removing features that might now simply be tolerated. Says MacMillan, “As your team takes on the point of view of the customer, seek change(s) that will play up positive attributes and lessen or eliminate negative ones. Your goal is ultimately to make your offering clearly superior to your competitors'.”
- Examine your key drivers of profit and profitability. By reconfiguring the drivers of cost and revenue, you can change the rules of the game and create new profit drivers.
- Acknowledge that your industry, and the world, is changing. How can you adapt to the shifts taking place in your market? What changes can you predict? MacMillan adds, “Most importantly, how can you exploit that change or precipitate it? Your goal is to position yourself for growth, and be on the cutting edge of that adaptation or change.”
In Creating and Implementing Strategy for Competitive Advantage, MacMillan doesn’t just teach these tools — he has participants put them to use. “The executives represent many countries and many industries. We divide them into groups and present them with a specific business challenge. Each group must then apply the tools to that challenge, developing ideas for growth. Then we discuss the feasibility of the suggested moves. The value of the tools as perceptual filters, ones that generate superior insights, is experienced first-hand by using them.”
But as valuable as the tools are, it is the framework, and the methodical way a diverse team works through it, that reveals the best opportunities. “If your goal is to find places to grow, and to move quickly and creatively, in essence reconfiguring your competitive landscape, you need that analytical team in place,” stresses MacMillan. “Haphazard thinking brings haphazard results. Decisive, tools-driven exploration is how to reveal the opportunities that can bring spectacular growth.”