Connect with us

Performance & Growth

Navigation Towards Growth

Strategic planning may be critically important to the growth of all businesses, but more often than not it exists in name only.

Patty Vogan

Published

on

Navigation_Growth

[The 4-phase approach]

1. Finding the best strategy  for your business

To answer those questions and more, Entrepreneur interviewed Michael Canic, business consultant and author of Ruthless Consistency: Aligning Your Organization to Win…or Else!

Entrepreneur One of a leader’s many responsibilities is to have a ‘strategic plan’ for their company.
Does a strategic plan produce sustained focus for
the leader, their management team and the company’s employees?

MC Actually, a strategic plan doesn’t produce sustained focus for anyone. What typically happens is that well-intentioned leaders go off-site for the annual ‘strategic planning’ retreat. They plaster the walls with flip chart notes and discuss at length big-picture issues such as mission and vision. When it’s over, everyone breathes a sigh of relief and gets back to the ‘real work’ that’s stacking up back at the office. The strategic plan is documented and distributed, and then it sits on a shelf and collects dust.

Entrepreneur So why don’t strategic plans become strategic reality?

MC Because strategic planning is all about creating ‘the plan’. Plans don’t implement themselves. Strategy, right through implementation, needs to be approached as a process. That’s why we created the four-phase strategic management process — to focus on turning strategy into reality.

Entrepreneur The idea of strategic management sounds good because it puts the strategic plan into action. What are the four phases of your plan and why are they important?

MC The four phases are assessment, positioning, planning and implementation. The reason they’re so important is because ignoring any single phase can lead to disaster. Failing to conduct a thorough assessment can mean making decisions based on faulty assumptions. Failing to establish the positioning of a company can result in plans that focus on the wrong things. Failing to plan leaves you with a destination but not a roadmap. And failing to implement means your efforts at everything else are wasted.

1. The assessment phase

The key here is that leaders have to be willing to attack their assumptions — to overcome their egos, to come to grips with reality, warts and all. So you start with a question the company needs to comprehensively answer: What is our current situation?

There are three things to look at here. One is the organisation itself, from an operational, financial, structural and people perspective. Two is market data — current and potential markets and current and potential customers. You want to look at your performance feedback and value drivers. Third, and this is the one that’s most often neglected, is what I call the ’STEEP’ factors: the sociocultural, technological, economic, environmental and political factors that can greatly impact a business.

Consider a fast-growing software company. Suppose their growth rate over the past three years has averaged 44%. Customers are happy. Investors are happy. It might be tempting to feel a little self-satisfied, perhaps become a bit complacent. But what’s happening to the industry? For example, if the trend is for ‘on demand’ rather than ‘on premises’ software, failing to recognise this and adapt could put you out of business.

2. The positioning phase

The question to ask here is: what do you want to accomplish as a business? Forget the manicured mission and vision statements. Most of these are too vague, too long and not remembered. Boil it down: come up with one, simply worded sentence that captures what you do as a business so that a stranger who heard this sentence could gain a basic understanding of what you do.

Then develop another simply worded sentence to capture what ‘winning’ would look like. Think of the early days of Apple when the overarching goal was to create the most user-friendly operating system for personal computers. Or recall that more than 30 years ago, Nike had a single, laser focus: ‘Crush Adidas’.

3. The planning phase

The general question to ask here is: how do you get
there? This is the phase that has to be information-driven.
How much capital is required to support the infrastructure for growth? How rapidly do you have to grow to survive a consolidating market? Which distribution channels do you need to dominate?

Think of how many promising start-ups have died because they underestimated both the time to establish a significant market presence and the capital required to achieve it.

4. The implementation phase

Here you must answer the question: how do you ensure it happens? This is the most important phase and the phase where strategic plans fail.

A critical and underestimated part of any implementation is alignment — ensuring that the factors that impact people (from skills, authority, resources and incentives to processes and structure) are all aligned with the overarching goal. It’s alignment through the eyes of the people, not just leaders, that counts.

A second critical aspect of implementation is commitment building. Here we like to structure leaders’ regular communications and engagement with employees. Our underlying belief is that information, input and involvement together help to build commitment.

The last part of this phase involves execution management. Every month, the leadership team should meet for a few hours to track and manage the implementation of the plan. I strongly believe that every 90 days, the leadership team should also meet to recalibrate the plan. Reality changes, and the plan or elements of the plan can become irrelevant. Every 90 days, it’s critical to question the assumptions upon which the plan was built and make adjustments as necessary. Have you lost a key customer? Has a new competitor come into the market? Has a promising investor bailed out on you? What has changed to the reliability of your supply chain?

Unsurprisingly, when a company vigorously adopts a disciplined strategic management process, they’re much more likely to achieve their ambitions — the right ambitions.

[Strategic structures]

2. Five structural elements of strategy

Strategies fail over and over again for the same reason: businesses ignore the five key structural elements of strategy. Miss one and your strategy is doomed to fail.
By Nilofer Merchant

How many times have you experienced this situation: you, your partners and your managers develop a plan, hold meetings, and achieve alignment. Yet during the execution phase, the strategy falls apart. During the inevitable review process, the causes are all too familiar: no defined key players. No consideration of the decision-making process. Too many ideas generated, too few killed. A laborious process or no process at all. The wrong people engaged or poor team collaboration. There’s a reason that the causes of failure are repeated. It’s because strategy has a unique structure, and if you overlook one of the five key elements of that structure, you’ll fail. Add elements that don’t support that structure and you’ll fail. And the failure will look familiar every time.

1. Power distribution

Power distribution dictates who’s involved, how much information each individual can access, and the decision-making process.

It’s crucial to know who you’re working with from their track record on complex strategy projects to basic strengths and weaknesses. Talk to other people in the organisation who have worked with them to gain more information. Vet people to avoid surprises and to understand the best ways to support and motivate team members.

How much of your strategy is confidential? What can — or should — be shared with other groups? Set the boundaries and share them so that everyone agrees and has the same expectations. Make sure that the inner working of the group matches the culture and values of the parent organisation. If your company is as free-flowing as Google, don’t bind people with conservative rules that eliminate communal sharing of ideas or the development  of innovative solutions.

2. Decision-making

The way that decisions are made in organisations determines how ideas are generated and which ideas are considered. The way decisions are made influences how these ideas are carried out later.

Does decision-making in your organisation flow top-down or bottom-up? Who are the holders of the power to decide which ideas advance and which are eliminated? If ideas are valued in your culture, there’s a strong likelihood that it might not matter who generates the ideas.

3. Idea generation

How ideas are generated affects the quantity and quality of these ideas, which directly affects the number of viable strategy options.

A company that has an annual strategy meeting with a brainstorming component that encompasses input from many directions within the company uses one type of idea generation. The Google model involves having employees use 20% of their time for innovation. They test and grow projects. Some projects are nurtured and provide the company with revenue. Others are killed off. It’s even possible that original projects may mutate into something different.

4. Process

Process is the way that ideas are handled and consumed within organisations. Process defines the way that agreements and commitments are made and managed, and how well people understand what is happening and what to do. The process-driven organisation avoids wasting employee time and energy. People in this type of company reach agreement that an action is valuable, develop a process around it, and set it in motion.

Process may be communicated to a team in writing, by word of mouth or in other ways. Agreement is critical to the understanding of process within an organisation.

5. People

In an organisation of any size, people bring their domain knowledge, talents, and perspectives to strategy creation. Often people are viewed as the first point of strategy failure, but they are actually the last point of failure in a long series of cascading interactions.

Put another way, very bright, creative, motivated people can fail if they are embedded in a strategy creation structure process where power, decision-making, idea generation, or process are broken.

Each of the five elements is critical to the strength, balance, and practicality of the proposed strategy. Tighten up around these five and watch your team’s next strategy
succeed beyond your plans.

[Growth strategy]

3. Plotting your path to business growth

Growth strategies are not cast in stone. You need to be flexible to maximise opportunities as they present themselves.
By David Meier

ost entrepreneurs, from time to time, have more than one way to grow their businesses available to them. The process of deciding on a growth strategy is ongoing, and the decisions that result can be critical to the future success of any business.

The search for real business growth, by creating permanent increases in profit as a direct result of measurable and sustained increases in sales volume, may not only be a reaction to opportunities in the marketplace, but also a requirement in order for your business to maintain market share. The right decisions can conceivably have a major positive impact on your business’s bottom line, thereby creating real growth. However, if you choose unwisely, or decide to do nothing when action is clearly warranted, the results can lead to a loss of growth potential, or even a period of negative growth (decreased sales and profitability).

Invest in growth

As with so many issues in business, your growth decisions should be based on objective financial data, consisting of relevant estimates and projections. Not every growth strategy can be expected to impact your business in the same manner, and over the same time period. Your ability to compare growth options is the best way to make informed decisions.

Think of your decisions in the context of ROI analysis. Each growth opportunity has an investment component, money that you would be required to spend as a part of the process of implementing a specific growth strategy. The corresponding return that you can expect from your investment in business growth can be represented as the increased profit your business is projected to incur, directly as a result of the sales increases created by your business’s growth strategy. For example: a retail business is considering growing by adding a new product line. The required investment to add the line is R1,2 million. This addition is expected to add R800 000 in annual sales, and as a direct result, a corresponding R200 000 increase in annual net profit. Therefore, the anticipated ROI from this additional (product) line is in excess of 16% (R200 000/R1,2 million).

Evaluate growth plans

If the business is currently enjoying an overall 25% ROI, the question the owner must answer is, ‘Should I invest R1,2 million in the addition of the new product line to earn an ROI that is nearly 9% less than my business is currently earning (25% – 16% = 9%)?’ The correct answer may appear to be an obvious ‘no’, but there may be other business reasons that would cause the owner to decide to add this product line, such as the presence of a strong market demand for the new items.

In any event, once each growth strategy is converted into an ROI percentage, you can compare dissimilar growth options, and ROI can be used as a critical financial component in any business growth decision. Furthermore, just as ROI analysis can be used to evaluate these additional growth strategies, it also can be used to evaluate business ideas, such as those of entirely new businesses. And fortunately, ROI analysis can be applied to these new business ideas well before an owner ever decides to invest in that new business.

Patty Vogan is a top leadership columnist and success coach.

Advertisement
Click to comment

You must be logged in to post a comment Login

Leave a Reply

Performance & Growth

Taking Care Of Business

Do you want to grow your business in 2019? Bear these tips in mind.

Christiaan Steyn

Published

on

small-business-success-south-africa

SMEs are the lifeblood of the South African economy, accounting for approximately 29% of employment in the country and forming a critical pillar of the government’s 2030 National Development Plan. With funding scarce and the economy volatile, small businesses remain increasingly vulnerable to economic pressures, with many failing to last beyond the five-year mark.

Thanks to the abundance of new and affordable technology, bringing with it the potential for new industries and market gaps, there has never been a better time to conduct business without crippling costs. It is not all doom and gloom in the small business sector, despite findings in the 2018 SME Landscape Report that suggest that a meagre 6% of all start-ups have received government funding.

Do not be afraid to delegate

Many entrepreneurs are so passionate about their own undertakings that they are unable to simply let things go. Rather than empowering and enabling others to take responsibility, many Type A business leaders instead opt to do it all themselves – usually with disastrous consequences.

Learning to delegate is key to alleviating bottlenecking and freeing up capacity in your business, so make sure to utilise all your available resources if you want your enterprise to expand.

Related: 10 Questions With Tshireletso ‘Ty’ Hlangwane, Winner Of The Workspace/MiWay Business Insurance Entrepreneur Competition

Go digital

While billboards and TV ads are expensive, marketing a business can now be done quite cheaply, thanks to the abundance of relatively affordable digital channels. So while you might not be able to have your brand staring out at you from the pages of a glossy magazine just yet, digital channels like Facebook and Google now allow you to achieve the same audience reach for a fraction of the cost.

Be discoverable

Offering the best service in town is one thing, but it is worth nothing if nobody knows about it. So make sure to pay close attention to your website and its search engine optimisation (SEO). By using the correct keywords and even putting a small investment into Google Adwords, you will ensure that people who are looking for what you offer are able to find you easily.

Mobile first

With over 50% of all web traffic in South Africa coming from mobile devices, businesses simply can’t afford not to take a mobile-first approach to business. If you are offering an online service, make sure it is optimised for a mobile experience and ensure that any communication touch-points – be they blogs, social media posts or online check-out pages – are designed with mobile in mind.

Be agile

One of the key advantages SMEs have over their larger counterparts is their ability to be flexible. Without outdated systems and reams of red tape to wade through, small businesses are far better able to adapt to market conditions and revise their offerings based on consumer needs. So make sure to listen to your customers and be willing to accept that some of your great ideas simply are not feasible.

Your willingness to accept failures and move on, will ultimately be what gives you the edge over your competitors.

Plan your finances

Cashflow is king when it comes to entrepreneurship and many a micro enterprise has come undone thanks to their inability to manage it. As such, financial planning is a critical tool for any business, especially for those operating without significant investment capital. Understanding potential pitfalls and keeping tabs on your profit margins will help to ensure you keep your pricing realistic and enable you to avoid finding yourself in the red.

Related: The Entrepreneurial Case For A Co-Working Space

Network

Operating in isolation can only get you so far, so it is important that you put yourself out there and make proactive attempts to connect with other like-minded businesses. By joining a business network or attending industry events, you will be able to arm yourself with useful contacts, handy insights and perhaps a few new clients in the process.

Remember that owning a business is like raising a child – it requires constant supervision, nurturing and care if it is to succeed to its utmost potential. So make sure to look after your business and one day it will end up looking after you.

MiWay is a licensed Short-term Insurer and Financial Services Provider (FSP. 33970).

Continue Reading

Performance & Growth

How Taking Risks – And Failing – Can Lead To Business Success

Don’t let fear of failure stop you from taking the risks you need to, to carry your business forward. But as your business grows, you’ll have to re-evaluate what risks you can take.

Grant Field

Published

on

business-failure

Innovate, innovate, innovate. The war cry is so often repeated that it has become something of a bore. Yet, true innovation remains a rarity – and to our huge detriment. As South Africans, we seem to carry a deep shame associated with failure. Yet, facing the very real possibility of failure is the only arena in which a culture of innovation can take root.

The biggest business failure of my life was an investment into a software company that wrote a piece of software that was set to revolutionise the mobile landscape. It was going to be huge. It was going to take the world by storm. But unfortunately, we backed the wrong horse.

We developed the software for the Symbian platform because Nokia was way ahead of the pack. Nobody else even came close. But, given the fact that there’s a good chance you currently have an iPhone or Android device in your pocket right now, you know how that story ended. Nokia seemed untouchable, then almost collapsed. We lost a lot of money.

Get back up

But, we learnt valuable lessons from that. Of course, there’s the general lesson that everyone should take away from failure – to get up and try again. As General George Custer said, “It’s not how many times you get knocked down that count, it’s how many times you get back up.”

The other lesson was more specific to our business. In developing the software, we learnt a lot about different technology platforms and those lessons were invaluable as we took the next steps in Fedgroup. The same people who built that software helped in the initial stages of developing Azurite, which today is the backbone of our company’s entire operation.

Because we’d been involved so heavily in developing for mobility and the future, our minds were opened to what technology could do. It gave us the mindset to get where we are today.

Related: 2 Types of Failure and How Your Business Can Weather Them

Investing in education

It sounds like a terrible cliché, but there’s value in failure. Take the lessons you learn in failure – the genuine lessons – because even if you lose money, consider it school fees, and cheap at the price. Arguably, our failure was the “fees payable” that bought us our competitive edge.

In the United States, they are less afraid of failure. They wear their failures like a badge of honour. Elon Musk, for example, misses his targets, but he’s always pushing the boundaries. Recent (questionable) antics aside, Musk’s risk-taking drives innovation.

If people in an organisation are terrified of failure, they don’t try new things, they don’t innovate, they don’t move forward and they certainly don’t disrupt. Even though now, as the CEO of a large financial services company, I can’t afford to bet the whole business on a risky proposition, I still encourage risk-taking and a spirit of adventure – within reason.

Reckless vs reason

This is not to say that we can – or should – be reckless. There should be accountability, and the reasons for making the mistake should make sense. And, you shouldn’t make the same mistake twice. But if you take risks within those parameters, you’ve got a better chance of making a real difference in your organisation.

We have recently launched an app that is fairly disruptive, and as far as we can tell, the first of its kind in the world. Before we launched, we put our personal money behind the idea to test it. We had done our homework, but it was still a risk. If it hadn’t worked, we would have lost our personal money, but because we took that risk and proved it worked, we were able to launch it safely to the public one year later.

Related: 8 Reasons Why Failure And Focus Are Essential To Business Success

Parameters, limitations, and the ethics of risk

When you’re an entrepreneur, when you’re just starting out, you can bet the farm. You can take risks on new ventures and potentially build something out of nothing.

Once you’re an established organisation with staff and clients – and in our case, clients who have invested their pension with us – the scope of risk takes on a new set of parameters. When you are dealing with a client’s security, it is simply not acceptable to expose them to additional avoidable risk.

However, because risk taking is where the magic of innovation happens, encouraging a framework where creativity, experimentation, and risk is possible within your organisation, is critical. One of the ways to encourage this is to examine your attitude towards failure. Build an environment where failure is not taboo, but presents a strong learning opportunity, and ring fence those areas within the organisation which absolutely cannot be jeopardised. This is risk in a helmet – you might get a roasty, but you could win the race.

Continue Reading

Performance & Growth

Proven Strategies To Grow Your Start-up On A Scale Following These Guidelines

The following strategies can help you make the start-up scalable and grow it to accommodate a larger demand.

Joseph Harisson

Published

on

business-growth-strategies

Scalability and flexibility are important properties of any business. Let’s say you’ve managed to build a successful start-up. It’s profitable and promising, but you want it to become better. The scalability of a business involves its ability to adapt for bigger workloads without losing revenue.

Even if your business is currently small and doesn’t generate huge profits, scalability can help it turn into a large enterprise. The wrong approach to developing a start-up can deprive it of an opportunity to become better.

The following strategies can help you make the start-up scalable and grow it to accommodate a larger demand.

Scaling Vs Growth

Many companies make a mistake of thinking that scaling and growing a company is the same thing. In fact, growth involves increasing revenue or the size of the company (the number of employees, offices, clients).

Constant growth requires numerous resources and may not always lead to a proportional revenue increase. In many cases, the growing number of services or products needed to boost revenue involves high costs related to the growing number of employees and equipment.

On the other hand, scaling allows you to increase the revenue without the costs involved in growth. You can handle the extra load and boost your profits while keeping the costs to a minimum.

At some point, a successful start-up needs to make a choice between growing at a constant rate and switching to the scaling business model.

Even though a single clear method for scaling your business doesn’t exist, there are some guidelines you can follow.

Related: If You Want Scale, Fail Fast And Learn Quickly

1. Get Ready To Be Patient

Scaling is not a quick process so you have to be patient. The overnight success story is not about you. In fact, scaling too fast usually results in unfortunate failure.

Allow yourself to spend the time to understand who your ideal customers are and how you can solve their problems in a better manner. Make sure you understand how to be confident about the new volume of your work.

Do research to find out how you can find the right resources to achieve scaling rather than growth.

2. Choose The Right Software

The lack of time and team members is a common problem for a startup looking for scaling methods. That’s why they need to try and automate as many processes as possible. This can be done with the assistance of the right software.

  • Trello – to simplify in-office and remote teamwork
  • MailChimp – to improve marketing campaigns
  • Brand24 – to get insights about your business
  • Survicate – to collect customers’ feedback
  • Voiptime – to increase connectivity.

Enterprise SEO specialists at Miromind also recommend paying special attention to different programmes to help you with your marketing efforts. Many digital marketing tools available today are free.

3. Take Advantage of Outsourcing

Since you are hoping to limit the expenses while growing the revenue, you have to find ways to spend the revenue in the right manner. The biggest mistake made by business owners who think they are choosing scaling is hiring a big team. By doing so, they turn scaling into growing.

Your best bet to avoid hiring a large team and paying large salaries while achieving your plans is to outsource. Using your resources wisely involves finding freelancers and remote employees who are willing to work for a lower pay on a one-time (or several) contract bases.

For example, you don’t need a lawyer or a computer specialist sitting in the office all day long. Why should you pay them a monthly salary?

Related: What It Will Really Take For South Africa’s Businesses To Scale And Create Jobs

4. Don’t Do It Alone

Even though certain team minimisation is necessary to improve your scaling efforts, don’t try to handle everything on your own. It’s important to have at least one person you can rely on to manage the business-related problems.

Conclusion

Scaling your start-up is possible as soon as you understand what scaling is in detail. You need to be careful not to start growing your business instead of scaling it in the process. Once you have all the fundamentals figured, resources managed, and the right people in place, you are ready to start.

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending