In This Issue:
The Many Different Facets of "What is Growth Strategy?"
Growth strategy can mean a number of different things. It can cover organic growth, which occurs from within, or inorganic growth, which comes from buying or merging with other businesses. It can entail launching something new, or selling more of what's been around a long time. It can reflect a broader perspective, or it can cover a narrower functional area.
To illustrate how different types of growth strategies contrast, this article does include discussion of my work. My work looks at growth strategy from a broader perspective and helps companies make the right strategic choices that drive business success. My work is based upon my research, which strives to explain why and how companies grow successfully. I discuss my work here because a key aspect of growth strategy entails making the right strategic choices to drive business success.
But, growth strategy has other aspects as well. That's why professionals with expertise very different from mine also often describe their work as growth strategy. Their work often addresses narrower functional areas that can influence the growth of the business, areas such as advertising, public relations, or sales. Since those professionals develop strategies that lead to growth, their work is a type of growth strategy, but it generally applies more narrowly.
Another somewhat specialized aspect of growth strategy covers inorganic growth, the growth that comes from mergers and acquisitions. Doing a deal can be highly specialized in terms of its legal or financial aspects. Yet, inorganic growth also entails broader strategic choices regarding fit, as well as what to ultimately do with acquired companies.
The kinds of strategic choices I work with tend to reflect a broader perspective that can apply to either organic or inorganic growth, or even to exiting pieces of the business. Through my 25+ years of research into business success and failure patterns, which I impart via my writing, speaking and consulting, I can help companies make the right strategic choices. There may be a bit of overlap between my broader growth strategy work and that of the narrower functional areas, particularly regarding target markets. Nonetheless, I concentrate on areas like what business to be in, what target markets to serve, what kinds of risks to take, how to evaluate whether and how much to change, pursuing new markets, new ventures, and innovation, as well as how to use knowledge and data. Strengths play a crucial role in all this, so I also focus on identifying those strengths. Getting a good grasp of those strengths is important since identifying business strengths can be more complex than many people think.
That said, the important point is that there are many different facets to growth strategy, all of which can contribute to business growth. In some cases, elements that can be applied across many functional areas drive growth and, thus, can be considered an aspect of growth strategy. Technology is an example. So is data. And, there are examples related to soft skills. In themselves, these elements may not necessarily be a strategy. But, when they are applied in ways that fit well, improve the business and enhance its existing strategy, their use can essentially become a type of growth strategy.
For example, in Wal-Mart's earlier growth days, its technology for inventory management was far ahead of the competition. This enabled the company to outperform its rivals and achieve more expansive growth. Although technology in itself is not a strategy, Wal-Mart's use of technology enhanced its competitive position and was a form of growth strategy.
A similar example is the use of data and knowledge, which also ties in with learning. These can contribute to business strengths. Since good strategy is based on strengths, data and know-how can be an aspect of growth strategy when applied appropriately in ways that improve the business. I have a background with data, and I can help companies incorporate data into their strategies. Additionally, I have presented on Informal Learning as Business Strategy. This presentation is not about training and learning techniques, but it covers how informal learning contributes to strengths, and has strategic value that can be a key driver of business success.
Still another example ties in with the book "The Empathy Era" by Belinda Parmar. Citing the book, career strategies coach and frequent contributor to major business publications, Beth Kuhel wrote an article titled "Can empathy be a growth strategy for your business?" (Cleveland Jewish News, May 15, 2015). I have not read the book. But, based upon my work with business success and failure patterns, I can see empathy playing a role in business growth. So, I think Kuhel's point that empathy can be a growth strategy is quite insightful.
As I see it, empathy can be a component of corporate culture, and corporate culture can be a strength that contributes to successful business growth. But, added empathy can have benefits that are not necessarily tied to a particular corporate culture. For example, empathy can boost the performance of sales reps and drive growth. This can be a form of growth strategy, as can using empathy to give customers what they want, which Kuhel's article discusses. Furthermore, empathy can enhance the functioning of teams. This can improve all sorts of things, from how well people work together while developing strategy to how well strategy gets executed. Thus, by contributing to better overall functioning of the company, empathy may help foster increased growth and can, in fact, be a type of growth strategy, as Kuhel suggests.
But, like technology or data, empathy is generally not a stand-alone strategy. In my work with business success and failure patterns, I have looked at issues related to people versus strategy as well as at strategy versus execution. I find that even in companies that grew impressively and had a strong people component--Southwest Airlines, for example--growth was not driven by people factors alone. There was also a strong business strategy underlying the success. So, Southwest's focus on people added to what was already a strong strategy. Likewise, empathy can be a form of growth strategy if it is appropriately added in a company that has reasonably good strategic underpinnings. And, in some of these companies, empathy may be able to help reignite the business when growth flattens.
Similarly, empathy alone generally won't drive strategy execution. Granted, people factors, such as empathy, can be important for execution. But, I find that many execution difficulties occur because the strategies do not fit the company. Poorly fitting strategies are extremely tough to execute, even with what might be well-oiled execution attempts. Nonetheless, execution does play a role in the success of strategy. And, empathy can enhance the people side of strategy implementation so execution goes more smoothly. As I explain in my "What Will You Do with All Those Good People?" report, although a strong underlying strategy is needed to succeed, the people side can enhance business success. And, greater emphasis on empathy, as Kuhel and Parmar call for, may be a way to do this.
In summary, growth strategy is a complex entity with many facets. It can be based upon overall strategic choices from a broader perspective. Or, it can be growth producing strategies restricted to more specialized functional areas. Or, it can be how elements like data, learning, or even empathy support the business model and enhance business performance. Regardless of the form it takes, a successful growth strategy can propel the business to greater heights.
La Grange Park, IL