As the New Year approaches, Paul Stead encourages businesses to resolve to be bold, re-energise and plan for a bright – and growing – future.
By now, most of us will have effected plans and budgets for our businesses in 2018; some will have revised a three-year plan to 2020 and a few the five years to 2022.
How businesses perceive and execute the planning process often varies with scale and maturity, and the quality of energy displayed within the process may similarly differ.
For businesses experiencing ‘rapid-growth’ (20-40% CAGR – compound annual growth rate – meaning they double revenues every three to four years) or even ‘hypergrowth’ (over 40% CAGR, doubling in under two years), the challenge for the coming year is how to maintain this steep growth curve.
These companies display some specific traits, one of which is contagious ‘can-do’ energy. For businesses determined to kick-start a growth spurt, the year-end planning should have identified likely opportunities, decided which levers to pull and where to focus resources.
If this is a top-down initiative the board may be energised – but few others will be. If this is a genuine team-based approach with focused objectives, clear deliverables and an understanding of the rationale, then the delivery teams should be equally energised and primed for action.
This article first appeared in the December / January issue of The Manufacturer magazine. To subscribe, please click here.
For some businesses, there is little formal planning beyond a cut-and-paste from year to year. Modest growth is desirable, but one year is similar to the next, punctuated by ad hoc enforced changes.
Many businesses are part of a lifestyle, and if the business supports this then the goal has been reached. Energy is dispersed across a number of activities, and not focused solely on the business.
High energy within a business frequently coincides with a strong vision and future-focus, and these in turn coincide with a business that knows ‘why’ it exists and what the collective ‘we’ needs to do to drive success.
The intent is to create a unified approach and cross-company plan so all stakeholders have shared goals and aspirations, and above all a shared belief in where the organisation is heading.
An oft-used and still great quote that illustrates this comes from when JFK asked a cleaner at NASA what his job was. “I’m helping put a man on the moon”, he replied, reflecting a visionary goal that had galvanised NASA, and a whole generation, with a future-focused can-do attitude and the energy to succeed.
Hypergrowth by design
The World Economic Forum set out to discover how hypergrowth companies differ from others in the way they are led and managed, and to learn lessons from their successes.
Perhaps their most significant discovery was that hypergrowth is not by chance – the outcome of people with bright ideas and positive market forces that ‘just happen’ to converge at one moment. It is actually very deliberate – the result of companies focusing on priorities that enable them to expand exponentially. In other words, it can be designed.
Many people associate hypergrowth with young, risk-taking companies that capitalise on a gap in the market or see the potential for a new business model. Yet the evidence suggests that not all such companies are young or disruptive.
Hypergrowth can come about as a result of joint ventures between big businesses and small start-ups, corporate partnerships, and new generations of family business owners following innovative strategies.
There are important attributes that may put companies on the path to hypergrowth – or at the very least, significantly improve their growth curves:
Culturally embedded agility is a vital trait. Hypergrowth companies recognise when they need to respond to market changes and they will do what it takes to overcome obstacles – for example, restructuring the business, clarifying and highlighting its purpose, and transforming its culture.
The right business model is a key requirement for scaling. Hypergrowth companies favour simple business models because complicated governance, operations and supply chain arrangements hinder the ability to act quickly and, therefore, to scale up. A popular and versatile example is matching markets with an online platform linking buyers and sellers – something covered in an earlier article about Eastman Chemicals.
People are recognised as the key driver of success. But instead of hunting down candidates with specific skill-sets to fill rigidly defined vacancies, hypergrowth companies seek out individuals who are the right cultural match for their values and purpose. Instead of taking a competency-based approach to recruitment, they look for people with problem-solving and intercultural skills – those confident operating in an environment characterised by constant and rapid change.
They don’t let regulation just happen to them; instead, they actively engage with regulators to help shape regulation. And where the boundaries of legality are not entirely clear, they are prepared to start working in an undefined space until clarification and communication are possible.
Hypergrowth companies see technology as an important provider of data, so use it to scale their businesses at a rapid rate. They have the confidence to ‘test and trial’ and go to market with products that are ‘good enough’ knowing they can use data to improve at a later date.
They embrace technological advances that allow them to create new possibilities and disrupt, innovate, take risks and expand into new markets. They recognise when they need to take advantage of new developments in a variety of fields such as additive manufacturing, artificial intelligence and automation. They see opportunities as borderless and boundless.
Mergers and acquisitions (M&A) and partnerships tend to be a priority for them. While they may buy out competitors as an act of self-defence, they are more likely to undertake M&A because they see it as an opportunity. This opportunity may be to expand their market, embrace fresh talent or access crucial new technology.
When companies and leaders embrace and plan for the future in this way they not only create amazing energy, but also create their own futures – whether they are aiming for hypergrowth or something more modest.
Irrespective of size, leading from the front continues to be the critical success factor in many businesses. This tangibly demonstrates leadership in tune with business drivers – not just today, but with where the business is heading.
This doesn’t mean CEOs need to do all the heavy lifting, but they ensure the business invests for the future and recognise the value of experimentation and therefore failure. They empower and encourage their teams to be scouting, reviewing how trends from today are going to become impact trends of tomorrow.
They communicate a vision of how these impact trends are going to change their businesses, their customers and how they can reimagine (‘redesign’ the business) to stay ahead. They plan for the future with the same care they show for tomorrow. Remember, designing your business for 2020 and 2022 is as essential as for 2018.