Organic growth is more than an execution problem
Finding a successful and repeatable formula for organic growth is something every corporate board wants. Unfortunately, it’s a little like the Fountain of Youth – such a formula does not exist, no matter how much we wish it were so.
The inconvenient truth that most leaders understand yet neglect to appreciate is that organic growth is a ‘one size fits one’ endeavor and best practices will only get you so far.
Consider the examples of a leading office supplies manufacturer, a global insurance company, and a manufacturer of wine closures. Despite clear growth strategies, superior products and services, and well thought-out execution plans, these profitable organizations continually missed their growth targets. Each company, however, finally found ways to overcome obstacles and generate impressive, sustainable top-line gains. But – what works for one company may not work for another, and what works for one company this year may not work next year.
The Complex Nature of Organic Growth
Pursuing organic growth is fundamentally different from carrying out many other types of organizational initiatives. Although restructuring the organization or integrating the functions of a recent acquisition, for example, are not easy, these efforts are straightforward; the desired end state is clear, and the pathway to implementation can be laid out with confidence. Naturally, many things may go wrong, but these can be managed through traditional project management techniques. These efforts are execution challenges.
In driving organic growth, however, the end state is rarely clear and the formulaic solutions to execution challenges do not apply. To be sure, the desired outcomes (i.e., expected business results) can and should be clearly articulated. But the solutions and ways of working that will actually deliver those outcomes are unknowable at the start. So it is impossible to define a clear path from current state to future state that simply needs to be executed. Organic growth is a complex challenge.
Tackling organic growth requires something beyond plain execution. It requires a process that enables experimentation, rapid learning, and discovering the optimal solutions that deliver the desired business outcomes in real contexts. We call this Adaptive Execution. Certainly, traditional execution disciplines such as accountability, work planning, results monitoring, etc. are important in driving growth; and they must be augmented with additional tools that deal with the complex nature of the challenge.
Keys to Organic Growth Success
There are three keys to success to accelerating organic growth.
1. Articulate crisp, inspiring outcomes – Drive clarity on the current and desired future state. This requires going beyond simply defining solutions to implement, and instead defining the desired outcomes and metrics of success, and the key strategic, operational, psychological, and behavioral shifts required to bridge the gap.
Leaders nearly always overestimate the degree of alignment at the start of an effort. “It’s obvious, everyone knows why we are doing this,” is a common refrain. While often true in the most general sense and among the most engaged stakeholders, awareness and understanding of where the organization is today, and where its growth aspirations will take it into the future is usually a hazy collection of images that vary widely among people across the organization. For instance, the insurance company had been carrying out cross-sell initiatives for years, but not until they articulated an exciting, data-driven case for change around metrics like product density, conversion, and retention did the effort ignite growth at the scale they required. And the office supplies company had been framing their growth opportunity as a new product development challenge – a narrow focus that missed other important avenues of delivering top-line gains. Once everyone was aligned on the true current state – that ambitious short-term growth objectives had to be achieved by leveraging existing products and services – the landscape of opportunity expanded and teams tapped into a variety of creative ideas.
Rarely will the current ways of working deliver on ambitious growth objectives. Leaders must help people across the organization think about required culture shifts, behavioral changes, process adjustments, technology changes, etc. to go from current state to future state.
2. Use urgent, results-focused learning efforts – Short-term projects that deliver meaningful gains against important business outcomes such as revenue, market share, new customers, etc. enable fast discovery of viable solutions and accelerate ROI on growth initiatives.
Solutions generated by executives and rolled out across the organization nearly always fall short of their aspirations. Local conditions are simply too varied and diverse to lend themselves to top-down edicts from leadership. Initiatives that utilize a combination of top-down and bottom-up efforts are much more successful. Leaders lay out expectations, drive accountability, and monitor performance; local (often temporary) cross-functional teams are empowered to experiment and figure out what it takes to move the needle. These teams are given support and encouragement to design their own solutions, typically leveraging what’s available from corporate and other areas of the company and tailoring them based on their experiences being closest to the work. They never start from scratch.
These projects work best when they are aimed at putting points on the board for specific products or services, geographies, and/or customer segments in less than 100 days. The insurance company looked to cross-sell Property, Casualty, and Specialty lines in two offices. The wine closure manufacturing commissioned three fast, focused efforts: breaking into major wine labels in Napa and Sonoma, getting a foothold in the Chinese market, and successfully launching a new product in Italy.
Teams use these experiences to pioneer better ways of working that deliver bottom-line gains and enhance a variety of skills.
Naturally, rapid-cycle, results-focused efforts are a complement to strong execution disciplines. Work planning, accountability, monitoring and reporting, capturing learning, etc. are also important to the success of these projects and the overall growth initiative. Together they make up an effective Adaptive Execution program that optimizes both discipline and experimentation.
3. Sustain & Scale Success – Employ change management tools and techniques that drive engagement and enable rapid scale up of successes.
Effective rapid-cycle, results-focused efforts are not “one and done” experiences that create a short-term spike in performance levels. On the contrary, they uncover solutions that truly move the needle and should be sustained and scaled up to other areas of the company.
As part of their mandate, teams are tasked with creating “sustainability and expansion plans” as their projects come to a close. It is up to them to figure out how to make sure no backsliding occurs and the new ways of working are embedded into the fabric of the company. They also look for places where what they have achieved can be leveraged in other areas. They are also well positioned to look for the next areas to tackle. For instance, the office supplies company first began jumpstarting its growth efforts with 14 projects across three divisions in one office. These generated $15 MM in annualized incremental revenue in just 100 days. And among the lessons they learned was that there were a variety of commercial products that could easily be adjusted for retail use. The teams suggested this philosophy be tried out in other divisions, and the program was scaled up to 50 additional sites that year yielding another $50 MM in annualized incremental revenue. Similarly, the insurance company took the cross-sell successes in the first two offices and replicated them in other offices around the country. And the launch experience in Italy helped the wine closures company re-write the book on how they bring new products to market.
Effective communications campaigns that build awareness and buy-in for the effort, and that generate momentum and excitement about what’s being achieved are also an important element of a high-performing growth program.
After years of cost cutting, streamlining, and reorganizing, companies today are looking to grow. The three keys to success outlined above – crisp and inspiring outcomes, results-focused learning efforts, and processes to sustain and scale success – will help any organization achieve its ambitions quickly and effectively.
image credit: bigstockphoto.com
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Jonathan Stearn, Managing Partner at Schaffer Consulting, has helped numerous clients tackle complex business challenges and address the human aspects associated with change initiatives. At the core of every project that he delivers is the achievement of bottom-line business results – not analysis, reports, or recommendations – in very short periods of time, typically less than 100 days.