What do you do when times are tough? It’s a question many companies are wrestling with right now. The common, knee-jerk reaction is to reduce spending, slash costs, and maybe even to lay off employees. After all, a corporation has to make a profit if it wants to stay afloat. And in an economy like this one—when you’re struggling to hold onto your market share—cutting costs is the only way you’re going to survive. Right? Wrong.
Cutting costs is, indeed, one way to show a profit in the short term. But you should be working toward long-term profitability—and that means you should be thinking growth. Fast growth.
It’s really quite simple. You can only cut costs so far; eventually you run into a wall. A growth company is not market driven; it’s a market driver. Instead of trying to get a bigger piece of the pie, growth companies work to expand the pie itself.
So how, exactly, do you go about transforming your company into a market driver?
- Focus on effectiveness, not efficiency. First, be sure you’re effective (doing the right thing), then focus on efficiency (doing things right). That’s the way it should be. But in hard economic times, many companies revert to survival mode and slash budgets across the board. The problem is, it doesn’t matter how efficient you are when you’re efficient at something the customer doesn’t care about. Wouldn’t it be far better to take a hard look at resource allocations and direct more money toward goals that will lead to long-term success?
Unfortunately, most managers choose to look at the world from an efficiency point of view. This is the way it’s been done in the past; it’s a controlled environment; it’s comfortable and settled. Growth champions break out of that mold; they don’t believe if it isn’t broken, don’t fix it. Change is the rule and they actively seek opportunities for growth.
- Get schooled in the art of external framing. External framing has to do with the way you view the markets in which you operate—or more to the point, the markets in which you could be operating. Don’t look at your company the way your competitors do, or even the way your customers do. Average companies think like their customers—growth companies think for their customers. There’s a big difference.
Robert Goizueta, former CEO of Coca-Cola, redefined his company’s market as "the stomach." This view included all types of nonalcoholic beverages. Armed with this new way of looking at its world, Coca-Cola considered beverages like coffee, juice, and water as part of its business domain.
Simply stated, Goizueta’s ability to step back and see his industry in a nontraditional way completely changed the strategic direction of the company, creating numerous growth opportunities in a market that experts said was stagnant.
- Focus on value innovation. Most companies talk about value creation, which is usually an incremental improvement over existing products or services. In contrast, value innovation means thinking proactively in terms of providing total solutions for customers’ needs—often before customers realize a need exists.
- Practice "diamond mining." The big growth opportunity you’ve always been looking for may have been right in front of you all along. To mine for diamonds, ask yourself: What is it that we do differently from everyone else? How can we take what we’re already doing and exploit it in new and different ways?
- Damn the economy, full speed ahead. It seems to be human nature—or perhaps corporate nature—to hunker down and wait for the storm to pass before taking chances. But the kind of aggressive growth I advocate doesn’t require a robust economy. When things are humming along nicely, you may not feel motivated to change. Why change when you’re comfortable? Sometimes it takes watching your profit ratios fall to spur you into action! Just be sure it’s the right kind of action. And look at it this way: chances are good your competitors have their heads buried in the sand. Take a fast growth stance now and they’ll never catch up.
Of course, these suggestions are just the tip of the iceberg. But underlying them all is a theme you can’t argue with: common sense.
Taking a growth stance based on proven commonsense techniques is never a mistake—and in a recession, it could just be what saves your life. IBI