Why Your Business Growth Strategies Fail to Produce Result
- Posted by: Nkem Mpamah
- Category: Business Strategy
I have come across entrepreneurs, having very brilliant products and services, with compelling value propositions. I have equally come across CEOs with some amazing products and fantastic business growth strategies for how they want to take the market by surprise. Time and again, these strategies fail to meet the desired expectations. Why?
When companies experience failure with their products and services, two factors are responsible; the strategy adopted by the company, and an inability of the entrepreneur and his team to execute flawlessly. In this post, I will focus on the first reason, which deals with business strategies.
For a business to grow profitably consistently, such business must operate on a set of tested strategies. The trouble is, there is a misconception about the what a business strategy is, and how it differs from the company’s vision and goals.
Regardless of how fashionable strategy sounds in business and leadership circles, the best of all strategies remain educated guesses. I say that because strategy deals with the future, and to the best of my knowledge, no one can predict the future accurately, at least for now. It is difficult to tell the direction the economy will go, 5 to 10 years from today. Yet, the best business growth strategies are expected to increase revenue and grow profitability over a sustainable length of time.
Entrepreneurs, CEOs, and their teams need to understand the dynamics of business strategies. They need to be conversant with creating them, as well as understand the factors that make them work. Basically, the role of business strategies is to provide the basis for allocating a company’s scarce resources. Organizing strategic planning sessions without assessing the organization’s critical needs, and how much resources are required to address such needs could pose
Why business growth strategies fail
There is more to business growth strategies than putting ideas on beautiful PowerPoint presentations, talking through the details, and forcing them on employees. It is critical to understand the two basic types of strategies, external and internal strategies, and how each impact on another. External strategies focus on factors external to the business, for example, branding, marketing, segmentation, channels, and or customer. Internal strategies, on the other hand, deal with such factors as accountability, capabilities, culture, core competencies, mission, vision, goals, and core values.
How can you position a company as a strong brand, develop new markets, and win new customers when your workforce is not aligned with your vision? Diversification of products and services can create a competitive advantage, but can you diversify when you cannot hold your team accountable for their actions? Or, Does your culture support the key touchpoints responsible for offering superior services and creating repeat customers for your business? Businesses operate on a set of core values; but can you make progress if your team is not aligned with those core values?
By default, internal strategies drive external strategies and determine the effectiveness with which company’s objectives are achieved. In my experience, of working with entrepreneurs and CEOs, many companies focus too much on external strategies and pay too little attention to internal strategies. 90 percent of the time, this is the root cause of failure of business growth strategies.
How business strategy differentiates your business
Businesses thrive on competition, and different companies compete on different strategies to create competitive advantage. To outperform rivals and establish a unique difference, two strategies can be useful;
i. Offer superior value to customers than your rivals.
Accomplishing that requires increasing your level of This can be achieved in a number of ways such as investing in modern technology, and training, coaching and motivating employees. You could also develop greater insight on how to manage important activities better than your rivals. Ultimately, increasing effectiveness results in
ii. Create a similar value for customers at lower costs than rivals
This involves developing the capability to manage all your internal resources in ways that reduce cost and increase Companies that deliver value at lower costs charge lower per average unit costs. Or
iii. Do both simultaneously
Where possible, a company can offer value at a premium price, while creating a similar value at lower costs simultaneously for a different customer segment. Doing so requires developing robust internal capabilities and ensuring that adequate resources exist to execute them.
Steps to create effective business growth strategies
There are many ways to grow a business, one of which is to focus on differentiation strategies. Companies that adopt the differentiation strategy do things differently in the market than rivals. They pay attention to the needs of their customers to figure out how they can meet those needs. Below are five key ideas you can consider when planning your next business growth strategies.
1. Focus on the bigger picture
From my strategy consultancy experience, I can attest that implementing business growth strategies effectively requires clarity and discipline. Clarity to translate strategic intent into action, and discipline to focus on what to do, and stop what not to do. The process also leads to clarity on such key strategic objectives as core purpose and core values. Core purpose provides an answer to the question; “Why do we exist?” and enhances your ability to think more strategically. Developing that level of clarity is important also in determining how a decision in one area of your business influences other areas of the business.
Next to understanding your core purpose is customer identification. You need to define exactly whom you are meant to serve. Let me say here, that the customer is the reason for business strategy development and execution. I say that because business growth strategies give wings to value-creation, which in turn drives customer satisfaction and repeat patronage. Therefore, your business growth strategies will fail if you do not have a clear understanding of who your customers are, and how the strategies will address their pain.
- Whom do we exist to serve?
- What exactly do they want from us?
- What makes them come to us?
- What can we do now to add more value
Focusing on the bigger picture
2. Offer unique compelling value propositions
The easiest way to attract and retain customers in any market is demonstrating that your business can add real value. Without a unique value proposition, business would be a struggle, and any attempts to push forward would fail. Many entrepreneurs and small business owners struggle to add value to customers for lack of well-defined value propositions.
In the past, quality, speed, and (low) price were at the center of every company’s value propositions. Today, things have changed. Although the three factors are still important, they are not the only factors customer seek in a company’s value propositions. Let me explain.
I have hired a couple of Artisans to work for me recently. Talk about electricians, plumbers, or washing machine service engineers; I have hired them. While many have strong technical skills for their trades, they have obsolete business attitudes that impact their value propositions negatively also.
I engaged them at different times to fix different household issues. Normally, they diagnosed the issue and quoted a price, which covers the cost of materials + their labour. Once agreed, they asked for around 80% of the fee up front, which I paid. Then, surprisingly, they asked for transport fare. “Transport fare?” they say, “Yes; to buy the materials.” I have had this experience, not once, and not twice. They have so much drive for money than creating value for their customers.
Like my friend, you might blame that attitude on lack of formal education, but I differ greatly with. Although formal education is important, it is not a prerequisite for business success. Businesses must adopt a set of tested strategies, and execute them flawlessly to add value to customers. That is everything that creates success, and the essence of this post.
Poor value propositions can ruin a business
If you think my artisan businessmen are less educated, here is another one. When I wanted to join chambers of commerce, I sent emails to some in my community requesting information about membership. One of the chambers replied; and rather than providing the information I requested, directed me to their website for details. I obtained an appointment to meet with the Director-General of another chamber, which meeting turned out to be useful. Sadly, nobody deemed it fit to follow up on me, a qualified prospect, two years after the meeting.
Finally on this; my wife and I were sold a defective product at a popular body care shop in Cambridge recently. Since we could not use the product, we decided to return it to the store for an exchange. While at the shop, we explained the condition we saw the product at home and requested an exchange with a better product. Surprising, the assistant manager on duty refused. It took a formal complaint from me to the company’s head office, and a review of CCTV footages to exchange the product. Upon resolving the issue, the assistant manager was sent to train on the company’s customer care policy, which I believe is an important part of that organization’s value propositions.
Here is the point; businesses whose attitudes towards customers are obsolete will soon go out of business. Delivering unique value propositions requires superb customer care, in addition to quality products and services, offered at the lowest price, and delivered at the speed of light.
3. Be clear about where you are going
Being clear about where you are going begins with being aware of where you are in the present. It determines the distance to cover and the steps take in order to reach the destination. Many business growth strategies are failing for lack of clarity of vision and alignment with the various steps needed to reach the vision. In practice, setting goals, and executing strategies provide the step-by-step guide that companies need to stay focused on their visions.
A vision is an image of whom a company wants to become in the long-term. A goal, on the other hand, is what the company wants to achieve in order to reach its vision. Although goals and visions differ in meaning, goals provide the steps or strategies that lead to vision. Therefore it is important to define both goals and vision with absolute clarity to avoid ambiguity.
Goals are easier to express in monetary terms. For example, “We want to increase our revenue from $10 million to $50 million three years from today.” A goal stated in clear terms as this makes it easy for people to know exactly where they’re going ($50 million). It also tells them about where you are in the present ($10 million). Such a level of clarity provides the motivation for strategy execution in order to achieve the goal. Also, they, provide
Let me leave you with this interesting point about vision, and that is that no one ever reaches his or her vision and remains in business. When a company reaches its vision, such company either goes out of business for that purpose or pursues
Three key business strategy questions
The “What?” question provides answers that help to identify and focus on areas of critical importance in the business. They could be areas that need change, or further development. They could also be areas that the company needs to work on to add more value to the marketplace. Whatever the reason, it must align with the organization’s Purpose and customer’s needs. Anything contrary can immobilize the strategy execution plan.
The “Who?” question deals with identifying the key human resource that is needed to execute the strategy. The aim is to develop employees with the requisite capabilities to drive the strategic actions and achieve the goal. Talent development and motivation is a critical element of strategic planning that organizations often downplay. The case of the assistant manager of the body care shop in the ‘Value Propositions’ section above, reinforces the fact that employees need the right capabilities and motivation to effectively execute strategies.
The last question, the “How?” focuses on the process, systems, operations