You know your company has growth potential but you’re not sure how to best make this happen.
Diagram 1
Your instincts may well be to ramp up your sales and marketing – after all more sales gives growth.
Here’s another way of thinking about this. Our diagram opposite shows the profile of a typical sustainable growth company. We’ve arranged this as an arrowhead (Diagram 1) as a metaphor for where the company’s going:
- You can see typical expenditure levels against annual Sales allow for a surplus cash flow and thus the ability for you to continue investing in Development;
- Companies who use this profile well can expect to grow from 10-20% annually;
- Development, shaped by Governance and Management guides the way the company travels into the future;
- So the first areas to focus on are where you want to get to – and, what well-executed Development is required.
Let’s now dissect Development(Diagram 2).
There are thus two key issues:
- How well the Development is planned to effectively invest up to 10% of annual Sales into supporting sustainable growth;;
- And, then how well Development is executed.
Key factors for the first are: (Diagram 3)
- Understanding the gap between where you are and where you want to get
– ie; ensuring it fits with your view of the future; - Identifying new business opportunities (including for existi
ng products and services) – because existing business almost always declines over time; - Validating these to make sure they will make sense in the market and add value to the company –ie; customers actually want them;
- Ensuring that chosen developments are within your competence – ie; you’re not going to make a mess of it.
At a very simple level, this is like reading the exam questions carefully before you start answering them. It saves a lot of confusion and pain later on.