I recently worked with a mid-size company whose growth had slowed. Even though they manufacture customized products, their industry is viewed as a commodity, and customers generally buy on the lowest price.
Part of the reason this occurs is because the longer time there is stability in the business environment, the more companies competing in the market look the same.
Once a company finds itself in this situation they drop prices to gain market share, and profit margins get squeezed. Everyone does it, everyone gets some business, and does okay. But no one does great.
For a company to grow it must get ahead of its competitors. This can be achieved by proactively changing the business environment.
By intentionally creating change, a company will have greater control over business outcomes, and gain a competitive advantage.
To accomplish this a company needs new ideas to create a new growth trajectory.
The problem is many times new ideas aren’t flowing from the team. The growth ideas the company generates often tend to always be “more of the same.”
As a result, the ideas that are generated are low-risk–things they company leaders and managers are confident they can accomplish.
Gain a few new customers here … Roll out a “new and improved” product there … Cross-sell a few new products into existing customer accounts …
All of these are great things to do!
But these are the ways companies grow just 2 or 3 percent—barely keeping up with the economy—and they are not going to generate big, innovative ideas and big growth.
Another challenge is company leaders don’t like to risk losing invested money, or their reputation for making a poor decision.
So they take little risk and opt for the “sure thing.” They plan very precise numbers, to be sure the numbers are achievable. They tend to choose a small, but certain gain, over a larger, but less certain gain.
So what can a company leader do to embrace uncertainty, and take bigger, calculated risks to create bigger growth, and gains?
When we encounter a problem like this, as we often do in our consulting work, we need to change the game.
The following list includes some team exercises you can use to change the game and encourage people to offer their “big” ideas.
Play a game. Frame the exercise as a competition or game: This frees people to practice taking more risk. Try running a “war game” or a venture capital presentation-style competition, with "investors" or "judges" to critique strategy, and ideas.
Encourage intelligent guessing. This is a well-informed guess or estimate using judgment that is based on experience or theoretical knowledge, and is therefore likely to be correct. Reinforce that excessive precision stifles creativity.
Change assumptions. Encourage teams to challenge the assumptions behind today’s ways of doing business. Show how changing assumptions might affect and change the outcome. Throw some sacred cow assumptions on their heads. For example, a manufacturing facility asked: “What if we stopped worrying about capacity utilization, and instead focused only on customer satisfaction?"
Challenge perceived risks. Encourage teams to search for a way to eliminate or mitigate the risks, rather than avoiding high-risk paths altogether.
Involve outsiders. Getting customers, external partners, advisers, facilitators, real investors with outside, fresh, and diverse views can yield immense benefits. If it’s not practical to include people from outside your company, consider including employees from other functions.
Cultivate diverse teams. It's not hard to imaging that if everyone on the team thinks the same, that there will not be much innovation and new ideas. Research has indicated that diverse teams are smarter, make better decisions, are more innovative, and have financial returns above the industry mean. Ensure there are people with different thinking styles on the team. Include creative people, analytical people, "nuts and bolts" hands-on people, and people who are relational and bridge-builders.
Companies that want to grow must get ahead of their competitors. To do this change the game, and throw your competitors off balance.
Most people avoid change, uncertainty, and risk.
By making change intentionally happen, you will have greater control over business outcomes, gain a competitive advantage, and create a new growth trajectory.
Please contact me at brichter@profit-strategies.com to discuss how we can help you change the game to create a new growth trajectory.