building successful business growth

CONTACT:

http://www.schafferresults.com

[email protected] ofc

Business Growth

Building a Successful Growth Strategy & Track Record

http://www.schafferresults.com/


mailto:[email protected]

contact: [email protected]/5/2011

Implications of Organizational

Capability

Successful Growth Strategy is Built on a Firm’s Value Chain –Discovering Where Organic and Integrative Initiatives Can Add Value

Technology

Development

Product

DesignManufacturing

Marketing &

DistributionService

Rev. +_%

Earn. +_%

Rev. +_%

Earn. +_%

Impacts Growth

__ __%

ROA

_ _%

Revenue

Growth

_ _%

Earnings

Growth

+

Structure

Staff

Strategy

Skills

Systems

Style

Superordinate

Goals

Formulatio

n

of

Strategic

Objectives

Transaction

Transition ImplementationBusiness

Improvement

Monitoring & Evaluation

Organic Value Chain

M & A Value Chain

Set the Stage: Build Growth Culture: 4+2, 7S, others

Primary:

•Strategy

•Execution

•Culture

•Structure

Secondary:

•Talent

•Innovation

•Leadership

•Mergers and partnerships

4+2

Customers

(Segments,

Groups)

TIME0 mos. 12–36 mos



Growth Strategy: Research by Chris Zook Yields Two Master Conclusions for Companies That Want to Grow…

1. Most sustained, profitable growth comes when a

company pushes out the boundaries of its core

business into an adjacent space

2. Companies profitably outgrow their rivals by

developing a formula for expanding those boundaries

in predictable, repeatable ways.

• Companies that have hit upon a repeatable formula show

success rates as high as 50%; some drive their rates up to 80% or

higher

• Repeatability allows the company to systematize the growth and,

by doing so, take advantage of learning-curve effects

Chris Zook, James Allen, ―Growth Outside the Core,‖ Harvard Business Review, December 2003.



Repeatable Formulas Matter

The Majority of Standout Growth Companies Have One or Two Powerful,

Repeatable Formulas That Generate Successive Waves of New Growth

• Never put the core business at risk

• Never make a move unless you have a good shot at being one of the top three

players in a new space.

• Pursue only one move at a time

• The most important screen for new adjacencies is to limit the number of new

variables managed to a small number: one

These formulas are applied by leaders who approach growth strategy with

a strong sense of discipline and restraint

Typically, growth-standout companies grew three times faster than did the average company in their respective

industries, returning 22% annually to shareholders.

Chris Zook, James Allen, ―Growth Outside the Core,‖ Harvard Business Review, December 2003.



Type Example

Expand Along The Value ChainA difficult adjacency move

De Beers extended its diamond business from wholesaling into retailing

Grow New Products and Services IBM moved into global services, which now constitutes 50% of the company’s revenue and pretax profits

Use New Distribution Channels

EAS made minor changes in formulation, packaging, and celebrity sponsorship of its Myoplex sports bar and moved from a niche position in specialty nutrition stores to become the leader in its category, selling to Wal-Mart

Enter New GeographiesVodafone expanded from the UK to Europe, the United States, Germany, and Japan

Address New Customer Segments… perhaps by modifying a proven product or technology

Charles Schwab expanded its advisory services for discount brokerage customers to target high-net-worth individuals

Move Into the “White Space” With a New Business Built Around a Strong Capability (the “Blue Ocean” Strategy)

American Airlines created the Sabre reservation system, a spin-off now worth more than the airline itself. Sabre, in turn, went on to create a new business adjacency of its own in the online travel agent Travelocity

Growth Into An Adjacent Market Space Can Take Place in One of Six Ways

Michael Treacy, ―Double-Digit Growth: How Great Companies Achieve It — No Matter What,‖ Portfolio, August 2003.



In What Dimension/ Direction Does Your Growth Strategy Extend?

Product

Customer

Growth Driver Example

More revenues per existing customers/channels via new products

Dole• Bananas and pineapples

• Fresh fruit and vegetables

• Packaged goods: desserts, juices

• Fresh prepared (pre-cut salad)

Offering tailored to meet (new) customer segment needs

Club Med• Single party-oriented vacationers

• Family vacations

Similar offer extended to new regionsGeography

Coca-Cola• US

• Europe

• Other developed countries

• New entry in emerging markets

ChannelSimilar offer reaching customers via new medium • Theme parks

• Studio/Tour attractions

• Product licensing

• Retail

Disney• Movies

• Television

• Videos

• Cable subscription

• Hotels



Current State

Where are we? How do we know? What’s our fact base?

Desired Future State

VISION & VALUES

STRATEGY & GOALS

The Need for Change:

Complications

BUSINESS PROCESSES

ORGANIZATIONAL STRUCTURE

IMPLEMENTATION

REINFORCEMENT

Source:

The Strategic Change Process: Follows a Set of Steps



What Are Your Business Growth Objectives?

How will your business achieve sustainable growth in ROA, revenue and profit, without putting results in the short- to medium- time-frame at risk?

• Build core business

• Avoid contracting in existing shrinking market

• Fill/ use existing capacity

• Diversify into adjacent business offerings

• Enter new markets

Schaffer Consulting helps clients achieve growth objectives through a structured process of development:

• Define clear thinking – shared business logic, terms definition and operating-model ―languages‖

• Surface data – just the right amount – to support effective analysis and prioritization of opportunities

• Drive decision-making processes through facilitated organizational-management and workforce engagement

• Generate prioritized set of options

– Organic and internal-growth, and

– Acquisition/ partner development

• Enable effective organizational implementation, execution, and change



Building An Effective Growth Strategy Means Pursuing a “Parallel Path” of Activities for Your Executive Leadership & Working Teams…

Phase 1: Initial Assessment/ Strategy Hypotheses

• Top team work, strategy outline, current state assessment, leader development

• Align the organization/ key teams through facilitated meetings and the use of common

language, tools and frameworks

• Agree conceptually about

– The likely business scenarios with which we’re working

– The areas that present the greatest growth opportunities, and

– The functions within the business most in need of investment

Phase 2: Additional Internal and External Analysis

• Evaluate (and either confirm or iterate) initial assessment/ strategy ideas using both

internal and external sources of data. Ideas to be evaluated include:

– Markets: Sizing, segmentation and competitive attractiveness

– Products: Size of the opportunity, investment required, risk assessment

– Internal investments in capability building in functional areas: determine competitive necessity and

perform a make versus buy assessment

– SWOT analyses of your organization relative to key competitors in each product area

– ―Fit‖ between your organization’s

described strengths and desirable opportunities

– Team engagement re: findings …On a Rapid Cycle



Building An Effective Growth Strategy Means Pursuing a “Parallel Path” … On a Rapid Cycle (continued)

Phase 3: Summarize Information, Identify and Prioritize Opportunities, and Develop Strategic Plan

• Establish option evaluation criteria for both internal investment and targeted acquisitions

• Prioritize opportunities and make trade-offs: (You can make the organization do anything management wants--but you do need to make wise investment choices from among universe of desirable possibilities)

– Use facilitated organizational alignment meetings, data/ analyses to support

• Identify next steps for all groups of opportunities & key work teams

• Refine & update strategy outline based on learning

Phase 4: Execute Plan

• Implement initial internal growth initiatives

• Capture learning/ evaluate org capability development

• Acquire initial acquisition targets, complete deals and integrate

• Achieve growth objectives

• Do it again – iterate plan

Approach Summary: In Parallel…

• Define a Common Strategy/ Know

What’s Important to Test

• Get on the Same Page/

Work Together

• Collect Data

• Test Alternatives

• Make Decisions

• Iteratively execute the Plan



Process to capture

market data in the

development of

objectives and

financial targets

What initiatives can be

undertaken to eliminate the gap

between sales projections and

strategic objectives

Metrics and reporting to support

field efforts and provide visibility of

progress to management

Establish sales plan by

key customer or

segment

As-Is State

Ea

rly W

ins

20

08

20

10 Strategic

Objectives

PerformanceManagement

OperatingPlan

Ambition Statements

Future Performance

End-State Descriptions

Key Goals

Business Benefits/Scorecard Metrics

$ Benefits

Non-Quantified Benefits

Intangible Benefits

Create market-data &

sales projection analyses

to validate strategic

objectives;

Run Strategic

Experiments to test

assumptions in markets

Validationof Assumptions

Gap Analysis

Build case for change/

growth; Set

Leadership, roles,

responsibilities;

Mobilize

Engage Leadership

Build a Transformation Map to Outline and Manage The Growth Initiatives - For Each Key Business



?Phase 3 Begins

Growth Program Development Process

Transition and Implementation

Workstreams

Organizational Assessment and Planning

Communication Plan Development and Execution

Change Planning & Implementation

Functional Area Planning & Implementation

Value Driver Analysis

Change Design Workstreams

SWOT

Management/ Stakeholder Approvals

(Other Diagnoses/ Tools As Needed)

We Help Clients Create Successful Growth Through Design, Organization & Implementation Activities Operating “in Parallel”

Milestones

Stage

Intervention(s) identified

Definition complete

“First Projects”/ program

architecture complete

Intervention/ Event

Execution

Close + 100 Days

Phase 1: Formulationof StrategicObjectives,

Due Diligence

Monitoring & Evaluation

ImplementationGrowth/

Improvement

Decisions, Events Transition

to Execution

Foundational Integration

Process Workstreams

Overall Growth Program Project Management

Team Formation

Knowledge Capture & Capability Building

Phase 2 Begins

Successful Major Growth

Efforts Put an Emphasis on

Planning, Value Capture,

Communication, Culture and

Employee Development



Drive Growth in ROA, Revenue, ProfitabilityUnderstand Capabilities, Markets, and Opportunities

Delivering Results Requires Discipline

TIME FRAMESTART 36 mos.12–24 mos.

3–6 mos.

Some Models -Portfolio Analyses:

• Value disciplines

• 4+2

• 7 S

• Value Chain

• Growth tools

Establish Frameworks and

Common Language

• Organizational assessment

• SWOT, Capabilities

Internal Assessment

• SWOT

• External position vs. competitors;

• Value Proposition

External Assessment

This approach has delivered results at global companies such as • Fuji • Sumitomo Heavy Industries • Cadbury–Schweppes • Intermagnetics/ Philips Medical

• Options identified

• Trade-offs made

• Initial acquisition(s)completed

• Initial Organic growth initiatives completed

• Internal capabilities (like delivery time) improved

Focused Growth Plan Implemented

Growth InitiativesIntroduced

Meet/ Exceed Mid-Term Plan

• ROA

• NOI

• Revenue

Refine Assets, Opportunities, Strategies, Scenarios

Implement Growth Strategy



High-level Growth Strategy Work Plan (Sample)Timeline Varies Based on Client, Urgency, Resources…

Feb

• Work planning

• Background data analysis

• Clarify charter

• Kick Off [date]

Project Set UpFundamentals

OverviewExternal Market

Research

Develop Detailed Implementation

Plan

Mar Apr May-Jun July-Sept

• Org capabilities & market

• Preliminary interviews

• Early hypothesis generation

• Refine scope

• Update meeting [date]

• Understand customers & markets

• Competitive intelligence

• Industry benchmarks

• Identify potential growth areas

Internal Data Analysis

• Detailed review of performance and operations.

• Customer, channel profitability

• Identify growth options

• Organic

• M&A

• Recommend strategic direction [date]

• State strategy

• Outline organizational impact

• P&L, O.P. plan direction

• Costs, ROI

• Rollout/Transition plan

• Sensitivity analysis

Refine Scope

Understand How

Business Model Works TODAY

Understand Position in Markets, Opportunities and Future Potential

Opportunities

Generation

and

Prioritization

Senior Approval on Strategic

Direction

Deliver Targeted

Growth Plan

Preliminary Business Assessment

Schedule TBDThree Months, estimated…



How Does Your Business Plan to Achieve Its Growth Objectives?

Strategy is the evolution of a central idea over continually changing circumstances.

-- Helmuth von Moltke,19th c. Prussian general

Schaffer Consulting is the global leader in helping leaders and organizations to focus on rapid and frequent results as the most powerful engine for achieving critical performance and strategic outcomes, and developing organizational capability to drive and sustain change.

Over the past 50 years, CEOs and other leaders around the world have relied on our experience and methodologies to catalyze momentum and produce tangible results in growing revenues, integrating acquired businesses, restructuring/ reducing costs, gaining efficiencies and simplifying their organizations.

We created the ―Rapid Results Approach‖ used by hundreds of organizations large and small to produce breakthrough results. We also worked with GE to develop its famed WorkOutmethodology for accelerating results while building a culture of speed, simplicity and transparency. For more information: www.schafferresults.com

Schaffer Consulting helps clients to achieve objectives through a structured

process of engagement:

• Defining clear thinking – shared business logic, terms definition and operating-model ―languages‖

• Rapidly engaging key leaders and participants

• Surfacing data – just the right amount – to support effective analysis and prioritization of the

opportunities in your ―risk portfolio‖

• Driving decision-making processes through facilitated organizational-management and workforce

engagement

• Generating prioritized set of options

• Enabling effective organizational implementation, execution, and growth-results

Develop and implement a Growth and Innovation Approach that fits your organization




Contact Us

Evan Smith

[email protected]

http://www.schafferresults.com

914.613.3187 direct

203.322.1604 office


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