Every new business owner looks forward to the day when their business becomes self-sustaining, and settles into a long-term growth curve that will assure financial success, as well as a lasting legacy. Unfortunately, in this age of vacillating customer trends and a wealth of new competitors scratching and clawing for a piece of the action, long-term growth requires constant focus.
In fact, many pundits argue that the long-term downfall of your business is inevitable, pointing to the fact that less than 15 percent of Fortune 100 companies have been able to sustain real revenue growth for more than a decade, and we are surprised regularly by catastrophic setbacks in bellwether companies, including General Motors, Kodak, Lehman Brothers, and Pan Am.
Others insist you can survive only if you take frequent and aggressive measures to keep a step ahead of the pack. For example, in a new book, “If You’re in a Dogfight, Become a Cat!,” Leonard Sherman, executive in residence at the Columbia Business School, suggests that you should stay out of the competitive dogfight and continually redefine the game on your own terms.
Sherman and others suggest six specific strategies for breaking away and staying ahead of the pack, and I believe every business owner should implement at least one of these on a quarterly basis:
Target customers poorly served by current offerings. The new strategy here is to focus on unmet new customer needs, rather than enhancing the offering you have – product, price, promotion, and place (4Ps). Competitors generally attack you on the 4Ps, so you need to find new territory like a cat, rather than rely only on dogfight survival.
Focus on different performance attributes. Another strategy is to find new performance attributes that relate to unmet consumer needs, and lead your message with these. This is called breakout positioning, rather than mimicking competitors. One approach is reverse positioning, or “dumbing down” your product for a new audience.
Substantially change the what, where, and how. This strategy is called breakaway positioning, since it is intended to redefine how consumers see the product, by borrowing features drawn from an entirely different product category. For example, Swatch defined their new category of watches as fashion accessories, rather than timepieces.
Use disruptive technologies to alter the value chain. Another powerful strategy is often called the Blue Ocean strategy, meant to conjure up the image of uncharted open waters rather than bloody red oceans with sharks fighting. Disruptive technologies, such as the smartphone, totally changed the value chain for cameras, video, and software.
Expand the market to new domains. New domains would include attracting business customers as well as individuals, taking your online business into retail, and diving into verticals. This strategy opens up new growth opportunities without the dogfight of taking territory away from existing competitors. It also forces you into new innovative thinking.
Plan to disrupt your own business regularly. Before the inevitable dogfights have diminished your growth and profitability, and sapped your resources, rally the business with a new “big bang” disruptive initiative, like Apple’s highly successful iPad disrupted their own personal computer offerings. This will make your current competitors irrelevant.
These strategies embody the three imperatives that Sherman and other experts advocate for effective growth strategy formulation: continuous innovation, meaningful differentiation, and total business alignment. These may sound straightforward, but they can be deceptively hard to implement, perhaps why so few companies consistently outperform the market.
The reality is that you can never relax in business, or rest on your laurels, but it’s a lot more fun when you are driving the boat, rather than being constantly pummeled by the waves of your competitors. The holy grail of long-term profitable growth requires constant attention and effort, but I believe it is within the reach of every business.
*** First published on Inc.com on 02/01/2017 ***
Martin Zwilling is the Founder and CEO of Startup Professionals, a company that provides services to startup founders around the world. See more details at www.startupprofessionals.com