There is no doubt that 2020 will go down as a year to remember. COVID-19 has disrupted the pace of business and upended many of its traditional assumptions.
If the COVID-19 crisis has taught us anything, it is that disruption can happen at lighting speed and have profound impacts on strategic performance.
Thus, companies need to continuously rethink their assumptions about business growth and prepare for an uncertain and dynamic environment.
In order to drive growth, conventional wisdom says the company has to:
- Introduce new products
- Enter new markets
- Acquire new customers
- Add more brands
- Acquire companies
- Expand into adjacent businesses
The concern with blindly pursuing such strategies is that they open the door for complexity to permeate the operations of the company.
Quality is often confused with quantity, and the pursuit for growth often causes the organization to chase rabbits running in every direction.
The organization lurches from one strategic initiative to another, at times acquiring troubled businesses that aren’t in sync with its core business model.
And like a hamster on a wheel, the company is engaged in continuous spinning but lacks meaningful forward progress.
It’s ventures in markets around the world are spread-out and disconnected.
Achieving sustainable business growth is not about doing more. Rather, it’s about doing things better, focusing your efforts on that which matters most.
In other words, understanding what customers really want and how best to serve those wants. Instead of:
- Acquiring more customers, have you considered firing non-profitable customers with steep costs-to-serve?
- Launching more products, why not kill non-performing products, variants and brands and focus on the potential few?
- Randomly entering new markets, how about you focus on the few markets where you can win and dominate?
Because of a lack of understanding of what customers really want, many businesses have bought into the myth of excellence – the false belief that a company must try to be good at everything it does.
Companies large and small are offering customers everything except what those customers really want.
Millions of dollars are spend on focus groups, surveys, customer panels, competitive analysis, and processing call-center reports, all to limited avail. Every business day, executives are inundated with data about their products.
They absolutely know the size of their market share, how products are selling in different markets, profit margin across hundreds of various items, etc.
Yet all this data is focused around customers and the product itself – not how well the product is delivering customers’ expectations.
In a world of increasingly ubiquitous product quality, increasingly similar market offerings, increasing price wars, and shrinking profit margins, understanding customers’ problems-to-be-solved is key to avoiding the frustration of hit-and-miss innovation and achieving sustainable growth.
What are some of the tell-tale signs that your company is addicted to doing more and trying to be the best at everything?
- Your recent customized new products and services against target markets are increasingly less profitable than those in the past.
- You are scraping the bottom of the barrel in acquiring new customers.
- You are struggling in some of the geographic markets you have entered recently.
- Your topline has been growing faster than your bottom line in recent quarters.
- Your selling and administrative expenses are creeping up as a percentage of revenues.
- Employees across the organization are confused about the top priorities.
- Employee morale is on a downward spiral and attrition on the rise.
As a business, you don’t want to get yourself in a position where you are the best at something your customers don’t want or need.
By failing to understand what causes a customer to choose one product or service over another, you are leaving yourself vulnerable to disruption as better products and solutions come along and customers quickly jump ship.
Most of the time businesses are selling or pushing their products and services to the market instead of appropriately shaping and delivering offerings that customers are seeking to meet their needs and wants.
It is always difficult to abandon a business model that has been successful in the past. But times have changed.
And for those companies that move fast and early, an opportunity exists to create blue oceans of uncontested market space created by this shift.
What matters is note the bundle of product attributes you bundle together, but the experiences you enable to help your customers make the progress they want to make.
You to need to switch from a supply side perspective to a demand side perspective, and start asking a few basic questions about your customers and your business:
- Under what circumstances are your customers purchasing and using your products and services versus other competitors?
- What is the one thing you are not offering your customers today that they are secretly imploring you to provide them?
- Are there segments with distinct customer expectations that you are inadequately serving with a one-size-fits-none solution?
- What are the things that have made you who you are today? What are you good at?
- What are the key five things about your business that you cannot, under any circumstances, afford to change?
- Are you investing in attributes that your customers don’t truly value, and it’s not translating into profitability and business growth?
- Which initiatives or processes need to be eliminated, curtailed or modified?
- What is changing around you that gives rise to a shift in customer behaviours and expectations?
- Who is not consuming your products today? How do their problems differ from those of your existing customers?
- What’s getting in the way of these non-consumers using your products to solve their problems?
Asking questions like these help generate insights into changing circumstances that send your customers either to you or to your competition.
This enables you to define the business you are in, the size and shape of the market in which you compete, and who your competitors are.
It also helps see customers where there were none, ideas for solutions where there were only problems, and opportunities where you least expect them.
Of course answers to these questions arise from diverse sources:
- Company internal systems.
- Convergence of emerging trends.
- Existing customer frustrations or pain points.
- People who are not purchasing and using your products or services.
- By observing how your customers use your products, especially when they do so in a way that is different from what you have envisioned.
- Looking around at other industries. There could be something that works in another line of business that might translate neatly into yours.
The promise of new markets, more customer segments, more product categories, and more brands is almost alluring, but the payoff is hardly a definite thing.
So next time you find your company succumbing to the seduction of more, just remember achieving growth is less about producing something new and more about enabling something new and important for customers.
Growth can be found where none seemed possible before. The trick is to see what everybody sees, but think what nobody has thought – differently.