Believe it or not, strategy is meant to make things easy. And the key to making things easy always boils down to this:
- Transforming an ambition into an act
This applies to anything really. “Losing weight” (an ambition) is hard, because you might not know where to begin. But “stop eating sugar” (an act) is theoretically easy because it’s just something you do, which happens to result in losing weight. It removes the ambiguity and the overwhelm of options, and leaves you with a relatively simple task.
This then is basically what any strategy should look like – a singular act in place of a broad ambition. Lovely.
Today, inspired by a newsletter from Roger Martin on a similar subject, I wanted to use this “ambition into act” technique to explain business growth.
Growth is obviously an ambition, and a vague and intimidating one at that. But it can actually be broken down into three possible acts, each of which are much more approachable. It doesn’t exactly render the task “easy”, but it certainly makes it more straightforward.
So I’m going to briefly list them, and then explain how regardless of which you choose, the strategic approach to each should be exactly the same.
The 3 ways to grow
So, no matter which way you cut it, these are pretty much your options:
- Get people to spend more with you
- Get more people to enter your market
- Expand into new verticals
Let’s break them down quickly:
Get people to spend more with you – This just means increasing the amount of profit you can squeeze from the average customer. Note, this doesn’t mean getting more customers from your competitors (increasing unit market share). That is not a viable form of growth because it encourages commodifying behaviour. It may happen as a by-product, but it shouldn’t be pursued for its own sake. Instead this approach simply means maximising the customers you have. This might come from upselling, or increasing willingness to spend more via brand or whatever, or increasing repeat purchase.
Get more people to enter your market – So this is classic “grow the pie” behaviour where you find ways to bring people into your category who aren’t currently shopping it. Again, this does not mean stealing your competitors’ customers; it means selling to people who aren’t anyone’s customers. Martin put this really nicely: “convince women to drink whiskey, get men to use fragrances, and adults to assemble Lego”.
Expand into new verticals – Finally the most difficult and high risk approach, pushing your brand into a new market, like Apple entering phones for instance. Not many brands manage to straddle multiple categories like this since generally it involves an entirely new skillset under the hood, even if the move might make sense from an external “brand perspective”.
You can see then, that when you get granular like this, it isn’t actually too hard to come up with ways you might grow. I think that if you spend literally 60 seconds thinking about your business in line with each of the above topics, you’ll probably come up with some interesting ideas you’ve never thought of before.
Now some of these will be little tactical ideas which might have the potential to deliver you, say, 5% growth. Assuming these are easy to execute you might as well do them – why not?
But what about more “strategic” ideas in these categories, which have the potential to delver 2x, 5x, or even 10x change. How do we come up with these?
Well this is where unique value comes in.
In order to generate and identify genuinely powerful ideas within these categories, you basically need a strategic yardstick to see:
- What would be right for your business specifically
- What would deliver competitive advantage
The unique value your business exists to deliver to the world is that yardstick. If you have it you can use it as the “brief” for these different forms of growth, which will not only help you spit out good ideas, but will also ensure those ideas are congruent with everything else you’re doing – thus helping build a vivd and coherent brand.
So for a basic example, if we imagine IKEA and their unique value offering of “making designer interiors accessible”, we can easily come up with a couple of on-strategy ideas for them:
Get people to spend more with you – bundle products into “design families” where the shopper will want to build out the set.
Get more people to enter your market – create a line of attractive furniture for people with mobility issues, so they aren’t limited to “hospital chic” in their homes.
Expand into new verticals – go beyond furniture into homewares and kitchens.
Pretty straight forward stuff, IF (and that’s a big if) you have a clear understanding of the value you’re going to own.
So now you can see how, when chunked down, strategic growth is actually pretty manageable process. Identify your unique value, then explore how that can be leveraged to make people spend more, bring new people into the category, and potentially move coherently into new verticals.
Kinda makes you wonder why we aren’t all billionaires, doesn’t it?
