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FIVE BY FIVE EBOOK SERIES

FIVE

MYTHS

ABOUT BUSINESS GROWTH
Other eBooks in this five by five series

5 Critical Leadership Priorities for Growth
5 Trends for Business Growth
5 Threa...
Introduction.
The relationship between politics and business growth has long been
a flashpoint between competing political...
Myth #1
Companies can
buy growth.

5 Myths About Business Growth
A proxy for real growth?
Modern finance encourages companies to use mergers and acquisitions
(M&A) to “buy growth.” This p...
Myth #2
Finance creates
growth.

5 Myths About Business Growth
The ultimate metric of growth?
In some finance-dominated corporate environments, growth can be viewed
as a mathematical ou...
Myth #3
More growth equals
more jobs.

5 Myths About Business Growth
Being productive for growth?
In many industries, growth has become synonymous with an expansion in
hiring. Business leader...
Myth #4
Growth is
tactical.

5 Myths About Business Growth
From fulfilling to creating demand?
Many companies view their growth exclusively as a function of their marketing
mix and ...
Myth #5
Growth is a
“black art”.

5 Myths About Business Growth
Mysterious and difficult to master?
With well-known stories about Silicon Valley startups and breakthrough companies
going...
Conclusion.
Growth-focused companies dispel the many myths associated with growth
by focusing on the factors that really d...
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5 Myths About Business Growth

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The relationship between politics and business growth has long been a flashpoint between competing political ideologies. Reinforcing the idea that growth is essentially a function of politics, terms like sequestration, quantitative easing and austerity are now being viewed as the determining factors in whether companies can grow in the future.
This is, of course, a myth.
Companies that are inherently growth-focused replace political ideology with the pragmatism needed to achieve and sustain growth. These companies acknowledge that they have virtually no control over political outcomes, and that some level of political volatility will always be present in the business environment. From this understanding, rather than be transfixed or even paralyzed by these factors, they look to convert the ever- changing political winds into opportunities for growth and expansion.
The myth that growth is political is one of many myths that can inhibit the ambition and future growth prospects of companies. As the pursuit of business growth becomes even more urgent, companies must overcome these myths.

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5 Myths About Business Growth

  1. 1. FIVE BY FIVE EBOOK SERIES FIVE MYTHS ABOUT BUSINESS GROWTH
  2. 2. Other eBooks in this five by five series 5 Critical Leadership Priorities for Growth 5 Trends for Business Growth 5 Threats to Business Growth 5 Opportunities for Business Growth learn more by reading GrowthThinking: Building the New Growth Enterprise by Keary L. Crawford and Wayne A. Simmons 5 Myths About Business Growth
  3. 3. Introduction. The relationship between politics and business growth has long been a flashpoint between competing political ideologies. Reinforcing the idea that growth is essentially a function of politics, terms like sequestration, quantitative easing and austerity are now being viewed as the determining factors in whether companies can grow in the future. This is, of course, a myth. Companies that are inherently growth-focused replace political ideology with the pragmatism needed to achieve and sustain growth. These companies acknowledge that they have virtually no control over political outcomes, and that some level of political volatility will always be present in the business environment. From this understanding, rather than be transfixed or even paralyzed by these factors, they look to convert the everchanging political winds into opportunities for growth and expansion. The myth that growth is political is one of many myths that can inhibit the ambition and future growth prospects of companies. As the pursuit of business growth becomes even more urgent, companies must overcome these myths. As seen in: VentureBeat Magazine © 2013 The Growth Strategy Co. www.growthstrategy.com 3
  4. 4. Myth #1 Companies can buy growth. 5 Myths About Business Growth
  5. 5. A proxy for real growth? Modern finance encourages companies to use mergers and acquisitions (M&A) to “buy growth.” This process results in the application of favorable accounting treatment that allows companies to adjust their growth rates retroactively—a proxy for real revenue growth. Growth-focused companies don’t “buy growth” to mask the growth challenges of the past. Rather, they focus their M&A activities on emerging technologies, complementary offerings and strategic assets that provide the differentiation, first-mover advantage and access to growth markets that can drive high growth into the future. How can we defy the failure rates for M&A? ctivities their M&A a focus hnologies, merging tec on e d offerings an plementary com sets strategic as © 2013 The Growth Strategy Co. www.growthstrategy.com 5
  6. 6. Myth #2 Finance creates growth. 5 Myths About Business Growth
  7. 7. The ultimate metric of growth? In some finance-dominated corporate environments, growth can be viewed as a mathematical output of complex, internally focused formulas and financial engineering. In the 1990s, for example, while revenues fluctuated or generally trended downward, Exxon was famous for building its culture and communicating its value by using the internal metric of return on capital employed (ROCE). In contrast, growth-focused companies view their health and viability, first and foremost, through the ultimate metric of top-line revenue growth and their ability to sustain that growth. Internal metrics are critical, but top-line revenue growth is an outside-in measure that determines the ultimate outcome—the rate at which companies are creating value for customers. Are we able to forecast our future growth prospects? th and their evenue grow top-line r growth is an sustain that ability to termiens ure that de eas outside-in m outcome the ultimate © 2013 The Growth Strategy Co. www.growthstrategy.com 7
  8. 8. Myth #3 More growth equals more jobs. 5 Myths About Business Growth
  9. 9. Being productive for growth? In many industries, growth has become synonymous with an expansion in hiring. Business leaders exacerbate this misconception by measuring their “status” by the number of the people working under them. However, as the Federal Reserve Bank of Chicago reports, “work that took 1,000 people in 1950 now requires only 170 people.” Growth-focused companies concentrate on productivity relative to revenue growth, rather than headcount, to determine their competitive advantages and the long-term sustainability of their enterprises. Can we deploy new technology to scale our productivity? productivity e n t ra t e o n conc ue growth ive to reven relat headcount ra t h e r t h a n © 2013 The Growth Strategy Co. www.growthstrategy.com 9
  10. 10. Myth #4 Growth is tactical. 5 Myths About Business Growth
  11. 11. From fulfilling to creating demand? Many companies view their growth exclusively as a function of their marketing mix and sales force. Unfortunately, marketing campaigns and sales activities are inherently tactical and designed to deliver short-term results. Growth-focused companies also focus on improving medium (Horizon 2) and long-term (Horizon 3) growth prospects by creating highly differentiated customer value propositions and pursuing first-mover advantages. This approach takes companies from tactically fulfilling demand to strategically creating the new demand that leads to high growth. Can we capture first mover advantage in growth markets? illing demand actically fulf from t ating the tegically cre t o s t ra new demand © 2013 The Growth Strategy Co. www.growthstrategy.com 11
  12. 12. Myth #5 Growth is a “black art”. 5 Myths About Business Growth
  13. 13. Mysterious and difficult to master? With well-known stories about Silicon Valley startups and breakthrough companies going from dorm rooms to oversubscribed IPOs, high-growth can be easily viewed as a pop culture phenomenon rooted in some sort of “black art.” In practice, regardless of the size, growth-focused companies go through an entrepreneurial thought process similar to that of a startup. This often involves using outside-in observation to formulate a divergent view of the future, applying intellectual curiosity to identify areas of opportunity within that future, and executing on the ability to accept the risks necessary to convert these hidden opportunities into high growth. How can we make growth less daunting? ompanies go th-focused c grow epreneurial ugh an entr thro cess thought pro © 2013 The Growth Strategy Co. www.growthstrategy.com 13
  14. 14. Conclusion. Growth-focused companies dispel the many myths associated with growth by focusing on the factors that really determine business growth: Reframing markets, volatility and external forces to uncover hidden sources of growth Repositioning tangible and intangible strategic assets to create high barriers to entry. Renewing products, services, and experiences to create unique sources of customer value and competitive differentiation. Realigning the competitive landscape by strategically changing the basis of competition; and Reinventing business models to create structural competitive advantages. Left unchecked, these five myths, and the many others associated with business growth can be paralyzing. Fortunately, individual companies can take a different approach by formulating their own views and taking preemptive action to achieve and sustain business growth. Other eBooks in this five by five series 5 Critical Leadership Priorities for Growth 5 Trends for Business Growth 5 Threats to Business Growth 5 Opportunities for Business Growth learn more by reading GrowthThinking: Building the New Growth Enterprise by Keary L. Crawford and Wayne A. Simmons The information contained in this publication has been obtained from sources believed to be reliable. The Growth Strategy Co. disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This publication consists of the research and experiential opinions of The Growth Strategy Co. and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice.

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