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Grow for Today, or Grow for Tomorrow?

Deloitte Debates


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Making your current business grow is one strategy. Growing beyond your current business is another. Which one offers greater benefits and how important is the difference?

Deciding to grow a business is the beginning, not the end, of a complex strategic planning process. One of the most important decisions is where to look for growth: in familiar areas that offer quick returns, or in products, services or markets that represent a departure and may take time to cultivate. The answer can determine not only what your business does next, but what it becomes. Should you seek growth opportunities close to the core, or farther afield?

Here’s the debate:

Grow where you know.
Focusing growth in areas of core competencies and existing business segments aligns with the identity, skills and differentiation you’ve already built. Companies fail when they attempt to grow too far from the core.
What you know is eventually going to change.
There’s dynamism in almost every sector. You can wait for change to come and see how quickly you’re able to adapt - or you can develop a plan that envisions multiple futures then build or acquire the capabilities and assets you will need.
Give the people what they want.
Listening to customers is the preferred way to help ensure you meet their needs. It is no longer a “push” world; you need to “pull” from market expectations and design for success. Customers have shown they will revolt when companies don’t listen.
Give the people something only you can offer.
When you create a new market, you begin as its only occupant - and you can create barriers to other entrants that keep your offering exclusive for a finite but lucrative time. Customers often don’t know what they need.
Take risk out of the equation.
Any growth initiative has costs and hurdles. Why add uncertainty? When you operate on familiar ground, the returns and the timetable are easier to predict.
Innovative growth is a hedge against risk.
Smart growth considers uncertainty in its planning. Investing in the future—though uncertain—creates pathways for growth and helps prevent the core business from becoming obsolete.
Your people are already on board.
It’s easier to win buy-in and commitment from your team when the new work looks and feels like the business they’re familiar with.
Your customers may or may not come with you.
Leadership is hard. People rally to bold visions. Growth engenders a future that can create excitement and enthusiasm.

My take

David Martin, Principal, Deloitte Consulting LLP

You live in the present. You will live in the future. Invest in both.

Focusing growth on core areas and short-term returns may feel more conservative because it involves familiarity and comfort. But in many cases it may actually be the riskier strategy. Similarly, betting big on brand new businesses and markets is also fraught with risk and uncertainty.

What then can a wise company do to create growth with an appropriate eye toward risk? I believe the answer rests in the duality of growth: deliver and grow the business of today while simultaneously creating growth for the business of tomorrow.

A “Business of Today” growth strategy will focus on existing customers, products and markets—the core. Your typical growth levers here will be market share, pricing, mix optimization and related tactics. A “Business of Tomorrow” strategy is much more likely to focus on entirely new markets, disruptive product launches and creating consumers where non consumption exists today.

Today and Tomorrow are not separated merely by time. The Business of Today and Business of Tomorrow are separated by uncertainty as well; after all, tomorrow is unknowable. This uncertainty introduces risk, impedes decision making and often causes companies to mistake discussion for strategy.

Creating growth in this duality requires you to recognize the different needs of the Business of Today and the Business of Tomorrow. First, you must identify the capabilities you need and either build or obtain them. Exploring uncharted territory requires different skills, experiences and inclinations from driving growth in the core business. Different metrics are required to measure success. While traditional metrics such as growth rate or time to market may be appropriate for Business of Today initiatives, non-traditional metrics such as growth rate above market or percentage of revenue from first-to-market may be better predictors of success when entering new spaces.

By taking what we call a Cell-Based approach to growth strategies, companies can identify the key opportunities and measures in each part of the business - whether today or tomorrow - and build the required capabilities to grow effectively.

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