In today’s disruptive world, if you are not considering growth through innovation, you are not in the game of seriously growing!
Any CEO or Managing Director worthy of their title is continually looking for ways to grow their business. But how many seriously look at and understand that innovation must be at the forefront of any growth strategy? This is not a hollow claim as it is backed up by significant research and data analysis of which we are fortunate to have access to.
Let us look at what options you might consider growing your business:
Yes, there is no doubt that by providing a great service or product and with strong brand recognition, organic growth can be a good source of passive growth. However, what we are saying here is that we are just relying on those that find or hear about us “organically” to then seek us out and engage with us. This is a good strategy for those businesses that do not have aspirations to do more than what they are. However, the reality is, that while you are relying on organic growth, your competitors are plotting to steal your customers; by what means? Innovation. In short, organic growth is not for those with higher aspirations to grow exponentially.
Stealing Competitor Clients
To achieve this, you are relying on your ability to communicate a value proposition that is far superior to your competitors. Do you think your competitors will respond to this? If they are worth anything at all, you bet. And now what position are you in?
The reality is that in most situations, this becomes a “price war”; who can attract the clients on the basis of what the clients see as a cheaper proposition. The result? Usually, a fight to the bottom between you and your competition that does not yield strong profitability and is a short-term strategy that often fails in pain for everyone.
Acquisitions can be a great strategy to expand your offering and client base immediately. It certainly has merit for those who are skilled in identifying acquisition targets, conducting due diligence, and assessing the synergies of a merger. But for the masses, there are many complications and add to this the fact that so many acquisitions fail to materialise the benefits first sought. For many mid-tier privately owned businesses, it is a challenging space to succeed, but should be in the mix of growth strategies.
Expanding your business into other regions or countries is a realistic growth strategy and we would absolutely advocate the research and potential development of such strategies. However, if you are simply expanding into an already existing market with existing incumbents, you are potentially reverting back to the strategies of stealing customers. Again competing on a basis of our product/service is “better” than the competitors; but this time, in geographic markets in which you have no established brand presence. It is a long-term strategy that requires substantial investment and fortitude to persist and carries with it many risks.
Now let’s look at growth through innovation!
From studies conducted by our strategic partners, Attractor Network and USA based Growth Science, we know the following:
Incumbents (established companies in a given marketplace) do have a 64% rate of success when introducing a new innovation on the basis of “better performance”. That is, that their innovation does the job “better” than competitors. This, in comparison to “new entrants” i.e. start-ups, who enter the market on the basis of “better performance” who have a survival rate of only 14%. The interesting statistic from this is that even incumbents who succeed with their innovative product at 64%, still on average only achieve growth rates of around 3%.
But here is the most interesting statistic from the studies.
In both cases, those that pivoted their market entry strategy to enter the market targeting the “low-end” or “non-consuming market”, as opposed to targeting existing customers, achieve average growth rates of over 70%. (Think Uber, AirBnB – these were low-end non-consumption market entry strategies that disrupted the market).
How many organisations achieve natural growth rates of 70%? Not many.
So even though you may not know the answers to questions of what innovation should we develop?; for whom we should develop?; how do we develop an innovative product or service?; the very least any credible CEO or MD should be considered in developing their growth strategies is to include innovation as a credible pathway to exponential growth.
With that mindset and understanding that significant growth comes from continually innovating, then there is a job to be done by instilling an innovation culture into your organisation. Learning and understanding how to develop this culture, find innovative ideas, assess market opportunities and validate market intelligence, develop commercialisation paths and launch new products into highly targeted high growth sectors can reap substantial growth opportunities (and help is here to achieve this).
In the past, many viewed this option as highly risky with significant investment required and lengthy-time periods to do the above. However, as Advivo Innovation & Commercialisation Partners have developed the use of data science tools in conjunction with our strategic partners, the ability to validate market opportunities can come rapidly with significant market intelligence that allows you to mitigate risk while increasing the probability of success.
Yes, that’s right. We ourselves, are disrupting the market by making these tools more accessible to a greater number of businesses that can have a profound impact on the success rates of innovative product launches. And with that, comes significant growth rates and massive returns to those that embrace a new way of growing your business.