In the first of a five-part Industry Insight series on preparing a business for growth, I examine the key components of a successful business growth strategy.
Business growth is about increasing profits and revenues. At no time has sustainable business growth been more important than it is at present for the South African economy; in a world where stasis equals death, it`s almost impossible to imagine a business that is not thinking about how to do more of what it does.
This is largely due to the effects of globalisation. Here globalisation refers to increasing free trade, the outsourcing of jobs to emerging countries, the opening of new markets, fewer trade barriers and global economic integration.
Globalisation impacts on SA via trade, investment, capital flows, technology, prices, growth and employment. As part of the global village, SA cannot isolate itself.
In a world where businesses face increasing competition, globalisation creates markets and opportunities. Paradoxically, while globalisation is opening the world up to us, it is forcing us to evaluate and streamline our business processes. Particularly important in the South African economic context, globalisation is forcing us to become competitive in the arena of world markets. It is driving SA to improve efficiencies, and to make its products and services more attractive to global customers.
While globalisation is opening the world up to us, it is forcing us to evaluate and streamline our business processes.
Ian Widdop, Director, Growth Partners
If South African businesses want to take on their counterparts around the world, they have to prepare for growth. The agendas of our global competitors are driven by growth, and by shareholders and investors who expect regular increases in revenues and profits.
The global environment is very important for SA, given our reliance on this environment for growth, investment and employment. Our marketplace is now the planet, rather than the few clandestine markets of just over a decade ago. As opposed to competing on a national scale, we now compete with countries like India and China, which are characterised by economies of scale, low labour costs and high technology.
Against this backdrop, the following factors become key to any business growth plan:
* Setting objectives, strategies and structures
* Knowing markets and customers
* Understanding and developing capabilities
* Innovation
A successful business interacts symbiotically with these factors in a multi-directional relationship that is continuous and iterative. The higher the degree of alignment between these elements, the more successful the company is guaranteed to be, meeting the expectations of investors and ensuring the level of growth they demand of the business.
Objectives, strategies and structures form the cornerstone of any successful business growth plan, as do the definition and setting of roles and responsibilities: who does what, and how do you measure what they do? If the company does not get this right at the outset, all its other efforts will be wasted.
Segmenting markets focuses on knowing them in more detail and, as a result, developing the ability to segment customers and understand their requirements. It`s really about specialisation - people are becoming much more specific about their demands, requiring goods and services that only a specialised offering can fulfil.
We live in an environment where customer demands predominate because competition is both relentless and increasingly international. In this fast-paced world, where people have access to up-to-the-minute information and real-time is everything, people simply want things quicker and better.
As a result, the world of selling must accommodate a dramatically changed world of buying. Suppliers are discovering that increasingly sophisticated segmentation techniques are yielding invaluable insights into buyer behaviour and that different segments have very different needs. Some require high-tech, high-touch, others require low-tech, low-touch, while some require both.
Understanding and developing capabilities refers to people, products, services, or solutions. It also takes into account processes: how does the company do what it does to get the right customers?
Business transformation is an ongoing imperative. Sustaining growth, therefore, relies on finding unique business value - on matching markets with capabilities. Building relationships, ensuring credibility and maintaining trust are all key to the sustainability of a business. Customers may change their requirements on an ongoing basis, but if the company has secured their trust, and built its credibility as a valued supplier - while focusing on innovation - it will have the ability to meet their changing requirements, continuously manage opportunities and make them grow.
Today`s business executives are required to spend the majority of their time focusing on the internal questions of objectives, strategies and capabilities, and on the external questions of markets and customers. The dictum is simple: know your customers; know your stuff. Matching the two results in a successful business.
In the next Industry Insight, I will provide an in-depth look at setting objectives, strategies and structures.
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