Unleashing Growth Opportunities
“Whether the business is a beachside taco stand or a multinational hotel chain, every successful business has one important holistic core element: a growth mindset.” Maria Wu, Forbes, August 2021
I could not agree more wholeheartedly with fellow entrepreneur Maria Wu, Founder and Chief of Maud Medical Clinic in Calgary, Alberta. Without a growth mindset, no business can reach its potential. With a growth mindset and the right tools to implement it, a company can realize its full potential. And yet there is reluctance. Some might say of a successful business, “if it’s not broke, why fix it?” There are others plagued by uncertainty, anxiety about the future, and just simple ennui. However, eschewing a growth mindset, for whatever reason, will leave a business in a vulnerable and less competitive position. In the 21st Century, a successful business must operate with a growth mindset. And yet, the growth mindset is only the visible part of the iceberg. There is indeed a whole discipline that needs to be acquired to generate significant growth and to decrease risks.
Most Fortune 500 companies are limited in their ability to build an idea quickly, iterate with the market, launch a start-up, and scale revenues. They may have limited innovation and product development capabilities or too many of them. They may be creating barriers to innovation due to a slow pace of operations resulting from a lack of urgency. Alternatively, they may have a high level of risk aversion because the legal department or the CFO is more inclined to protect the existing business than to take on the risk of creating a new one. In some cases, they lack corporate entrepreneurs to bring the concept to market and scale it. Corporate entrepreneurs might exist, but they often do not receive the necessary support, as they may be perceived as disruptive to the traditional business approach. They may be reluctant to invest in non-core capabilities, such as hiring, or fear investing their budget before seeing results.
In this paper, we examine the importance of intentional growth, including its key benefits and common impediments to growth. We examine what it means to unleash growth opportunities and how Aramis Advisors helps companies and organizations realize their full potential through a structured approach to growth.
Why is intentional growth important
Top-line growth is typically the largest source of value creation over other efforts such as line extensions, cost reduction programs, or free cash flow improvement initiatives. In extensive research, Olsen, Plaschke, and Stelter (BCG) demonstrated that top-line growth historically accounted for 58% of value creation versus 20% for cost reduction, 15% for line expansion, and only 7% for free cash flow improvement. What’s more, adding new revenue sources and new capabilities is an engaging way to design your organization’s future and is more inspiring than cost-cutting programs. Adding rather than subtracting opens the possibilities to different future states.
The key benefits of growth include Economic Value, Organizational Value, Operational Value and Agility
Economic Value can be easily measured as it covers the following examples:
Generate new revenues
Accelerate existing growth plans
Enable focus on economic priorities
Provide rationale to make an economic decision (Build / Buy / Partner / Exit)
Improve EBITDA
Organizational Value is more intangible but contributes to the creation of economic value through the following examples:
Leverage untapped or underutilized assets (people, process, content, IP, network, access, technology, etc.)
Align the executive team on strategic priorities
Free up staff’s time to focus on organizational strategic priorities
Shift corporate culture to prioritizing growth initiatives
Operational Value and Agility are also more intangible but nonetheless quite significant , as they cover the following examples:
Execute plans faster, cheaper, or better
Build new internal capabilities
Acquire / Integrate new company or new technology
Procure a technical platform to enable testing, reporting and running different scenarios
What prevents organizations from being intentional about growth?
Hunters versus farmers: As organizations grow and then stabilize, the management team evolves from a hunter frame of mind to a farmer frame of mind. Organizations with slow growth (less than 5% per year) may be hesitant to take new risks. Their primary goal is to protect the core business, which generates cash flow and profits. Often, it translates into short-term planning (a one-year horizon or even a 1-2 quarter horizon), leading to bottom-up planning where existing budgets and initiatives are being simply tweaked and reconducted. Focusing on growth means a longer time horizon (typically at least 3 years) and a more top-down approach to planning, a good understanding of competitive moves, clients’ needs, and general trends, allowing the organization to imagine new strategic prongs and to project a vision of itself in the future
Executive Misalignment: Growth is impeded where there is misalignment in the executive team, and every executive is focused on growing his or her own fiefdom. If every executive has an individual mission, the corporate mission suffers. There is no one to lead the company forward. Misalignment in the executive team creates competing priorities that inhibit the opportunity to focus on growth. This typically cascades throughout the organization and manifests as competing priorities. It ultimately slows down overall progress and sometimes creates gridlock, preventing progress altogether.
Organizational Maturity: As they grow, organizations go through different stages of organizational maturity, which span from “informal” to “documented” to “structured” to “managed” and eventually “optimized”. Every stage presents its own challenges when it comes to upgrading processes, acquiring tools & technology, and hiring and staffing the right people in the right roles. Over time, growth can be both a catalyst and an inhibitor in an organization's development. It is essential to manage the relationship between growth and organizational development, as they are deeply intertwined. Organizational maturity is a gradual process focused on self-improvement.
What does it mean to unleash growth opportunities?
Design a growth-oriented strategic plan. Your strategic plan is your roadmap, the document that is supposed to keep your entire team aligned. Many plans are reconducted ongoing initiatives without dedicating enough budget, efforts, or room for new growth initiatives. Organizations need to design a future where innovation becomes a major strategic prong (with calculated risk) and budget is allocated accordingly
Foster an organizational growth mindset. This means that you not only adopt and embrace a growth mindset, but you sell it to your team, and foster that mindset throughout your company with a focus on creating new processes, leveraging technology and explaining what success looks like, with new key performance indicators.
Create and build new revenue engines. Launching new products or services is essential for growth, whether you develop them internally, partner with complementary organizations, or acquire smaller, innovative companies.
Innovate new business models. We all know that business models can go stale and gather dust. Innovate business models that are fresh, new, and exciting; something your team will embrace and implement. Fresh and new business models might include different pricing schemes (such as subscription, licensing, bundling, etc.) or a shift in target clientele from B2C to B2B.
Create exceptional experiences. There may not be anything more important than this. If your business is not creating positive experiences, you will struggle to beat the competition. However, if you are creating exceptional experiences for your clients, your business will grow, as client satisfaction will align with that exceptionalism.
Repurpose existing talents and assets. I touched on this a bit earlier. This is one of the keys to unlocking your growth opportunities successfully. Because it doesn’t rely on new talent or assets, it looks at new ways to leverage existing talents and repurpose existing assets in the service of a more successful and robust company, where everyone and everything is working at peak performance.
Our structured approach to unleash growth opportunities:
Typically, it requires 12-16 weeks to identify, prioritize, select, and launch top-line growth opportunities. We divide this into three phases, allowing management to provide input and approve moving to the next step.
Phase 1 : Discovery and Opportunities Identification: Situation assessment followed by a high-level ideation and prioritization of business ideas that meet the growth goals of our client. In this interactive step, we identify, evaluate, and prioritize as many relevant business ideas as possible (inclusive of quick wins, as well as incremental or broader ideas). The criteria for evaluation and prioritization are high-level metrics such as revenue potential, alignment with our client’s overall strategy, operational feasibility, time to realize financial benefits, and potential risks to the organization.
Phase 2: Opportunities Analysis: In-depth analysis of two to three opportunities that surface from the previous phase and that our client management and/or board want to investigate. The analysis typically includes business model assumptions, a 3-year P&L, required investments, hiring requirements, and high-level risk analysis
Phase 3: Go-to-Market Plan and Launch: Develop the go-to-market approach for the top idea chosen by our client’s management team and/or board
Our approach works for different types of organizations, revenues, or stages of development, including:
Newly funded organizations (Series A and beyond) /Mid-market organizations /business units of Fortune 500, as well as non-profit organizations
Organizations that seek to add $1M, $10M or $100M in incremental revenues
Organizations with 3-, 5-, or 10-year outlooks. This approach works regardless of the financial criteria used, such as NPV, ROI, break-even point, or Free cash flow.
Furthermore, as former entrepreneurs and business-builders ourselves, we are interested in staying engaged with our clients should they choose to include us in the building phase.
Our unique approach to unlocking growth opportunities has yielded impressive results. The following examples showcase the powerful results achieved by three companies we have had the privilege of advising.
Licensing Organization
Through business model innovation, efforts are currently on track to deliver $50-$100 M incremental EBITDA at maturity. We designed and built an innovation program by directing and mentoring a strongly matrixed team. We mentored executives in a business model innovation focused on creating:
new revenue sources
new models
encompassing revenue sharing
white labeling joint ventures
acquisition and investment in start-ups
A US Wireless carrier
We led a go-to-market strategy and business case for this wireless business. We led the development of a team of 15 FTEs that generated $150M in incremental revenue over five years.
Media Company
We directed product and services development in collaboration with an innovative team at this nonprofit media company. They incorporated 800 of our ideas to launch five new digital products within a 24-month period.
These are just some of the success stories that Advisors at Aramis have had the privilege of helping create. We believe passionately that every company and organization has the potential to unleash growth opportunities beyond their wildest dreams. We would like the opportunity to help your business realize its most significant potential.
Conclusion
Steve Andriole, Professor of Business Technology in the Villanova School of Business at Villanova University, wrote in Forbes, “companies that fail to innovate their business models, organizational structures, and leadership teams find it ‘difficult’ to adjust to new ways of thinking and doing. The fear is driven by uncertainty.”
At Aramis Advisors, we understand the uncertainty we all live with. The pandemic that turned the world on its head two years ago still threatens our global health and rattles the stock market. While people became cautious behind masks, staying home, and avoiding contact, businesses were hurt, and some are continuing to experience the very human reaction to crisis: caution and the instinct to hunker down and hold back. I encourage you to adopt a growth mindset for your business, despite the challenges we all face in these uncertain economic times. In fact, I’ll go a step further and posit that uncertain times require an intentional growth mindset more than ever. Either grow or be left in the dust.
Jack Welch taught that it is a leader’s job is to look in the future and see the organization not as it is, but as it should be. We aim to do that for our clients.
Aramis Advisors has a culture committed to excellence; our work is peerless. We are honest, only taking on clients we know we can help. We collaborate, treating our clients as partners. We take action, not just providing a roadmap and then walking away. We are entrepreneurs and business builders who stay with our clients to help implement the strategic plan. Along with these core cultural values, we are committed to creating social impact through promoting sustainability and environmental responsibility. Our core values drive everything we do, and our social impact commitment is woven into the fiber of our company. By delivering excellence with integrity in a collaborative and action-oriented manner, Aramis Advisors can help your company unleash your growth opportunities today for abundant success tomorrow.
