Growth rules: Which matter most?

In a recent article , we explained that achieving sustainable, profitable growth requires companies to actively choose growth through a holistic approach comprising three elements: developing an aspirational mindset and culture, activating pathways, and executing with excellence. 1 “ Choosing to grow: The leader’s blueprint ,” McKinsey, July 7, 2022. We then set out to bring those pathways to life through the ten rules of growth  (see sidebar, “The ten rules of value-creating growth”), based on an in-depth study of the growth patterns and performance of the world’s largest public companies. 2 Chris Bradley, Rebecca Doherty, Nicholas Northcote, and Tido Röder, “ The ten rules of growth ,” McKinsey, August 12, 2022.

The ten rules of value-creating growth

Our research suggests ten imperatives that should guide how executives pursue growth pathways.

  • Put competitive advantage first. Do you have a winning, scalable business model?
  • Make the trend your friend. Will your strategy shift your portfolio toward granular pockets of profitable market growth?
  • Don’t be a laggard. How do you benchmark your growth to that of your peers, and are you running faster?
  • Turbocharge your core. Is your core business primed for growth? If not, what will it take to reignite that growth?
  • Look beyond the core. A typical business generates 20 percent of revenue outside the core. Does yours?
  • Grow where you know. Are you prioritizing new business opportunities where you are a natural owner?
  • Be a local hero. Do you have a winning formula for your home market?
  • Go global if you can beat local. Do you have a transferable advantage that can be leveraged to expand internationally?
  • Acquire programmatically. Do you have a blueprint that outlines why, where, and how you will pursue programmatic M&A?
  • It’s OK to shrink to grow. Are there parts of your portfolio that you can divest to fund growth?

We have since discussed this “growth code” with dozens of executives and boards to help them calibrate their growth strategies. In these conversations, one question keeps recurring: Are all these rules equally important?

The answer, of course, is no. The impact of near-core diversification or international expansion, programmatic M&A strategies or industry outperformance will depend heavily on a company’s context. But on average, what is the relative importance of each rule for a typical growth strategy?

To find the empirical answer, we went back to our data set of nearly 1,600 companies and looked at how mastering each rule would affect an organization’s probability of achieving TSR higher than its industry median. We then derived each rule’s relative impact on the probability of TSR outperformance. The resulting ranking lists the ten rules based on their relative impact: companies that mastered the rule were between 1.1 to 1.7 times more likely to beat their industries than those that had not (exhibit).

While the first rule—“put competitive advantage first”—falls in the middle of the pack, having a clear source of competitive advantage is a prerequisite for profitable growth. Companies with low returns need to transform their business models before investing in growth—otherwise, they might struggle to attract and deploy growth capital. Mastering this rule makes companies 1.3 times more likely to outperform their industries on shareholder returns.

“Don’t be a laggard” is the rule that emerged at the top of our ranking. Winning market share away from competitors is a sign of a superior business model, which investors tend to reward. As a result, such companies are 1.7 times more likely to generate peer-beating returns than those lagging behind their industries. While faster growth typically correlates with better returns, we were surprised that outgrowing your peers matters so much more than simply being in a fast-growing market (“make the trend your friend”).

Two rules—“turbocharge your core” and “be a local hero”—covering investment in growth within a company’s core industry or region (those contributing the largest share of revenue) have the second-highest impact of all the rules, at 1.6 times. This makes intuitive sense, as it is very difficult (although not impossible) to achieve enterprise-level growth if the largest parts of your portfolio are not firing on all cylinders. The takeaway is that companies with slow-growing cores should take a fine-grained view of their markets to unearth granular pockets of opportunity—for example, subdividing markets into combinations of customer or business segments and regions—to ensure they allocate capital to the fastest-growing combinations. Companies that lack this option should consider divesting underperforming parts of their portfolios, freeing up capital to pivot to other industries or regions (see the tenth rule, “shrink to grow,” which generates similarly positive returns).

Three of the rules (“look beyond the core,” “grow where you know,” and “go global if you can beat local”) highlight the importance of pursuing growth beyond the core. Across our sample, about 20 percent of total growth came from industries outside the companies’ core business, and 50 percent of all growth came from international markets. Businesses that leverage a source of competitive or ownership advantage to expand into adjacent industries or geographies are 1.2 to 1.3 times more likely to generate peer-beating returns than those that focus solely on their core. The implications for growth strategy are clear: keep refreshing your portfolio of businesses and continuously scan for new growth markets.

Finally, this research reaffirms the long-established fact  that it is difficult for companies to consistently generate value-creating growth purely organically or through large acquisitions. 3 Robert Uhlaner and Liz Wol, “ Programmatic M&A: Winning in the new normal ,” McKinsey, March 21, 2022. Those with a program­matic approach to M&A (the ninth rule) are 1.2 times more likely to deliver peer-beating returns and successfully unlock the key growth pathways of expanding the core, innovating into adjacencies, and igniting breakout businesses.

While the impact of individual rules may differ, the biggest benefits come from combining them. In other words, the more rules companies master, the better they will perform. On average, companies that mastered two or three rules generated industry median shareholder returns, while the 38 percent of companies that mastered four or more generated more than four points of excess shareholder returns.

A deeper understanding of the relative importance of growth levers can help executives prioritize growth opportunities. But remember that sustaining profitable growth requires pairing winning strategies with an organization-wide commitment to “choosing growth,” backed by strong execution.

Chris Bradley is a senior partner in McKinsey’s Sydney office, Rebecca Doherty  is a partner in the Bay Area office, Tido Röder is an associate partner in the Munich office, and Jill Zucker  is a senior partner in the New York office.

This article was edited by Joanna Pachner, an executive editor in the Toronto office.

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The ten rules of growth

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Choosing to grow: The leader’s blueprint

Company Growth Strategy: 7 Key Steps for Business Growth & Expansion

Sujan Patel

Published: April 17, 2023

A concrete growth strategy is more than a marketing strategy, it's a crucial cog in your business machine. Without one, you're at the mercy of a fickle consumer base and market fluctuations.

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So, how do you plan to grow?

Download Now: Free Growth Strategy Template

If you're unsure about the steps needed to craft an effective growth strategy, we've got you covered.

Business Growth

Business growth is a stage where an organization experiences unprecedented and sustained increases in market reach and profit avenues. This can happen when a company increases revenue, produces more products or services, or expands its customer base.

For the majority of businesses, growth is the main objective. With that in mind, business decisions are often made based on what would contribute to the company’s continued growth and overall success. There are several methods that can facilitate growth which we'll explain more about below.

business growth strategy models

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  • Sales and Revenue Growth
  • Growth of Customer Base
  • Expansion into New Regions

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Types of Business Growth

As a business owner, you have several avenues for growth. Business growth can be broken down into the following categories:

With organic growth, a company expands through its own operations utilzing its own internal resources. This is in contrast to having to seek out external resources to facilitate growth.

An example of organic growth is making production more efficient so you can produce more within a shorter time frame, which leads to increased sales. A perk of utilizing organic growth is that it relies on self-sufficiency and avoids taking on debt. Additionally, the increased revenue created from organic growth can help fund more strategic growth methods later on. We’ll explain that below.

2. Strategic

Strategic growth involves developing initiatives that will help your business grow long term. An example of strategic growth could be coming up with a new product or developing a market strategy to target a new audience.

Unlike organic growth, these initiatives often require a significant amount of resources and funding. Businesses often take an organic approach first in hopes that their efforts will generate enough capital to invest in future strategic growth initiatives.

3. Internal

Internal growth strategy seeks to optimize internal business processes to increase revenue. Similar to organic growth, this strategy relies on companies using their own internal resources. Internal growth strategy is all about using existing resources in the most purposeful way possible.

An example of internal growth could be cutting wasteful spending and running a leaner operation by automating some of its functions instead of hiring more employees. Internal growth can be more challenging because it forces companies to look at how their processes can be improved and made more efficient rather than focusing on external factors like entering new markets to facilitate growth.

4. Mergers, Partnerships, Acquisitions

Although riskier than the other growth types, mergers, partnerships, and acquisitions can come with high rewards. There’s strength in numbers and a well-executed merger, partnership, or acquisition can help your business break into a new market, expand your customer base, or increase your products and services on offer.

Business Growth Strategy

A growth strategy is a plan that companies make to expand their business in a specific aspect, such as yearly revenue, number of customers, or number of products. Specific growth strategies can include adding new locations, investing in customer acquisition, or expanding a product line.

A company's industry and target market influence which growth strategies it will choose. Strategize, consider the available options, and build some into your business plan. Depending on the kind of company you're building, your growth strategy might include aspects like:

  • Adding new locations
  • Investing in customer acquisition
  • Franchising opportunities
  • Product line expansions
  • Selling products online across multiple platforms

Your particular industry and target market will influence your decisions, but it's almost universally true that new customer acquisition will play a sizable role. That said, there are different types of overarching growth strategies you can adopt before making a specific choice, such as adding new locations. Let’s take a look.

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Fill out this form to access your template, types of business growth strategies.

There are several general growth strategies that your organization can pursue. Some strategies may work in tandem. For instance, a customer growth and market growth strategy will usually go hand-in-hand.

Revenue Growth Strategy

A revenue growth strategy is an organization’s plan to increase revenue over a time period, such as year-over-year. Businesses pursuing a revenue growth strategy may monitor cash flow , leverage sales forecasting reports , analyze current market trends, diminish customer acquisition costs , and pursue strategic partnerships with other businesses to improve the bottom line.

Specific revenue growth tactics may include:

  • Investing in sales training programs to boost close rates
  • Leveraging technology to improve sales forecasting reports
  • Using lower-cost marketing strategies to lower customer acquisition costs
  • Continuing to train customer service reps
  • Partnering with another company to promote your products and services

Customer Growth Strategy

A customer growth strategy is an organization’s plan to boost new customer acquisitions over a time period, such as month-over-month. Businesses pursuing a customer growth strategy may be more open to making large strategic investments, as long as the investments lead to greater customer acquisitions.

For this strategy, you may track customer churn rates , calculate customer lifetime value , and leverage pricing strategies to attract more customers. You might also spend more on marketing, sales, and CX , with new customer sign-ups as the north star metric.

Specific customer growth tactics may include:

  • Investing in your marketing and sales organization’s headcount
  • Increasing advertising and marketing spend
  • Opening new locations in a promising market you’ve not yet reached
  • Adding new product lines and services
  • Adopting a discount or freemium pricing strategy
  • Tracking metrics such as churn rates, customer lifetime value, and MRR

Marketing Growth Strategy

A marketing growth strategy — which is related, but not the same as, a market development strategy — is an organization’s plan to increase their total addressable market (TAM) and increase existing market share.

Businesses pursuing a marketing growth strategy will research different verticals, customer types, audiences, regions, and more to measure the viability of a market expansion.

Specific marketing growth tactics may include:

  • Rebranding the business to appeal to a new audience
  • Launching new products to appeal to buyers in a new market
  • Opening new locations in other regions
  • Adopting a different marketing strategy, e.g local marketing or event marketing , to appeal to new markets
  • Becoming a franchisor so that individual business owners can buy franchises from you

Product Growth Strategy

A product growth strategy is an organization’s plan to increase product usage and sign-ups, or expand product lines. This type of growth strategy requires a significant investment into the organization’s product and engineering team (at SaaS organizations). In the retail industry, a product growth strategy may look like partnering with new manufacturers to expand your product catalog.

Specific tactics may include:

  • Adding new features and benefits to existing products
  • Adopting a freemium pricing strategy
  • Adding new products to the existing product line
  • Partnering with new manufacturers and providers
  • Expanding into new markets and verticals to increase product adoption

Not sure what all of this can look like for your business? Here are some actionable tactics for achieving growth.

How to Grow a Company Successfully

  • Use a growth strategy template.
  • Choose your targeted area of growth.
  • Conduct market and industry research.
  • Set growth goals.
  • Plan your course of action.
  • Determine your growth tools and requirements.
  • Execute your plan.

1. Use a growth strategy template [Free Tool] .

HubSpot Growth Strategy Template

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Don’t hit the ground running without planning out and documenting the steps for your growth strategy. We recommend downloading this free Growth Strategy Template and working off the included section prompts to outline your intended process for growth in your organization.

2. Choose your targeted area of growth.

It’s great that you want to grow your business, but what exactly do you want to grow?

Your business growth plan should hone in on specific areas of growth. Common focuses of strategic growth initiatives might include:

  • Growth in employee headcount
  • Expansion of current office, retail, and/or warehouse space
  • Addition of new locations or branches of your business
  • Expansion into new regions, locations, cities, or countries
  • Addition of new products and/or services
  • Expanding purchase locations (i.e. selling in new stores or launching an online store)
  • Growth in revenue and/or profit
  • Growth of customer base and/or customer acquisition rate

It’s possible that your growth plan will encompass more than one of the initiatives outlined above, which makes sense — the best growth doesn't happen in a vacuum. For example, growing your unit sales will result in growth in revenue — and possibly additional locations and headcount to support the increased sales.

3. Conduct market and industry research.

After you’ve chosen what you want to grow, you’ll need to justify why you want to grow in this area (and if growth is even possible).

Researching the state of your industry is the best way to determine if your desired growth is both necessary and feasible. Examples could include running surveys and focus groups with existing and potential customers or digging into existing industry research.

The knowledge and facts you uncover in this step will shape the expectations and growth goals for this project to better determine a timeline, budget, and ultimate goal. This brings us to step four…

4. Set growth goals.

Once you’ve determined what you’re growing and why you’re growing, the next step is to determine how much you’ll be growing.

These goals should be based on your endgame aspirations of where you ideally want your organization to be, but they should also be achievable and realistic – which is why setting a goal based on industry research is so valuable.

Lastly, take the steps to quantify your goals in terms of metrics and timeline. Aiming to "grow sales by 30% quarter-over-quarter for the next three years" is much clearer than "increasing sales."

5. Plan your course of action.

Next, outline how you’ll achieve your growth goals with a detailed growth strategy. Again – we suggest writing out a detailed growth strategy plan to gain the understanding and buy-in of your team.

Growth Action Plan Downloadable Template

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This action plan should contain a list of action items, deadlines, teams or persons responsible, and resources for attaining your growth goal.

6. Determine your growth tools and requirements.

The last step before acting on your plan is determining any requirements your team will need through the process. These are specific resources that will help you meet your growth goals faster and with more accuracy. Examples might include:

  • Funding: Organizations may need a capital investment or an internal budget allocation to see this project through.
  • Tools & Software: Consider what technological resources may be needed to expedite and/or gain insights from the growth process.
  • Services: Growth may be better achieved with the help of consultants, designers, or planners in a specific field.

7. Execute your plan.

With all of your planning, resourcing, and goal-setting complete, you’re now ready to execute your company growth plan and deliver results for the business.

Throughout this time, make sure you’re holding your stakeholders accountable, keeping the line of communication open, and comparing initial results to your forecasted growth goals to see if your projected results are still achievable or if anything needs to be adjusted.

Your growth plan and the tactics you leverage will ultimately be specific to your business, but there are some universal strategies you can implement when getting started.

To expand a business and its revenue, companies can implement different strategies for growth. Examples of growth strategy include:

Growth Strategy Examples

  • Viral Loops
  • Milestone Referrals
  • Word-of-Mouth
  • The 'When They Zig, We Zag' Approach
  • In-Person Outreach
  • Market Penetration
  • Market Development
  • Product Development
  • Growth Alliances
  • Acquisitions
  • Organic Growth
  • Social Media
  • Excellent Customer Service

Growth Strategy Examples

1. Viral Loops

Some growth strategies are tailored to be completely self-sustainable. They require an initial push, but ultimately, they rely primarily (if not solely) on users' enthusiasm to keep them going. One strategy that fits that bill is the viral loop.

The basic premise of a viral loop is straightforward:

  • Someone tries your product.
  • They're offered a valuable incentive to share it with others.
  • They accept and share with their network.
  • New users sign up, see the incentive for themselves, and share with their networks.

For instance, a cloud storage company trying to get off the ground might offer users an additional 500 MB for each referral.

Ideally, your incentive will be compelling enough for users to actively and enthusiastically encourage their friends and family to get on board. At its best, a viral loop is a self-perpetuating acquisition machine that operates 24/7/365.

That said, viral loops are not guaranteed to go viral, and they’ve become less effective as they’ve become more commonplace. But the potential is still there.

Part of the appeal is that the viral loop flips the traditional funnel upside-down:

Growth strategy viral loop

Instead of needing as many leads as possible at the top, a viral loop funnel requires just one satisfied user to share with others. As long as every referral results in at least 1.1 new users, the system continues growing.

2. Milestone Referrals

The milestone referral model is similar to the viral loop in that it relies on incentives to kickstart and sustain it. But milestone referrals add a more intricate, progressive element to the process.

Companies that leverage viral loops generally offer a flat, consistent offer for individual referrals — businesses that use milestone referrals offer rewards for hitting specific benchmarks. In many cases, "milestones" are metrics like the number of referred friends.

For example, a business might include different or increasingly enticing incentives that come with one, five, and 10 referrals as opposed to a fixed incentive for each referral. A company will often leverage this strategy to encourage users to bring on a volume of friends and family that suits its specific business goals.

The strategy also adds an engaging element to the referral process. When done right, milestone referrals are simple to share with relatively straightforward objectives and enticing, tangible products as rewards.

3. Word-of-Mouth

Word-of-mouth is organic and effective. Recommendations from friends and family are some of the most powerful incentives for consumers to purchase or try a product or service.

The secret of word-of-mouth’s effectiveness lies in a deeply rooted psychological bias all people have — we subconsciously believe the majority knows better.

Social proof is central to most successful sales copywriting and broader content marketing efforts. That's why businesses draw so much attention to their online reputations.

They know in today's customer-driven world — one where communication methods change and information is available to all — a single negative blog post or tweet can compromise an entire marketing effort.

Pete Blackshaw , the father of digital word-of-mouth growth, says, "satisfied customers tell three friends; angry customers tell 3,000."

The key with word-of-mouth is to focus on a positive user experience. You need to grow a base of satisfied customers and sustain the wave of loyal feedback that comes with it.

With this method, you have to focus on delivering a spectacular user experience, and users will spread the word for you.

4. The "When They Zig, We Zag" Approach

Sometimes the best growth strategy a company can employ is standing out — offering a unique experience that sets it apart from other businesses in its space. When monotony defines an industry, the company that breaks it often finds an edge.

Say your company developed an app for transitioning playlists between music streaming apps. Assume you have a few competitors who all generate revenue through ads and paid subscriptions — both of which frustrate users.

In that case, you might be best off trying to shed some of the baggage that customers run into trouble with when using your competitors' programs. If your service is paid, you could consider offering a free trial of an ad-free experience — right off the bat.

The point here is that there's often a lot of value and opportunity in differentiating yourself. If you can "zig when they zag", you can capture consumers' attention and capitalize on their shifting interests.

5. In-Person Outreach

It might be a while before this particular approach can be employed again, but it's effective enough to warrant a mention. Sometimes, adding a human element to your growth strategy can help set things in motion for your business.

Prospects are often receptive to a personal approach — and there's nothing more personal than immediate, face-to-face interactions. Putting boots on the ground and personally interfacing with potential customers can be a great way to get your business the traction it needs to get going.

This could mean hosting or sponsoring events, attending conferences relevant to your space, hiring brand ambassadors, or any other way to directly and strategically reach out to your target demographic in person.

6. Market Penetration

Competition is a necessary part of business. Imagine that two companies in the same industry are targeting the same consumers. Typically, whatever customers Business A has, Business B does not. Market penetration is a strategy that builds off of this tug-of-war.

Market penetration increases the market share — the percentage of total sales in an industry generated by a company — of a product within a given industry. Coca-Cola, the most popular carbonated beverage in the United States, has a 42.8% market share. If competitors like Pepsi and Sprite were looking to increase market penetration, they would need to increase market share. This increase would imply that they are acquiring customers that were previously buying Coca-Cola or other carbonated beverage brands.

While lowering prices and advertising are two costly yet effective tactics to increase market share, they are part of a series of methods businesses can use for overall sales and customer retention.

7. Development

If a company feels as if they have plateaued and its current market no longer has room for growth, it might switch strategies from market penetration to market development. While market penetration focuses on a company and its current market, market development strategies lead businesses to tap into a new one.

Companies can decide to manufacture new products or find an innovative use for their project. Take Uber. Although few would say that the rideshare company has plateaued, six years after its launch in 2009, Uber launched UberEats, its online food ordering, and delivery platform. The company already had drivers set to take passengers to their destinations. Uber expanded their idea and has become one of the biggest names in the food delivery industry.

8. Product Development

For growth, many businesses need to introduce something new. Product development — the creation of a new product or the enhancement of an existing one — allows companies to attract new customers and retain existing ones.

Online fast-fashion retailers are an example of this. A company like ASOS built its brand off of clothing. To appeal to a bigger customer base, it has since added face and body products, a collection made up of ASOS products and other popular brands. If an interested customer prefers to shop for their clothes, makeup, and skincare products at once, the brand now serves as a big draw.

9. Growth Alliances

Growth alliances are strategic collaborations between companies. They further the growth goals of the involved parties. Take JCPenney and Sephora. For Sephora, it can’t hurt for the makeup retailer to have more stores across the country. JCPenney, however, needed to keep up with powerhouses like Macy’s and its fully-fledged makeup section.

In 2006, Sephora began opening stores inside JCPenney. As of 2022, Sephora Inside JCPenney is now in over 574 stores. Simultaneously, JCPenney now carries a selection of makeup to rival competitors.

10. Acquisitions

Companies can use an acquisition strategy to promote growth. By acquiring other businesses, companies expand their operations through creating new products or expanding into a new industry. One of the more obvious ideas for growth, this strategy offers significant benefits to companies. They allow for faster growth, access to more customers, lower business risk, and more.

Founded in 1837, Procter & Gamble is a consumer goods company known for its acquisitions. It initially started in soaps and candles but currently has 65 acquired companies that have allowed it to expand into different markets. The list includes Pampers, Tide, Bounty, Tampax, Old Spice, and more. Although its sales dipped between 2016-2019, Procter & Gamble’s net sales for 2021 were $76 billion, its best year within the last decade.

11. Organic Growth

As mentioned previously, organic growth is the most ideal business growth strategy. It could look like focusing on SEO, developing engaging content, or prioritizing advertisements. Instead of focusing on external growth, organic growth is a sustainable strategy that promotes long-term success.

12. Leverage Social Media

Having a strong social media presence can be invaluable to marketing and business growth. Be sure to establish brand pages on all social media platforms like Instagram, Facebook, Pinterest, TikTok, Twitter, etc. Social media can help you increase engagement with your target audience and make it easier for potential customers to find your brand. It’s also great for word-of-mouth promotion as existing customers will likely share your content with their network.

13. Provide Excellent Customer Service

It can be tempting to focus on acquiring new customers, but maintaining loyalty with your existing customers is just as important. Providing an excellent customer service experience ensures that you’ll continue to keep the customers you have, and there’s a good chance you’ll reap some referrals too.

The Key to Growing Your Business

Controlled, sustainable growth is the key to successful businesses. Industries are constantly changing, and it is the responsibility of companies to adapt to these changes.

Successful companies plan for growth. They work for it. They earn it. So what's your plan?

Editor's note: This post was originally published in March 2020 and has been updated for comprehensiveness.

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Transforming for Growth: An Evidence-Based Guide

Related Expertise: Business Transformation

Transforming for Growth: An Evidence-Based Guide

June 24, 2020  By  Martin Reeves ,  Lars Fæste ,  Salman Bham , and  Ask Nørgaard Heje

Transforming for Growth: An Evidence-Based Guide

Seven evidence-based factors can boost your chances for a successful transformation.

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Recent data suggests that most companies are preoccupied with reacting to the disruption caused by COVID-19 and readying themselves for a possible recession. 1 1 BCG survey of more than 300 companies’ COVID-19 response actions as of May 21, 2020. Notes: 1 BCG survey of more than 300 companies’ COVID-19 response actions as of May 21, 2020. But for companies that seek it, there is also competitive advantage in adversity . Indeed, previous shocks created lasting shifts in the business environment, and the coronavirus pandemic will likely do so as well. Companies that can reimagine their business models to capture the resulting new opportunities will come out ahead. For many firms, this reimagination will require a transformation focused around growth, which is the main driver of long-term success in transformations.

Yet transforming for growth is not easy. A little more than a quarter of transformations both sustainably accelerate growth and outperform competitors in creating shareholder value. To help companies increase their odds, we applied an evidence-based approach to uncover and study 735 US transformations. Our analysis identified seven success factors—spanning leadership, strategy, and culture—that can serve as the starting point for a growth transformation playbook.

Long Odds of Success

A successful transformation for growth both sustainably accelerates growth and generates shareholder value. We measure growth acceleration as the improvement in a company’s annualized revenue growth rate relative to industry averages over the five years after a transformation launch, and then we compare that with the company’s growth rate relative to industry averages before the transformation. Additionally, we measure shareholder value as the total shareholder return outperformance (TSRO) the company delivers that exceed industry averages over the five years after a transformation is launched. (See “About Our Study,” for more details on the methodology we used.)

About Our Study

Our analysis is based on 735 transformations occurring in US companies with $1 billion-plus market cap over the period 2004–2017. As in our previous research, transformations were identified by annual restructuring costs in excess of 0.5% of revenue. We defined a successful growth transformation as one that both  accelerates growth relative to industry  and  delivers positive total shareholder return outperformance . A company’s growth acceleration is the difference between its industry adjusted growth rate (IAGR) in the five years after its transformation starts and its IAGR in the three years before its transformation starts. IAGR is a company’s annualized growth rate over a time period, less the median annualized industry growth rate over that same period. Total shareholder return outperformance is the annualized TSR that a company delivers in excess of median industry TSR over the five-year period after the company’s transformation begins. We based candidate success factors on the literature review and case studies. These factors were translated into quantitative proxies and analyzed using logistic regression, a statistical model that predicts the probability of a successful outcome while accounting for multiple competing effects.

Transforming for growth is difficult; only 27% of the transformations in our sample were successful. (See Exhibit 1.) It is hard because companies need to grow in a way that also creates shareholder value: 23% of transformations actually managed to accelerate growth but failed to generate TSRO. Those that were successful, however, generated significant value—11 percentage points more growth acceleration and 12 percentage points more TSRO than an “average” transformation.

business growth strategy models

Additionally, economic stress such as that caused by COVID-19 should not dissuade companies from pursuing growth. During the 2008–2009 financial crisis, 35% of transformations led to successful growth, 8 percentage points higher than average. Although the coronavirus crisis brings many challenges, firms that can reimagine their business models for the post-COVID-19 world might find opportunities to transform for growth.

Seven Ways to Increase Your Chance of Success

Given the long odds of success for growth transformations, it is important to understand what can be done to improve them. The seven factors that we identified as characterizing successful growth transformations in a measurable way span the categories of leadership, strategy, and culture. (See Exhibit 2.)

business growth strategy models

CEOs play an important role in a transformation’s success. They can bridge business silos, allocate resources, and serve as role models for the necessary cultural changes. This is particularly important for growth transformations, which often can take companies into unfamiliar territory in the pursuit of new revenue opportunities.

1. Take a fresh look at your business. Transformations are not often accompanied by a CEO change. Only 14% of transformations coincide with a change in top management, barely higher than the 11% CEO churn in an average year. In line with our earlier research , however, we found that starting a transformation with a new CEO in place can boost the odds of a successful growth transformation by 7 percentage points, rising to 10 percentage points if the new CEO is also an external hire.

  • Preemptive Transformation: Fix It Before It Breaks
  • The Transformations That Work—and Why

Many incumbent CEOs do lead successful transformations—our finding describes an aggregate pattern, not a rule. But this pattern suggests that an outsider’s perspective can be helpful when identifying growth opportunities and impediments. Incumbent CEOs who want to add an outsider’s perspective to their toolbox can break free of their traditional processes and mental models by using strategy games to explore a more expanded range of possibilities.

For example, Satya Nadella, who was hired as Microsoft’s CEO in 2014, described himself as an “insider-outsider” because of his background in the company’s Cloud & Enterprise Division rather than the then-dominant Windows division. That outsider perspective helped Nadella identify Microsoft’s existing Windows-first strategy and internal silos as obstacles to the growth potential of new offerings, which led him to initiate a transformation of Microsoft to “mobile first–cloud first” (later called “intelligent cloud”) and to increase internal collaboration. Since his appointment, Nadella has accelerated Microsoft’s revenue growth from 8% to 14% and tripled its share price.

2. Ensure leadership continuity after the transformation starts. Although new leadership at the start of a transformation increases its chance of success, we found that CEO churn during a transformation is linked to an 11 percentage point lower chance of success. Such change midstream can foster a sense of directionlessness that reduces the odds of a growth transformation’s success. A CEO change during a transformation also sends a negative signal that can erode investor confidence and lower stakeholder buy-in, decreasing the odds of success.

But there is another way to view our leadership continuity finding. Only 7% of the companies we studied changed their CEO during a growth transformation. Because CEOs are unlikely to leave a company voluntarily during a major transformation, such CEO changes at the helm are likely involuntary. They are perhaps a response to an already badly off-track transformation. Thus, our finding could actually be read as evidence that when a transformation is not going well, it is unlikely a new CEO could rescue it within the original schedule. Thus, finding the right leadership at the start of the transformation process is key.

While specific strategies for growth vary heavily by company and context, we found three lessons that apply broadly: taking a long-term view on strategy, taking an exploratory approach to growth, and investing in a company’s ongoing transformation capabilities all increase the chances of success.

3. Take a long-term perspective on strategy. To understand the extent to which companies take a long-term perspective on strategy rather than focusing on immediate issues, we used a proprietary natural language processing algorithm to score the degree of long-term thinking expressed in companies’ annual reports. We found that companies taking a long-term perspective on strategy are 5 percentage points more likely to successfully transform for growth. 2 2 Above industry average long-term orientation over the five years after the transformation was launched. Notes: 2 Above industry average long-term orientation over the five years after the transformation was launched.

Firms that take a long-term perspective place the importance of sustainable growth and shareholder value over short-term returns. They also make strategic decisions on multiple timescales simultaneously . These firms understand that an “optimal” growth transformation may take several years to realize, and they don’t only chase short-term initiatives.

For example, in 2008 most major computer game companies used a cyclical business model: they developed a game, sold it to customers for a one-time fee, and worked toward their next launch. Activision saw an opportunity to grow customer lifetime value by switching to a subscription model based around smaller monthly payments and more frequent, incremental, updates to games from their main franchises. They did so through a merger with Blizzard, one of the few companies operating a game subscription service at the time. The newly formed Activision Blizzard turned its subscribers into a dedicated fan base by developing spinoff products that ranged from virtual card games to novels and a Hollywood movie. The steps it took to increase its customer lifetime value paid off. Between 2008 and 2018 the company grew its annual revenue by 10% (+2 percentage points compared with industry peers) while delivering an average annual TSR of 19%.

4. Prioritize exploration over exploitation. Companies can pursue growth in different ways. They can exploit existing products and services, for example, by selling more of them to existing and new customers, or they can explore new revenue opportunities. Capital expenditure (CAPEX) investments generally suggest a company has the intention of exploiting existing opportunities by expanding capacity. In contrast, R&D is generally focused on exploring new possibilities and generating new product and service offerings.

We found that growth transformations accompanied by high CAPEX spend versus industry averages are 11 percentage points less likely to succeed, while those with high R&D spend versus industry averages are 29 percentage points more likely to succeed. 3 3 Above industry average cumulative R&D or CAPEX (respectively) as a percentage of cumulative revenue over the five years after the transformation was launched. Notes: 3 Above industry average cumulative R&D or CAPEX (respectively) as a percentage of cumulative revenue over the five years after the transformation was launched. That suggests that a growth-oriented company should think beyond increasing sales of existing products and invest in developing new offerings, finding ways to continually reinvent themselves .

Though exploration can seem riskier than exploitation, companies willing to explore can reap significant rewards.

In 2011, for example, the biopharma company Bristol-Myers Squibb began to shift from diversified health care to becoming a biopharma pure play with a strong focus on R&D. As part of the overall transformation, BMS identified immuno-oncology as an important growth opportunity that a shift in its R&D approach could unlock. Not only did BMS increase R&D spending (from 17% of sales in 2011 to 23% of sales in 2019), it also undertook several initiatives to empower the R&D function. Besides being the originator of new drugs, R&D would also become a stronger decision maker when making tradeoffs in the pipeline. As a result, BMS increased growth from -5% between 2010 and 2012 to 6% annually, and it went on to deliver 10% annual TSR between 2012 and 2019.

5. Treat transformation as an ongoing capability. Of the firms in our sample, 45% began multiple transformations between 2006 and 2019. We found that firms with a track record of at least one successful growth transformation were 23 percentage points more likely to succeed with subsequent growth transformations.

This finding suggests that companies should think of transformation as an ongoing capability, especially since the basis of competitive advantage is changing faster than ever . Companies should therefore lay the groundwork for future transformations by developing an adaptive firm with capabilities to change and respond quickly to new opportunities as they emerge—embracing an “ “always-on” ” approach to transformation. Firms also should build their knowledge base of successful change strategies, replacing anecdotal or heuristic approaches with the emerging science of organizational change .

Consumer credit reporting agency Equifax Inc. did just that in 2008 and the 2010s, following one successful growth transformation after another. During the 2008 transformation, the company delayered the organization and improved company processes to increase agility. It created a growth council to encourage an innovative mindset, improving the company’s response to change. As a result, Equifax was able to transform digitally in the 2010s and develop strong data and analytics capabilities, accelerating growth by serving new customer needs. Then in 2017, Equifax suffered a data breach that exposed its weak cybersecurity and led to a 34% decline in share price. Amid this controversy, Equifax relied on its transformation capabilities to quickly launch a security overhaul with the goal of restoring trust and so growing revenue and shareholder value. So far, the company’s share price has recovered, and its revenue continues to grow.

Culture shapes companies’ abilities to respond to change by influencing how individual employees handle decisions. Cultures that instill a sense of purpose and think holistically about change increase the odds of a successful growth transformation.

6. Become a purposeful organization. Our analysis suggests that companies that have a stronger sense of purpose are 17 percentage points more likely to transform for growth successfully. As a quantitative proxy for “purpose” we use an aggregate environmental, social, and governance (ESG) score that measures companies’ commitment to a range of environmental, social, and governance themes. 4 4 Above industry average Eikon combined ESG score over the five years after the transformation was launched. Notes: 4 Above industry average Eikon combined ESG score over the five years after the transformation was launched. This result aligns with previous research findings that purposeful organizations have higher growth rates and total shareholder returns .

A strong purpose can improve the odds of a successful growth transformation because employees feel more closely engaged with it and therefore can execute it more effectively. If employees are motivated by purpose and believe that a growth transformation serves their mission, they will more likely embrace the disruption and uncertainty that often accompanies a change program. In addition, if employees’ individual sense of mission aligns with the employer’s business model, then they are more likely to take actions that lead to positive business outcomes even without managerial oversight.

For example, when the cleaning company Ecolab identified a concern among customers about access to clean water, it saw that as an opportunity due to clean water being a complementary input to the company’s cleaning products. In 2011, Ecolab acquired the water treatment company Nalco, which began its transformation into a global leader in water management and water treatment services. At the same time, Ecolab rebranded itself with a strong sustainability profile focusing on how much water the company saves globally with its solutions. This created a strong sense of purpose within the organization: Ecolab was now seen as a leader in sustainability and preserving water resources. The results have been impressive, with the company increasing revenue growth from 0% to 10% annually and delivering 18% annual TSR between 2011 and 2019.

7. Think “biologically.” Historically, managers have tended to view their organizations “mechanistically” and rely on simple cause-and-effect models to guide their thinking. But organizations are actually embedded in a dynamic, complex world in which outcomes are inherently unpredictable. Success in such an environment can mean augmenting a traditional mechanical approach with a “biological” mindset that acknowledges the uncertainty and complexity of business problems, addressing them indirectly.

We found that companies that think biologically were 2 percentage points more likely to successfully transform for growth. 5 5 Above industry average biological thinking over the five years after the transformation was launched. Notes: 5 Above industry average biological thinking over the five years after the transformation was launched. We scored companies on their degree of biological thinking using a proprietary machine learning algorithm that looks for evidence of this kind of approach in annual reports. One approach that many biologically minded companies use to harness the dynamism and complexity of their external environment is leveraging ecosystems . By collaborating with partners and orchestrating an ecosystem around their businesses, companies can shape their environment to create mutual benefits and stay connected to emerging opportunities. This requires a culture of openness that is receptive to collaboration and exploration.

Microsoft adopted such biological thinking to foster collaboration starting in 2014. Although Microsoft was an early entrant into cloud, by 2014 its market share was just 11%—far lagging market leader Amazon’s 29%. 6 6 “AWS Market Share Reaches Five-Year High Despite Microsoft Growth Surge,” Synergy Research Group (Feb. 2, 1015). Notes: 6 “AWS Market Share Reaches Five-Year High Despite Microsoft Growth Surge,” Synergy Research Group (Feb. 2, 1015). Cloud success requires an ecosystem of partners to ensure access to the widest pool of technological innovation in a rapidly evolving space. At the time, Microsoft’s culture was closed to external ideas (one senior leader famously called a major open source technology “a cancer”). Recognizing this, CEO Nadella made a pivot toward a culture of curiosity, openness, and learning as a central part of the company’s transformation. By 2019, Microsoft’s cloud solution Azure was used mainly to deploy non-Windows technologies, and Azure had achieved an average growth rate of 117%, twice that of Amazon Web Services. 7 7 Microsoft annual report 2016-2019, Azure growth rates from reportable segments vs. AWS revenue CAGR, derived from Statista. Notes: 7 Microsoft annual report 2016-2019, Azure growth rates from reportable segments vs. AWS revenue CAGR, derived from Statista.

Leveraging Multiple Factors to Ensure Success

Each of the seven factors we’ve just described can individually improve the chances of success. But their effects are additive: companies that applied more factors had a correspondingly higher chance of successfully accelerating growth and achieving TSR outperformance—rising from 11% for companies with none of the factors to 59% for the small minority that applied five factors. (See Exhibit 3.)

business growth strategy models

This suggests that the starting point to a growth transformation program should combine several factors, such as making sure that the right leadership is in place with a fresh perspective, considering the long-term, investing in R&D, adopting a larger purpose and a holistic approach to change. Transformation programs are inherently risky, but by using evidence-based practices, companies can improve the odds.

Structuring a Growth Transformation

When we deconstruct total shareholder value growth into its revenue, cost, and expected future revenue contributions, we see how and when successful growth transformations create value.

Only 4% of our successful growth transformations relied solely on revenue growth to generate TSR. The remainder generated value through a balance of revenue, cost, and expectations. This suggests that companies attempting growth transformations should beware of narrowly focusing on growth at the expense of long-term profitability or future growth opportunities.

Successful growth transformations tend to deliver on each driver—revenue, cost, and expectations—at different points in the transformation journey (See Exhibit 4.)

business growth strategy models

On average, in the year a company launches a transformation, most of the TSR generated is expected value (corresponding to increased P/E multiple), suggesting that successful companies are able to convince investors of their growth stories. One-third of year one TSR, however, comes through revenue growth, perhaps representing tangible progress that demonstrates growth ventures are on the right track. By year three, cost reduction is responsible for the largest portion of TSR growth as companies refocus their portfolios and free up funding for growth investments. By year five, revenue growth is the largest driver of TSR growth.

Transforming for growth is hard to do but valuable if done right. By taking an empirical approach to change and learning from previously successful growth transformations, companies can improve their odds of transforming for growth successfully.

business growth strategy models

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BUSINESS MODELS

Learn everything you need to know about business models. This guide on business models was created by an ex-McKinsey consultant and includes frameworks, case studies, examples, a step-by-step design guide, and an 18-page business model PowerPoint template.

THE BIG PICTURE ON BUSINESS MODELS

1. To Grow, Get All of the Elements Right

If you think through, analyze , and correctly solve each element of the business model, your company will grow.

2. Sequentially Solve the Business Model

Strategic planning should always start with the mission , then flow through the targets, value proposition , go to market, and finally the organization .

3. Understand the Role of Each Business Model Element

Once you understand each business model element, then it is much easier to solve for the right strategies to grow.

4. Strategic Alignment is the Key to Execution

Strategic alignment is when an organization is laser-focused on developing and delivering a killer value proposition and go-to-market that beats the competition .

A BUSINESS MODEL HAS 5 CORE ELEMENTS

There are five major components to any business model:

1. The Mission   2. Targets  3. Customer Value Proposition  4. Go-to-Market  5. The Organization

The way a business model works is: " The organization efficiently & effectively develops and delivers the customer value proposition and go-to-market to fulfill the needs of the target customers better than competitors , all for the purpose of achieving the mission ."

The horizontal graphic below translates the flow of elements in a business model.

How a business model works

THE WHO, WHAT, WHY, WHERE & HOW OF BUSINESS MODELS

We can take the horizontal business model graphic and make it vertical, which is the graphic we use throughout the site.

Let's go over the big picture of the business model.

We start at the top with the "true north" representing a business' mission , vision, and values , which ultimately gives purpose and provides the "why" the company exists. An inspiring and enduring mission, vision, and values serve as a guide to align strategies, and help all employees make the   right decisions , however big or small the decisions .

We next move down to the   targets.   These include the   markets   and   geographies   ("where") the company competes in, for the business of the target   customers  ("who"). Companies that clearly define and deeply understand their targets, develop focused and aligned business models.

Next is the  value proposition , which is the "what" and the core of any business model, composed of the  business's products ,  services ,  and  pricing . Then, there is the  go-to-market , comprised of the  business's distribution ,  sales ,  and  marketing . The purpose of go-to-market is to amplify the value proposition to drive customer acquisition and loyalty.

Finally, the  organization  is organized into  functions  (e.g., sales, ops, finance). Everything the organization does is a  process  (whether defined as one or not) executed by  team members ,  partners , and  infrastructure . The organization is the execution machine and the "how" things get done in a business model. And as stated before, the organization's purpose is to efficiently and effectively develop and deliver the value proposition and go-to-market to fulfill customers' needs better than competitors, all for the purpose of achieving the mission, vision, and values.

SOLVE A BUSINESS MODEL FROM THE TOP DOWN

Let's go over a few things about business models. First, look below to see all the  different types of strategy , which are just the tip of the iceberg. Second, most companies make the mistake of solving their strategy from the bottom up, starting with functional strategies. The conversation goes something like this, "We've got our board meeting coming up. Bob, I need your ops strategy. Jane, I need your marketing strategy . Helen, I need your sales plan and strategy. Nate, give me a readout on the HR strategy ."

I equate it to trying to design a car, with the chassis, brakes, engine, and electronics team independently designing their part. In the end, it won't work. Now, let's get into a simple case study to understand better how a business model works.

SOUTHWEST AIRLINES - ONE OF THE CLEANEST BUSINESS MODELS

Finding a better example of a well-tuned business model than Southwest Airlines is hard. Starting in 1967, Southwest Airlines has grown to be the largest domestic airline in the U.S., with $20 billion in annual sales and 50,000 employees. With a deep history of award-winning service, Southwest has amassed 43 straight years of  profitability . If you were lucky enough to buy $10,000 worth of Southwest stock in 1971, it would be worth over $20,000,000 today.

TRUE NORTH - "THE "WHY"

The true north of a company includes the organization's mission, vision, and values, which provide the foundation for aligning strategies, decisions, actions, and culture . A compelling mission gives the team and organization the inspiration and the focus they need to make mission-based decisions and align their strategies. A strong vision of strategic pillars and ambitious goals provides the next level of focus for aligning the organization's strategies. And values are the foundation of expected norms and behaviors that foster a company's culture. Without a compelling mission, vision, and values, management teams often struggle with strategic focus since they try to navigate without understanding the direction of true north.

Back in 1971, Southwest's mission was so simple and effective, “Charge the lowest possible fare. And provide the highest quality service.”

Over the past 45+ years, Southwest's strategic and day-to-day decisions reinforced how they could charge the lowest possible fare and provide the highest quality service. You'll see Southwest's mission throughout Southwest's business model.

Today, Southwest's true north is encapsulated below in its purpose, vision, mission, and values.

TARGETS - THE "WHO" & "WHERE"

A business model has three primary targets:  1. Markets , 2. Customers, 3. Geographies.  The targets define the "who" and "where" of a business model. A  market  establishes the solution space a business competes in for customers. If a  leadership team  truly understands its market dynamics, it can navigate its way to a leadership position. A defined  target customer  enables an organization to tailor their value proposition better to exceed the target customers' needs. While  target geographies  focus on the execution of a business and add to economies of scale.

Well-defined targets provide an organization clarity to make better decisions and execute at a higher level. Expanding into new markets, customer segments, and geographies can lead to explosive growth when a business already has a winning value proposition in existing markets, customer segments, and geographies. However, suppose a company expands into new target markets, customers, and geographies before the value proposition and organization are ready. In that case, it can fragment focus, create shoddy execution, and overextend the business into financial distress.

Let's better understand Southwest's target market, customer segments, and geographies.

Southwest's Target Market

The output of a market strategy is a differentiated positioning within the market. Southwest competes in the highly competitive commuter airline market, which, as an industry, lost $50 billion from 2001-2012.

The idea of Southwest was born on a napkin with lines connecting the three dots titled Dallas, San Antonio, and Houston. Back in 1967, the founders of Southwest saw a hole in the commuter airline market. While the big airlines were built around national and regional hub and spoke route models, Southwest focused on intrastate point-to-point routes (initially Dallas, Houston & San Antonio). Since then, Southwest has stuck to this point-to-point route market positioning, while most other airlines relied on their hub and spoke models.

Southwest's Target Customers

You start a business to fulfill a customer's need. Southwest started a regional point-to-point airline for customers who wanted an hour-long flight rather than waste 3.5 to 4.5 hours in a car to drive from Dallas to Houston or San Antonio. Instead of spending 7 to 9 hours behind the car windshield for a day round trip, customers could be pampered by  "the best service and the most beautiful girls in the sky."  Southwest had a unique perspective on how they defined the needs of their  target customers , as stated in their 1975 Annual Report,

"We believe that in short-haul markets of up to 500 miles, the private automobile is a worthy competitor for those consumers representing the great majority of us who cannot logically place a value on time commensurate with the airfares now charged in those markets. Except for the businessman and woman market, a fare that does not compete with the cost of personal automobile travel will not permit any air market to reach its potential.

By focusing on this unmet customer need to substitute a flight for a car drive, Southwest was one of the key influencers in driving astronomical growth in U.S. domestic air travel. They attracted business customers with low fares, convenience, and service, and leisure travelers with ultra-discounted weekend tickets to drive up their plane utilization. At the time, the ultra-discounted weekend fares opened up a whole new segment of travel customers who wanted to fly for pleasure, to visit family, recreation, and to explore new destinations.

Over the past 45+ years, Southwest has continued its focus on the business and leisure customer segments, tailoring its value proposition and go-to-market to these two segments.

Southwest's Target Geographies

While Southwest Airlines now serves over 100 destinations, its deliberate geographic expansion strategy was one of the keys to Southwest's growth. In keeping with its low-cost provider mission, Southwest has always pursued a geographic density strategy to drive cost and capital synergies and utilization.

Over the six years after their 1971 launch, Southwest expanded just in Texas with routes to the Rio Grande Valley, Austin, Corpus Christi, El Paso, Lubbock, and Midland/Odessa. In 1977, Southwest's fleet of 12 737s carried 2.4 million customers, which equals 200,000 passengers per plane, or 548 passengers per plane per day. Considering the population of Texas was only 13 million people in 1977, the word-of-mouth of the new, cool, and cheap Southwest Airlines was unavoidable. This geographic focus also enabled Southwest to leverage its fixed costs related to airports, personnel, maintenance facilities, and advertising .

Southwest has always taken a highly deliberate geographic expansion strategy, choosing routes that are natural extensions of the existing route network, leading to 40 years of steady, profitable growth. Southwest has continuously focused on driving the economies of scale that a dense geographic strategy provides. Furthermore, Southwest has been extremely opportunistic with their airport selection, often focusing on lower-cost second-tier airports in a region such as Dallas Love Field, Houston Hobby, Chicago Midway, Baltimore-Washington International, Oakland, San Jose, Burbank, Manchester, Providence, Ft-Lauderdale-Hollywood.

And, when Southwest expanded internationally, they made the strategic acquisition of AirTran, which had few overlapping routes but did have a robust business to the Caribbean, Mexico, and select Central American cities.

The Strategic Takeaway on Targets

Understanding, defining, and executing against target markets, customers, and geographies is core to building a killer business model. If you create a  differentiated market position,  you have a long-term vision of what you need to execute against. If you define the right target customers, you can tailor a differentiated value proposition to drive more customer value than competitors while also narrowing the scope of your go-to-market strategies. If you develop geographic density, then you reap economies of scale.

Keep your targets focused until your business and economic model are ready to scale into new markets, customer segments, and geographies. New markets, customer segments, and geographies can provide explosive growth, but only if your value proposition and economics are ready to beat the competitors in the new targets. The downfall of too many businesses is they overextend themselves by trying to expand into too many new targets, fragmenting the focus and execution of the organization.

THE VALUE PROPOSITION - THE CORE & "WHAT"

Southwest's value proposition.

Let's return to the original Southwest mission:  "Charge the lowest possible fare. And provide the highest quality service."  Frankly, it sounds like their value proposition, which is what you want in a mission statement .

Herb Kelleher, the co-founder and former CEO of Southwest, understood the customer value equation from the beginning, as he highlighted in an interview with  Strategy + Business, after being honored as a "Lifetime Strategist,"

One of the things that people, I think, didn't understand is that we started out saying we're going to give you more for less, not less for less. We're going to give you new airplanes, not old airplanes. We're going to give you the best on-time performance. We're going to give you the people who are most hospitable."

1970s Southwest Ad

Southwest's Service - Rational Benefits

In evaluating a value proposition, start with the rational benefits of the  products  and  services . Southwest's rational benefits are getting customers and their bags from point A to B through the air, which they do efficiently and competently.

They have the highest frequency of point-to-point routes, providing customers convenience and reduced travel time versus hub and spoke airlines. Southwest has the best historical on-time and baggage performance. They have a fast and convenient check-in process. In the event of a change, they have no change penalties and make it easy to book another flight. They also have the richest and easiest-to-redeem rewards program, averaging 9.5% of passenger miles flown on Rapid Rewards flights versus ~7% on other airlines.

By consistently and efficiently getting passengers and their bags from point A to B, Southwest consistently ranks as one of the top airlines in customer satisfaction.

Southwest's Service - Emotional Benefits

If you fly Southwest, you understand the difference in the emotional experience versus other airlines. It always starts with the people, and Southwest's employees have a fun, caring, and go-the-extra-mile attitude.

Then there is Southwest's physical experience of newer planes, with leather seats and extra legroom compared to other airlines in the same fare class.

Then there are the perks of free live TV, free snacks, drinks, and affordable $5 wifi and alcoholic beverages. If you're a frequent flier, they periodically send you free alcoholic beverage coupons.

There is also the emotional lift of not being taken advantage of with bag and change fees.

Southwest's service is so good, and their emotional connection with customers is so strong that they can pull off marketing campaigns centered around "Love." Imagine what a bad joke it would be if other airlines tried incorporating "love" into their  marketing .

Southwest Pricing

In 1993, the U.S. Department of Transportation coined the term the "Southwest Effect" for the rapid growth in total air travel in a city-to-city route once Southwest started to fly the route. The "Southwest Effect" is driven by their value equation, which equals benefits - price. While we've gone through the customer benefits of Southwest, let's flip to the other side of the coin:  pricing .

Historically, Southwest has been the price leader in the airline industry. With the growth of ultra-discount airlines (e.g., Frontier, Spirit), they may no longer be the ticket price leader. However, they are probably still the leader in the total cost of flying when you factor in the extra cost of bags, seat selection, change fees and the other charges of ultra-discount airlines.

Southwest utilizes its simple pricing in its #FeesDontFly  marketing campaign . While the competitive herd goes one way, Southwest goes the other way, which is the essence of  competitive differentiation .

The Strategic Takeaways on Value Propositions

A business's value proposition comprises its products, services, and pricing. The goal of a value proposition is to drive better customer value (benefits - price) than competitors. Over the past 45+ years, Southwest has consistently delivered superior customer value, leading them to grow into the largest U.S. domestic airline.

For struggling companies, the first thing to look at is the customer value proposition, which is most likely deficient versus the competition . Even for successful companies, the bottom line is to continuously focus on differentiating the value proposition to improve benefits while driving down costs, which can translate into enhanced profit or price improvement. The Customer Value Wedge is a nice visual to understand this concept better.

GO-TO-MARKET - AMPLIFYING THE VALUE PROPOSITION

The go-to-market strategy of a business model is how a company drives and fulfills the demand for products and services to customers. The three components of go-to-market include  distribution ,  sales , and  marketing . Powerful go-to-market strategies effectively and efficiently amplify the value proposition to the defined target customers.

The big strategic choice with distribution is whether to go direct, indirect, or a hybrid model of both direct and indirect channels. The big strategic goal with sales and marketing is to drive campaigns and activities to increase the size of the customer funnel and accelerate customers through the funnel.

Southwest Direct Distribution

With the rise of digital channels, distribution is currently a hotbed of disruption and innovation . Thousands of companies have cut out significant distribution costs from their value chain, by going directly to customers through digital channels .

Given Southwest's mission of low fares, in the late 90s, as Expedia, Priceline, Orbitz, and other travel websites grew, Southwest decided not to partner with third-party websites and only utilize Southwest.com as their online distribution.  At the time it was a risky move as many airline analysts said Southwest was going to suffer. However, given the strength of Southwest's value proposition and loyalty, the direct distribution strategy paid off.

For Southwest, the estimated savings are ~$700 million a year by not using the travel sites. Southwest can split the $700 million between higher profits and lower fares for customers. It is an example of driving the customer value wedge.

Distribution strategy is a critical element of any go-to-market strategy, and getting it right can be the difference between winning and losing.

Southwest Sales & Marketing

Southwest's marketing, encapsulated in their "Tranfarency" and "Love" campaigns, reflects their low fares and high-quality service mission. "Transfarency" amplifies the rational benefits of Southwest's value proposition, while "Love" amplifies the emotional benefits.

One of the main outputs of any marketing strategy is a campaign, simply a combination of messages and media. There are three media meta-channels:  advocacy, owned, and paid . The beauty of Southwest is how consistent they are in driving its brand messages across all three of these media meta-channels.

With Southwest and most B2C companies, there isn't a "Sales" element to their business model, as in most B2B business models.

Too often, companies blame marketing for their growth woes instead of addressing the lack of value in their value proposition. Two of the most successful retailers, Costco and Trader Joe's, spend almost nothing on marketing but continue to grow through the strength of their value proposition and word-of-mouth advocacy. From 2010 to 2013, Southwest kept its advertising spending almost flat but increased revenues by 46%.

The Strategic Takeaways on Go-to-Market

Too often, executives blame distribution, marketing, and sales strategies for growth woes. They usually replace their sales and marketing leaders or spend more on advertising and salespeople when they need to improve their value proposition.

Go-to-market strategies amplify a value proposition. If the value proposition is inferior to the competition, improve the value proposition and then amplify the value proposition through bigger and better go-to-market strategies.

If your business has a strong value proposition, add growth fuel by heavily investing in distribution, sales, and marketing. And align the go-to-market strategies to the target customer and their typical purchasing journey. Lastly, get the brand messaging right to tap into the rational and emotional benefits of the value proposition.

THE ORGANIZATION - THE HEART & "HOW"

The purpose of an organization is to efficiently and effectively develop and deliver the customer value proposition and go-to-market. Reflect on this for a minute. Is your role and everyone in the company focused on developing and delivering the customer value proposition and go-to-market?

Organizations are simply a collection of processes executed by a combination of people, infrastructure, and partners . The  processes are organized into functions .

There are two types of functions: 1. value chain functions and 2. support functions. Value chain functions create the value proposition and deliver and service the value proposition (i.e., logistics, product development , manufacturing, sales, marketing, and service operations). Support functions support the efficiency and effectiveness of other functions (i.e., procurement , IT, finance, HR, legal).

Solve the Top Before Getting to the Bottom

From a strategic perspective, the better the management team defines the top part of the business model, the easier it is for them to define strong organizational and functional strategies. Strategically aligning the value proposition, go-to-market, and organizational strategies to the targets and "true north" is one of the easiest ways to drive the efficiency and effectiveness of the organization.

Another critical component of organizational strategy is  core competencies , which are those capabilities that a business needs to be world-class at to develop and deliver the competitive differentiation and advantage of the business model.

Now, let's dive into how Southwest reinforces its business model through its organizational strategies. Southwest's mission and value proposition of low cost, high service is accomplished through Southwest's strategies related to  Team Members, Infrastructure, Partners, & Processes .

Southwest's Enduring Focus on People

People are the heart and soul of any organization. Southwest's mantra is "employees first, customers second, shareholders third. As co-founder of Southwest, Herb Kelleher said,  "If the employees serve the customer well, the customer comes back, and that makes the shareholders happy. It's simple, it's not a conflict, it's a chain."

Southwest has one of the most passionate and loyal workforces. They were named  the best company for work-life balance . They've ranked as high as  #13 in the Forbes Best Employer list . They've never had a layoff or cut pay.  Voluntary turnover is less than 2%.  With over 50,000 employees, Southwest does an incredible job keeping its  team members  happy, productive, and passionate. So, the question is how?

There are three main elements to a holistic people strategy :  1. org design ,  2. employee journey, and 3. culture . Let's dig into Southwest's employee journey and culture to understand how they elevate and  realize the potential of their team .

Southwest's Culture

A company's culture starts with its  values , which are reinforced by norms and the environment. Benefits and compensation are also critical to a company's culture.

It is hard to beat Southwest's culture. What other companies  celebrate their culture in their recruiting materials ? And, what other companies have a Culture Services Department and Local and Companywide Culture Committees?

It all starts with Southwest's values, which are broken up into "Live the Southwest Way" (Warrior Spirit, Servant's Heart, Fun-LUVing Attitude) and "Work the Southwest Way" (Safety and Reliability, Friendly Customer Service, and Low Costs).

Southwest norms, which define how Southwest team members interact with each other, reinforce the values. Southwest's environment (offices, planes, gates, etc.) celebrates employees, travel, and Southwest. Southwest also reinforces its values and norms with spirit parties, chili cook-offs, and Luvlines (their employee magazine).

Though Southwest is a low-price airline, its compensation is some of the highest in the industry. And they align all team members to their mission and financial performance through a generous profit-sharing plan. In 2015, Southwest paid out $620 million in profit-sharing, which amounted to over $12,000 per employee. This plan reinforces the Work the Southwest Way values. Southwest's benefits are numerous and generous. There are too many to list, but you should glance at them on  Southwest's website .

While culture may seem squishy and nebulous, a solid and enduring culture can take root in any company if you get the values right and reinforce them with norms, the environment, benefits, and compensation.

Southwest's Employee Journey

Strong companies infuse their mission and values into their  employee journey , including recruiting, hiring, onboarding , development, evaluation, and advancement. Some companies do it better than others, but great companies like Southwest are deliberate and thoughtful in their employee journey strategy.

Southwest leadership knows that starting with the right people, who inherently embody Southwest's values, is paramount to realizing its mission and preserving its culture. Southwest hires less than 2% of applicants and 6% of interviewees. Their interview process is rigorous, with group interviews, fit interviews, and a profile guide.

New hires go through a 4-week training program that trains them on the ins and outs of the job and enculturates them in the Southwest values with fun activities such as egg balancing relays and scavenger hunts. Once a team member begins to work, they are assigned a team member sponsor and participate in new hire parties and luncheons to reinforce the Southwest norms and culture.

Evaluation and advancement are based not only on a team member's skills but also on their demonstration of living the Southwest values. Team member development is reinforced through SWA University's extensive leadership and management development programs, along with continuous feedback and coaching.

There is also a continuous celebration of Southwest team members. Customers see it in the Southwest magazine with monthly articles on team members who have gone above and beyond. Southwest advertisements use team members instead of actors. Team members can give each other SWAG (Southwest Airlines Gratitude) points, utilizing an online platform that allows team members to recognize other team members for their Warrior Spirit, Servant's Heart, or Fun-LUVing Attitude.  Team members can turn their points in for gift cards and merchandise . There are also numerous employee awards, such as the Spirit Award.

Southwest has thoughtfully optimized its employee journey to elevate and realize the potential of its 50,000+ person team.

Southwest's Infrastructure

Infrastructure includes the equipment, information technology, facilities, machinery, and other physical assets a business uses. Infrastructure strategy and decisions are challenging, given the typical significant investment, sometimes long and complex implementations, against the backdrop of a continuously changing future.

In Southwest's case, its infrastructure strategy reinforces its low-cost mission. In 1971, Southwest began service with four Boeing 737s, which were introduced into the market a mere four years earlier. While competitors used 15-25 seat commuter jets for the same type of routes, Southwest's 737s seated 112 passengers, ensuring Southwest a superior cost structure once the planes were fully utilized (which took a few years). Still to this day, Southwest's fleet of 700+ planes is all Boeing 737s, compared to United Airlines, which utilizes  over 20 types of aircraft .

As stated in  Southwest's 10-K ,  "The Company's low-cost structure has historically been facilitated by Southwest's use of a single aircraft type, the Boeing 737, an operationally efficient point-to-point route structure, and highly productive employees. Southwest's use of a single aircraft type has allowed for simplified scheduling, maintenance, flight operations, and training activities."

Southwest's no-seat assignments policy massively simplifies its systems and processes, with no need to track seats and seat assignments for every plane for every flight for an entire year out.

Then there is the decision, back in the early 2000s, not to install in-flight entertainment, which would have cost multiple millions of dollars per plane and led to installation downtime. The weight of each in-seat display unit can be upwards of 13 pounds. Every pound of extra weight adds ~$1,400 per year per plane in extra fuel. 13 pounds per seat adds ~$3 million in additional operating costs per year per aircraft. In-flight entertainment didn't align with their low-cost mission. Fast forward a decade, and now Southwest has arguably the best in-flight entertainment with free live TV with BYOD (bring your own device).

Southwest has always aligned its infrastructure strategy with its mission and value proposition, leading to its unit cost leadership of 4.4 cents per available seat mile versus 5.4 to 5.8 cents for other airlines.

Southwest's Partners

Partners are all those companies that support a business. To understand the breadth of partners in a company, simply look at the accounts payable list to see all the partners. Now, while many partners are transactional, in most businesses, a few strategic partners can support the success of a business model.

In the case of Southwest, Boeing is a strong and important strategic partner. Here is an excellent quote from a  nice history of the Boeing / Southwest partnership,

"Our relationship with Southwest is about more than just delivering great airplanes," said Carolyn Corvi, vice president and general manager of the Boeing 737/757 Programs. "It's about understanding their business, trusting each other, and working together to achieve solutions. We know that while they have a lot of fun and play hard, they also run a business model that the entire industry emulates and admires. We are delighted and honored to have such a wonderful partner."

And you can see the benefits of this partnership, with Southwest often being the launch partner on Boeing's new 737 and customizing them to meet the needs of Southwest's customers. Take a look at the  737-800 MAX as an example .

Southwest's Processes

Every action in a business is a process, whether acknowledged as one or not. The key to processes is that they are lean and efficient by reducing non-value-added actions and inventory, otherwise known as waste. For Southwest, the foundation of processes is great people, infrastructure, and partners, which enables them to have super lean & low-cost processes and high plane utilization.

Just think about Southwest's quick gate turnaround, which originated as a 10-minute turnaround challenge,  which you can read about here . They only use 737s, so their turnaround teams and training are optimized on one type of plane. They don't have food carts, and they have customers and stewards clean up during deplaning. Through the profit-sharing plan, their team members are incentivized to get planes out on time and turn them around quickly.

Or, think about their no-seat assignments, which help them lean out many processes. Customer service interactions about seat assignments are non-existent, which also lowers IT costs by eliminating the complexity of seat assignments. Furthermore, the first customers to check in are the first to get their boarding number, which drives earlier check-in and better over / under-booking  metrics , eliminating the need to kick paying customers off an overbooked flight.

Southwest's lean processes also make it the historical leader in on-time and baggage performance. The collective focus on lean processes helps Southwest's team members realize their mission of being a low-cost airline.

Strategic Takeaways on Organizations

Southwest's organization efficiently and effectively develops and delivers its value proposition and go-to-market. Southwest's alignment of its entire business model from the mission to the targets to the value proposition, go-to-market, and the organization is extremely rare. So is their phenomenal revenue growth and 45 years of profitability.

BUSINESS MODEL STRATEGY

If a company doesn't have a mission or has a weak mission, fix that first. If the target markets, customers, and geographies are too broad, then focus them on the most lucrative. If the value proposition doesn't drive better customer value than the competition, then solve that. If the value proposition is strong, then focus on scaling through an improved go-to-market strategy. The more focused the top part of the business model, the easier it is to develop great organizational and functional strategies. If the business model is robust and working, then, and only then, think about expanding into new markets, customer segments, or geographies.

Every company has the potential to grow for decades, but it all comes down to strategy and execution.

If you need to develop a business model strategy, I encourage you to read  developing a strategy  or  set up some time with me  to start figuring it out.

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  • 7 strategic planning models, plus 8 fra ...

7 strategic planning models, plus 8 frameworks to help you get started

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Strategic planning is vital in defining where your business is going in the next three to five years. With the right strategic planning models and frameworks, you can uncover opportunities, identify risks, and create a strategic plan to fuel your organization’s success. We list the most popular models and frameworks and explain how you can combine them to create a strategic plan that fits your business.

A strategic plan is a great tool to help you hit your business goals . But sometimes, this tool needs to be updated to reflect new business priorities or changing market conditions. If you decide to use a model that already exists, you can benefit from a roadmap that’s already created. The model you choose can improve your knowledge of what works best in your organization, uncover unknown strengths and weaknesses, or help you find out how you can outpace your competitors.

In this article, we cover the most common strategic planning models and frameworks and explain when to use which one. Plus, get tips on how to apply them and which models and frameworks work well together. 

Strategic planning models vs. frameworks

First off: This is not a one-or-nothing scenario. You can use as many or as few strategic planning models and frameworks as you like. 

When your organization undergoes a strategic planning phase, you should first pick a model or two that you want to apply. This will provide you with a basic outline of the steps to take during the strategic planning process.

[Inline illustration] Strategic planning models vs. frameworks (Infographic)

During that process, think of strategic planning frameworks as the tools in your toolbox. Many models suggest starting with a SWOT analysis or defining your vision and mission statements first. Depending on your goals, though, you may want to apply several different frameworks throughout the strategic planning process.

For example, if you’re applying a scenario-based strategic plan, you could start with a SWOT and PEST(LE) analysis to get a better overview of your current standing. If one of the weaknesses you identify has to do with your manufacturing process, you could apply the theory of constraints to improve bottlenecks and mitigate risks. 

Now that you know the difference between the two, learn more about the seven strategic planning models, as well as the eight most commonly used frameworks that go along with them.

[Inline illustration] The seven strategic planning models (Infographic)

1. Basic model

The basic strategic planning model is ideal for establishing your company’s vision, mission, business objectives, and values. This model helps you outline the specific steps you need to take to reach your goals, monitor progress to keep everyone on target, and address issues as they arise.

If it’s your first strategic planning session, the basic model is the way to go. Later on, you can embellish it with other models to adjust or rewrite your business strategy as needed. Let’s take a look at what kinds of businesses can benefit from this strategic planning model and how to apply it.

Small businesses or organizations

Companies with little to no strategic planning experience

Organizations with few resources 

Write your mission statement. Gather your planning team and have a brainstorming session. The more ideas you can collect early in this step, the more fun and rewarding the analysis phase will feel.

Identify your organization’s goals . Setting clear business goals will increase your team’s performance and positively impact their motivation.

Outline strategies that will help you reach your goals. Ask yourself what steps you have to take in order to reach these goals and break them down into long-term, mid-term, and short-term goals .

Create action plans to implement each of the strategies above. Action plans will keep teams motivated and your organization on target.

Monitor and revise the plan as you go . As with any strategic plan, it’s important to closely monitor if your company is implementing it successfully and how you can adjust it for a better outcome.

2. Issue-based model

Also called goal-based planning model, this is essentially an extension of the basic strategic planning model. It’s a bit more dynamic and very popular for companies that want to create a more comprehensive plan.

Organizations with basic strategic planning experience

Businesses that are looking for a more comprehensive plan

Conduct a SWOT analysis . Assess your organization’s strengths, weaknesses, opportunities, and threats with a SWOT analysis to get a better overview of what your strategic plan should focus on. We’ll give into how to conduct a SWOT analysis when we get into the strategic planning frameworks below.

Identify and prioritize major issues and/or goals. Based on your SWOT analysis, identify and prioritize what your strategic plan should focus on this time around.

Develop your main strategies that address these issues and/or goals. Aim to develop one overarching strategy that addresses your highest-priority goal and/or issue to keep this process as simple as possible.

Update or create a mission and vision statement . Make sure that your business’s statements align with your new or updated strategy. If you haven’t already, this is also a chance for you to define your organization’s values.

Create action plans. These will help you address your organization’s goals, resource needs, roles, and responsibilities. 

Develop a yearly operational plan document. This model works best if your business repeats the strategic plan implementation process on an annual basis, so use a yearly operational plan to capture your goals, progress, and opportunities for next time.

Allocate resources for your year-one operational plan. Whether you need funding or dedicated team members to implement your first strategic plan, now is the time to allocate all the resources you’ll need.

Monitor and revise the strategic plan. Record your lessons learned in the operational plan so you can revisit and improve it for the next strategic planning phase.

The issue-based plan can repeat on an annual basis (or less often once you resolve the issues). It’s important to update the plan every time it’s in action to ensure it’s still doing the best it can for your organization.

You don’t have to repeat the full process every year—rather, focus on what’s a priority during this run.

3. Alignment model

This model is also called strategic alignment model (SAM) and is one of the most popular strategic planning models. It helps you align your business and IT strategies with your organization’s strategic goals. 

You’ll have to consider four equally important, yet different perspectives when applying the alignment strategic planning model:

Strategy execution: The business strategy driving the model

Technology potential: The IT strategy supporting the business strategy

Competitive potential: Emerging IT capabilities that can create new products and services

Service level: Team members dedicated to creating the best IT system in the organization

Ideally, your strategy will check off all the criteria above—however, it’s more likely you’ll have to find a compromise. 

Here’s how to create a strategic plan using the alignment model and what kinds of companies can benefit from it.

Organizations that need to fine-tune their strategies

Businesses that want to uncover issues that prevent them from aligning with their mission

Companies that want to reassess objectives or correct problem areas that prevent them from growing

Outline your organization’s mission, programs, resources, and where support is needed. Before you can improve your statements and approaches, you need to define what exactly they are.

Identify what internal processes are working and which ones aren’t. Pinpoint which processes are causing problems, creating bottlenecks , or could otherwise use improving. Then prioritize which internal processes will have the biggest positive impact on your business.

Identify solutions. Work with the respective teams when you’re creating a new strategy to benefit from their experience and perspective on the current situation.

Update your strategic plan with the solutions. Update your strategic plan and monitor if implementing it is setting your business up for improvement or growth. If not, you may have to return to the drawing board and update your strategic plan with new solutions.

4. Scenario model

The scenario model works great if you combine it with other models like the basic or issue-based model. This model is particularly helpful if you need to consider external factors as well. These can be government regulations, technical, or demographic changes that may impact your business.

Organizations trying to identify strategic issues and goals caused by external factors

Identify external factors that influence your organization. For example, you should consider demographic, regulation, or environmental factors.

Review the worst case scenario the above factors could have on your organization. If you know what the worst case scenario for your business looks like, it’ll be much easier to prepare for it. Besides, it’ll take some of the pressure and surprise out of the mix, should a scenario similar to the one you create actually occur.

Identify and discuss two additional hypothetical organizational scenarios. On top of your worst case scenario, you’ll also want to define the best case and average case scenarios. Keep in mind that the worst case scenario from the previous step can often provoke strong motivation to change your organization for the better. However, discussing the other two will allow you to focus on the positive—the opportunities your business may have ahead.

Identify and suggest potential strategies or solutions. Everyone on the team should now brainstorm different ways your business could potentially respond to each of the three scenarios. Discuss the proposed strategies as a team afterward.

Uncover common considerations or strategies for your organization. There’s a good chance that your teammates come up with similar solutions. Decide which ones you like best as a team or create a new one together.

Identify the most likely scenario and the most reasonable strategy. Finally, examine which of the three scenarios is most likely to occur in the next three to five years and how your business should respond to potential changes.

5. Self-organizing model

Also called the organic planning model, the self-organizing model is a bit different from the linear approaches of the other models. You’ll have to be very patient with this method. 

This strategic planning model is all about focusing on the learning and growing process rather than achieving a specific goal. Since the organic model concentrates on continuous improvement , the process is never really over.

Large organizations that can afford to take their time

Businesses that prefer a more naturalistic, organic planning approach that revolves around common values, communication, and shared reflection

Companies that have a clear understanding of their vision

Define and communicate your organization’s cultural values . Your team can only think clearly and with solutions in mind when they have a clear understanding of your organization's values.

Communicate the planning group’s vision for the organization. Define and communicate the vision with everyone involved in the strategic planning process. This will align everyone’s ideas with your company’s vision.

Discuss what processes will help realize the organization’s vision on a regular basis. Meet every quarter to discuss strategies or tactics that will move your organization closer to realizing your vision.

6. Real-time model

This fluid model can help organizations that deal with rapid changes to their work environment. There are three levels of success in the real-time model: 

Organizational: At the organizational level, you’re forming strategies in response to opportunities or trends.

Programmatic: At the programmatic level, you have to decide how to respond to specific outcomes or environmental changes.

Operational: On the operational level, you will study internal systems, policies, and people to develop a strategy for your company.

Figuring out your competitive advantage can be difficult, but this is absolutely crucial to ensure success. Whether it’s a unique asset or strength your organization has or an outstanding execution of services or programs—it’s important that you can set yourself apart from others in the industry to succeed.

Companies that need to react quickly to changing environments

Businesses that are seeking new tools to help them align with their organizational strategy

Define your mission and vision statement. If you ever feel stuck formulating your company’s mission or vision statement, take a look at those of others. Maybe Asana’s vision statement sparks some inspiration.

Research, understand, and learn from competitor strategy and market trends. Pick a handful of competitors in your industry and find out how they’ve created success for themselves. How did they handle setbacks or challenges? What kinds of challenges did they even encounter? Are these common scenarios in the market? Learn from your competitors by finding out as much as you can about them.

Study external environments. At this point, you can combine the real-time model with the scenario model to find solutions to threats and opportunities outside of your control.

Conduct a SWOT analysis of your internal processes, systems, and resources. Besides the external factors your team has to consider, it’s also important to look at your company’s internal environment and how well you’re prepared for different scenarios.

Develop a strategy. Discuss the results of your SWOT analysis to develop a business strategy that builds toward organizational, programmatic, and operational success.

Rinse and repeat. Monitor how well the new strategy is working for your organization and repeat the planning process as needed to ensure you’re on top or, perhaps, ahead of the game. 

7. Inspirational model

This last strategic planning model is perfect to inspire and energize your team as they work toward your organization’s goals. It’s also a great way to introduce or reconnect your employees to your business strategy after a merger or acquisition.

Businesses with a dynamic and inspired start-up culture

Organizations looking for inspiration to reinvigorate the creative process

Companies looking for quick solutions and strategy shifts

Gather your team to discuss an inspirational vision for your organization. The more people you can gather for this process, the more input you will receive.

Brainstorm big, hairy audacious goals and ideas. Encouraging your team not to hold back with ideas that may seem ridiculous will do two things: for one, it will mitigate the fear of contributing bad ideas. But more importantly, it may lead to a genius idea or suggestion that your team wouldn’t have thought of if they felt like they had to think inside of the box.

Assess your organization’s resources. Find out if your company has the resources to implement your new ideas. If they don’t, you’ll have to either adjust your strategy or allocate more resources.

Develop a strategy balancing your resources and brainstorming ideas. Far-fetched ideas can grow into amazing opportunities but they can also bear great risk. Make sure to balance ideas with your strategic direction. 

Now, let’s dive into the most commonly used strategic frameworks.

8. SWOT analysis framework

One of the most popular strategic planning frameworks is the SWOT analysis . A SWOT analysis is a great first step in identifying areas of opportunity and risk—which can help you create a strategic plan that accounts for growth and prepares for threats.

SWOT stands for strengths, weaknesses, opportunities, and threats. Here’s an example:

[Inline illustration] SWOT analysis (Example)

9. OKRs framework

A big part of strategic planning is setting goals for your company. That’s where OKRs come into play. 

OKRs stand for objective and key results—this goal-setting framework helps your organization set and achieve goals. It provides a somewhat holistic approach that you can use to connect your team’s work to your organization’s big-picture goals.  When team members understand how their individual work contributes to the organization’s success, they tend to be more motivated and produce better results

10. Balanced scorecard (BSC) framework

The balanced scorecard is a popular strategic framework for businesses that want to take a more holistic approach rather than just focus on their financial performance. It was designed by David Norton and Robert Kaplan in the 1990s, it’s used by companies around the globe to: 

Communicate goals

Align their team’s daily work with their company’s strategy

Prioritize products, services, and projects

Monitor their progress toward their strategic goals

Your balanced scorecard will outline four main business perspectives:

Customers or clients , meaning their value, satisfaction, and/or retention

Financial , meaning your effectiveness in using resources and your financial performance

Internal process , meaning your business’s quality and efficiency

Organizational capacity , meaning your organizational culture, infrastructure and technology, and human resources

With the help of a strategy map, you can visualize and communicate how your company is creating value. A strategy map is a simple graphic that shows cause-and-effect connections between strategic objectives. 

The balanced scorecard framework is an amazing tool to use from outlining your mission, vision, and values all the way to implementing your strategic plan .

You can use an integration like Lucidchart to create strategy maps for your business in Asana.

11. Porter’s Five Forces framework

If you’re using the real-time strategic planning model, Porter’s Five Forces are a great framework to apply. You can use it to find out what your product’s or service’s competitive advantage is before entering the market.

Developed by Michael E. Porter , the framework outlines five forces you have to be aware of and monitor:

[Inline illustration] Porter’s Five Forces framework (Infographic)

Threat of new industry entrants: Any new entry into the market results in increased pressure on prices and costs. 

Competition in the industry: The more competitors that exist, the more difficult it will be for you to create value in the market with your product or service.

Bargaining power of suppliers: Suppliers can wield more power if there are less alternatives for buyers or it’s expensive, time consuming, or difficult to switch to a different supplier.

Bargaining power of buyers: Buyers can wield more power if the same product or service is available elsewhere with little to no difference in quality.

Threat of substitutes: If another company already covers the market’s needs, you’ll have to create a better product or service or make it available for a lower price at the same quality in order to compete.

Remember, industry structures aren’t static. The more dynamic your strategic plan is, the better you’ll be able to compete in a market.

12. VRIO framework

The VRIO framework is another strategic planning tool designed to help you evaluate your competitive advantage. VRIO stands for value, rarity, imitability, and organization.

It’s a resource-based theory developed by Jay Barney. With this framework, you can study your firmed resources and find out whether or not your company can transform them into sustained competitive advantages. 

Firmed resources can be tangible (e.g., cash, tools, inventory, etc.) or intangible (e.g., copyrights, trademarks, organizational culture, etc.). Whether these resources will actually help your business once you enter the market depends on four qualities:

Valuable : Will this resource either increase your revenue or decrease your costs and thereby create value for your business?

Rare : Are the resources you’re using rare or can others use your resources as well and therefore easily provide the same product or service?

Inimitable : Are your resources either inimitable or non-substitutable? In other words, how unique and complex are your resources?

Organizational: Are you organized enough to use your resources in a way that captures their value, rarity, and inimitability?

It’s important that your resources check all the boxes above so you can ensure that you have sustained competitive advantage over others in the industry.

13. Theory of Constraints (TOC) framework

If the reason you’re currently in a strategic planning process is because you’re trying to mitigate risks or uncover issues that could hurt your business—this framework should be in your toolkit.

The theory of constraints (TOC) is a problem-solving framework that can help you identify limiting factors or bottlenecks preventing your organization from hitting OKRs or KPIs . 

Whether it’s a policy, market, or recourse constraint—you can apply the theory of constraints to solve potential problems, respond to issues, and empower your team to improve their work with the resources they have.

14. PEST/PESTLE analysis framework

The idea of the PEST analysis is similar to that of the SWOT analysis except that you’re focusing on external factors and solutions. It’s a great framework to combine with the scenario-based strategic planning model as it helps you define external factors connected to your business’s success.

PEST stands for political, economic, sociological, and technological factors. Depending on your business model, you may want to expand this framework to include legal and environmental factors as well (PESTLE). These are the most common factors you can include in a PESTLE analysis:

Political: Taxes, trade tariffs, conflicts

Economic: Interest and inflation rate, economic growth patterns, unemployment rate

Social: Demographics, education, media, health

Technological: Communication, information technology, research and development, patents

Legal: Regulatory bodies, environmental regulations, consumer protection

Environmental: Climate, geographical location, environmental offsets

15. Hoshin Kanri framework

Hoshin Kanri is a great tool to communicate and implement strategic goals. It’s a planning system that involves the entire organization in the strategic planning process. The term is Japanese and stands for “compass management” and is also known as policy management. 

This strategic planning framework is a top-down approach that starts with your leadership team defining long-term goals which are then aligned and communicated with every team member in the company. 

You should hold regular meetings to monitor progress and update the timeline to ensure that every teammate’s contributions are aligned with the overarching company goals.

Stick to your strategic goals

Whether you’re a small business just starting out or a nonprofit organization with decades of experience, strategic planning is a crucial step in your journey to success. 

If you’re looking for a tool that can help you and your team define, organize, and implement your strategic goals, Asana is here to help. Our goal-setting software allows you to connect all of your team members in one place, visualize progress, and stay on target.

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10 Business Growth Strategies + Successful Examples

10 Business Growth Strategies + Successful Examples

Casey O'Connor

What Is a Business Growth Strategy?

How to develop a business growth strategy, 10 business growth strategies explained, examples of successful growth strategies, tips for business growth in 2023.

All businesses, regardless of size or industry, hope to achieve growth in their lifetime. 

The specific intended outcomes of business growth goals will vary depending on the size of your company, its strengths and needs, and its position in the market. 

Unfortunately, although all businesses aim to grow, only 25% of them make it to 15 years of operation. Effective methods and strategies must be executed correctly in order to expand; this is where business growth strategies come into play.

A business growth strategy is a framework of the actions a business will take to meet their growth goals, and can help your organization achieve them for scalable success. 

In this article, we’ll go over everything you need to know about business growth strategies, including what they are, how to develop one, and ten of the most effective ones available for businesses today. 

Here’s what we’ll cover:

  • How to Develop a Business Growth Strategy 

A business growth strategy is an outline of the methods, tactics, and specific actions an organization will use to meet business goals. 

Business growth strategies can help businesses achieve a variety of different goals. 

Some business growth strategies are focused on revenue, while others prioritize the size of the customer base. 

Some business growth strategies are all about increasing an organization’s physical presence (opening a new store location, for example), while others are about developing new products or marketing to new audiences. 

A business growth strategy is basically an action plan, based on relevant market research, that explains exactly how your business will grow. It’s designed to help businesses capture more market share.

The specifics of your business growth strategy will depend on the unique needs of your business.

That being said, the process of developing the framework for new business growth strategies is more or less the same each time. 

how to develop a business growth strategy

1. Perform Market Research

Solid business growth strategies are always based on recent and relevant market data. 

Thorough market research will give you insight into current and potential customer preferences, industry trends, and your company’s position in the market relative to its competitors. 

It’s extremely important to get the lay of the land, so to speak, before you design your business growth strategy. Effective business growth goals need to be created using context from the overall market.

2. Establish Goals

You can’t have a business growth strategy without concrete goals. 

business growth strategies: SMART goals

In the beginning, try to plan short-term goals. Your business growth strategies should be focused on month-long or quarter-long periods as you get started. This will enable your team to go through the goal-setting and strategy-planning process quickly and frequently.

3. Identify Your Growth Strategy

There are a number of different specific growth strategies for your team to consider that may meet your growth needs. The growth strategy you choose will ultimately depend on your organization’s budget, opportunities, competition , and goals. 

We’ll go over some of the most effective business growth strategies in the next section of this article. 

4. Map Out Your Execution Plan

Once the high-level planning is complete, it’s time to outline the exact actions your team will take to meet your growth goals. 

business growth strategies: go-to-market-strategy

5. Create a Forecast

business growth strategies: sales forecast

6. Monitor, Measure, and Optimize

Once you start executing your business growth strategy, you need to monitor its progress in real-time. 

Make sure you’re measuring your activities and their results at regular intervals, and follow a standardized process for tracking and analyzing data.

Tip: Ensure you have the right tools in place to ensure growth with our free blueprint below.

The Optimal Technology Stack for B2B Sales Teams

Following are 10 of the most effective and common business growth strategies. 

business growth strategies

1. Market Penetration

A market penetration strategy is designed to help your organization increase its market share. The goal is to sell more of an existing product in an existing market.

One way to achieve a market penetration strategy is by lowering prices or offering promotions and discounts. 

Market penetration is a particularly effective strategy for SMB businesses because it is low-risk. 

Other effective tactics in a market penetration strategy include:

  • Discounts for bulk/volume purchases
  • Increase the number of distributors/dealers you work with 
  • Offer free trials
  • Direct marketing 

The bottom line is to sell more of your product in your existing market. In a market penetration strategy, the company is aiming to reach the maximum number of customers in the market until it becomes saturated.

2. Market Development

A market development strategy is all about selling existing products to new markets. This business growth strategy is aimed at growing the customer base. It works well for companies who are still working to find their position in a strong existing market. 

Market development relies on astute and thorough market research. Succeeding with this strategy is about more than just beating out your direct competitors. You may need to explore new geography, new customer segments, or new channels. Franchising is also a good option for certain industries.

Market development can be very lucrative; most companies achieve the most profitable growth when they’re able to move into an adjacent target market.

3. Product Expansion 

A product expansion business growth strategy relies on the creation of new products and services. These new offerings help your organization increase their market share. 

Many teams get creative with a product expansion strategy. It doesn’t always mean that you need to create brand-new products. You could also add updates to existing products, or add new varieties. You could also create bundles of existing products. 

Market research and marketing strategy analysis will help you determine the market needs and how you can most effectively tweak your offerings to meet those needs. 

4. Acquisition

Most people are very familiar with acquisitions. An acquisition is a business occurrence in which one company purchases another company. 

Acquisitions are sometimes lumped together with mergers, but the two are actually slightly different concepts. In an acquisition, one company takes over another one. In a merger, two companies join together. 

Acquisitions can be extremely profitable, but they require a lot of capital upfront, healthy cash flow, and significant debt capacity. For those reasons, acquisitions are usually completed by mature companies. 

If your organization can manage the expenses, though, they’re a great business growth strategy. Acquisitions reduce competition, give you access to proprietary technology, and expand your customer base.

5. Alternative Channels

One cost-effective business growth strategy is marketing on alternative channels. 

This strategy allows you to potentially reach new markets without creating any product changes. Exploring alternative channels is a very popular business growth strategy for small businesses who are just getting off the ground.

Consider the following alternative channels as you grow your business: 

  • Website presence
  • Yelp business page
  • New platforms for sales, like Amazon, eBay, or Etsy
  • Paid search ads
  • Wholesalers
  • Email marketing
  • Social media (Facebook, Twitter, LinkedIn, Instagram)
  • Business blog 

Omnichannel marketing is growing in popularity and is a very effective way to meet sales goals in the 21st century.

6. Strategic Partnerships

In a strategic partnership, two companies join forces for mutual benefit, while each still maintaining their own brand identity and operations. 

Partnerships allow each company to access the other’s customer base. It also allows for the shared use of critical resources like manpower, equipment, and technology. 

Because there’s less at stake, partnerships are more common than mergers or acquisitions.

7. Market Segmentation

With a market segmentation growth strategy, sales and marketing teams work to carefully segment their markets based on factors such as geography, demographics, or buying preferences. 

This highly-targeted segmentation allows sales teams to focus on and specialize in segments that are less explored than others already served by the competition. 

business growth strategies: personalization is key to winning business

8. Organic Growth

The most ideal business growth strategy is known as organic growth. 

Organic growth requires little to no advertising, mergers, or acquisitions, and instead represents an optimized set of conditions that allow your marketing campaigns and products to reach many parts of your target audience without much effort on your part. 

business growth strategies: customer acquisition cost

9. Diversification

This type of business growth strategy can be risky, but also has a high return when executed correctly. 

Diversification means that sales teams sell either new products, or sell to new markets — or, in some cases, both. 

  • Horizontal diversification: sales reps sell a new product to the current market.
  • Vertical diversification: a business starts competing with its suppliers or customers. 
  • Concentric diversification: a company creates a new product that’s similar to an existing product.
  • Conglomerate diversification:  sales reps sell new products to new audiences.

Diversification requires a lot of capital and has the highest risk of failure out of all of the business growth strategies outlined in this article.

10. Cost Reduction

A cost reduction business growth strategy relies on organizations to reduce their operating costs. This frees up cash for reinvestment into growth opportunities and improves your overall bottom line.

Here are some strategies for implementing a cost reduction strategy: 

  • Use accounting software to reduce or eliminate errors
  • Go paperless
  • Consider automation and/or outsourcing where possible
  • Reduce traditional advertising methods and go digital instead

There is no one-size-fits-all when it comes to business growth strategies. You may find that several could fit the needs of your team, or that your needs change over time. It’s perfectly okay to use a variety of strategies over time — or even simultaneously.

Every brand with even an inkling of name recognition has successfully used a business growth strategy. Here’s a look at how some of the world’s most well-known companies have used popular business growth strategies to succeed.

Market Penetration: Facebook

business growth strategies: Facebook market penetration

When Mark Zuckerberg launched Facebook, he shared the platform with only his fellow Harvard students. He later opened it up to Stanford, Yale, and Columbia. Later, again, he went on to share it among all the Ivy League schools, and some select Boston ones as well.

This is a perfect example of market penetration. Zuckerberg took his existing product and maximized the number of customers he “sold” it to within his market.

Strategic Partnership: Lyft & Taco Bell

business growth strategies: Lyft and Taco Bell strategic partnership

Lyft & Taco Bell joined forces for one of the most memorable (and delicious) strategic partnerships in pop culture history. 

During the partnership, Lyft offered riders free access to “Taco Mode,” during which passengers could make a pit stop at Taco Bell on the way to their destination. This drove sales up for Taco Bell, and drew hungry customers away from competitor Uber and into the backseat of a Lyft.

Diversification: Amazon

business growth strategies: Amazon diversification

It’s a well-known fact that the online retailer Amazon started as a books-only e-commerce platform. 

Over time, the company expanded to sell toys, DVDs, music, furniture, and — eventually — just about anything you could ever want. 

This is a textbook example of a diversification business growth strategy.

Here are some of our best tips for business growth in 2023. 

Carefully Consider and Combine Strategies

There are many more than the ten business growth strategies outlined here in this article, and each one has advantages and drawbacks. 

Take time — and even trial and error — discover which meets the needs of your specific business goals at any given time. 

In many cases, it’s also appropriate to use more than one business growth strategy at the same time. 

Understand Your Brand Identity 

In order for your business to grow, you need to have a very nuanced and thorough understanding of your brand, its identity, and its position in the market. 

Your business’s strengths, differentiating factors, unique selling points (USPs) , and core competencies will all help your business grow in a sustainable way.

Be Ready to Pivot

Successful and scalable business growth requires flexibility. 

Business growth strategies are great because they help sales and marketing teams stick to a plan, but they also allow teams to monitor progress and adapt strategies as needed. 

The most successful businesses are the ones that keep a careful pulse on their business progress and are ready to make changes as needed. 

Automate Everything 

Truly scalable growth requires capable systems running behind the scenes. 

Sales reps can’t afford to waste time entering data, manually setting appointments, and collating buyer insights into something actionable. 

Sales software like Yesware can help reps save time by automating administrative tasks, so they can focus on revenue-generating sales activities. 

What business growth strategies have been successful for your business?

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15 types of business growth explained

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Influx has built support teams for more than 300 high-growth brands in the US, Australia, and Europe. We hire, train, and empower a remote community with the top 1% of customer support agents, spread over 120+ cities. Learn more about  how it works →

As a business owner, it’s essential to constantly seek new growth opportunities. Critical factors in successful growth are market research, a willingness to take calculated risks, and adapt to changing market conditions. Whether it’s expanding your products, entering new markets, or investing in customer support , you can use various strategies to take your business to the next level. 

15 business growth strategies  

1. organic growth.

Organic growth is the ideal business growth strategy. Organic growth refers to the increase in a company’s revenue and profitability from its existing operations, products, and markets without relying on acquisitions or other external factors. Strategies that businesses can use to improve organic growth include: 

  • Innovating 
  • Identifying new opportunities 
  • Building brand equity 
  • Improve customer experience  
  • Optimize operations 

Rather than relying solely on external expansion, organic growth is a long-term approach that fosters sustainable growth. 

2. Outsourcing  

Outsourcing can be a cost-effective way to grow your business while focusing on core competencies. A company can reduce overhead costs, such as labor, facilities, and equipment, with outsourcing. It can also provide access to specialized expertise, technologies, and processes that may not be available in-house. For example, a company may outsource its customer support with Influx and gain access to 24/7 support, elite agents, and the latest technology needed for scaling your business.

It is important to carefully evaluate potential outsourcing partners to ensure they have the necessary skills, experience, and reputation for delivering quality work. Like any growth strategy, outsourcing comes with risks, such as loss of control over quality and security. The highest level of security for peace of mind solutions drives our relationships with our clients and partners. Please scroll to the bottom of our optimal security blog to review Influx’s security protocol . To reduce costs and streamline operations, outsourcing for growth allows you to stay competitive in a rapidly changing market. 

business growth strategy models

3. Diversification

Diversification is a growth strategy that involves entering into a new market or industry–one that your business is not currently operating in–while creating a new product for that market. Diversification aims to decrease risk while gaining access to new customers and creating new revenue streams. 

There are two main types of diversification: related and unrelated. Related diversification involves expanding into businesses related to the company’s current products/services. Disney’s purchase of ABC is an example of related diversification since they are both aspects of entertainment. On the other hand, diversifying into new industries completely unrelated to a business’s current industry is unrelated diversification, such as Amazon entering the grocery store business. 

Diversification comes with its risks, and there is no guarantee for success. Entering new markets necessitates significant investment in marketing, research, development, and operations. Moreover, diversification can result in a lack of concentration and resources being stretched too thin, which can be detrimental to the company’s current operation. As a result, diversification should be carefully planned and applied strategically.

4. Product development  

Product development is a growth strategy in which a company creates new products or improves existing ones to expand its market share and profits. This strategy involves investing in research and development to identify customer needs and preferences, then using that information to create new or improved products that better meet those needs. The goal is to differentiate the company’s offerings from its competitors, making them more attractive to customers and capturing new market segments.

Product development as a growth strategy can be particularly effective for companies that operate in highly competitive industries, where innovation is key to staying ahead of the competition.

5. Market segmentation  

Market segmentation is a growth strategy that divides a broad target market into smaller groups of consumers with similar needs, characteristics, or behaviors. By doing so, companies can better tailor their products, services, and marketing efforts to meet the needs of each segment, thereby improving competitiveness and profitability. 

The process of market segmentation typically involves several steps, including: 

  • Identifying the target market
  • Analyzing customer needs 
  • Developing segments 
  • Developing targeted marketing strategies 

Market segmentation can help companies better understand and serve their customers and improve their marketing effectiveness, resulting in increased revenue.

6. Market development

Market development is a growth strategy that involves selling existing products in new markets. Rather than developing new products or services, the focus is finding new customers or uses. This may include expanding into different geographic locations, targeting new demographic groups, or finding new applications. To implement a market development strategy, a business needs to conduct market research to identify new opportunities, assess competition, and understand the needs and preferences of the target market. 

Market development can be a viable growth strategy for businesses looking to expand their customer base and increase their revenue without investing in developing new products. 

7. Market penetration  

Market penetration, not to be confused with market development, is the concept of increasing sales of existing products in an existing market. The aim is to sell more of the existing product to existing customers and attract new customers within the same market. This strategy is often achieved by adopting various marketing tactics such as advertising, sales promotion, discounts, and improved distribution channels to increase product visibility. 

Market penetration is a common strategy for businesses with a strong foothold in a particular market but looking to increase their market share or defend against new competitors. This growth strategy is an effective way to achieve growth without the risks and costs associated with developing new products or entering new markets. 

8. Market disruption  

Market disruption involves creating a new market or ‘disrupting’ an existing one by introducing a new product. Market disruption aims to create a new market that did not previously exist or to fundamentally change how an existing market operates by meeting pain points. 

Examples of successful market disruptors include companies like Uber, Airbnb, and Netflix. Each of these companies introduced new business models and technology to their respective markets, fundamentally changing how customers interact with their services. 

Market disruption can be a risky strategy, as it involves significant investment and uncertainty. However, for companies that can successfully disrupt a market, the potential rewards can be substantial. 

business growth strategy models

9. Excellent customer service  

One of the most critical growth strategies is excellent customer service . Excellent customer service can help a business grow in several ways: 

  • Customer retention: When a business provides excellent customer service, it creates a positive experience for the customer, making them more likely to return for future purchases. This increases customer retention and loyalty, leading to repeat business and increased revenue. 
  • Customer referrals: Satisfied customers are more likely to refer their friends and family to a business that provides excellent customer service. This can lead to new customers and increased sales. 
  • Positive reputation: Word of mouth is a powerful marketing tool, and when customers have a positive experience, they are more likely to share it with others. This can help to build a positive reputation, leading to increased trust, credibility, and customer loyalty. 
  • Increased sales: Providing excellent customer service can lead to increased sales, as customers are more likely to make additional purchases and spend more money when they feel valued and appreciated by a business. 
  • Competitive advantage: In today’s competitive marketplace, businesses that provide excellent customer service can stand out from their competitors and gain a competitive advantage. This can lead to increased market share, growth, and long-term success. 

Maintaining a loyal customer base is just as important as acquiring new customers. Scale your operations with Influx, your trusted customer support experts ! 

10. New channels  

Another approach for business growth is to offer products through additional distribution channels. For example, a corporation may decide to sell its goods via retail outlets after previously operating solely online. They may also broaden their market to consumers rather than merely B2B (business-to-business). 

11. Vertical integration  

Vertical integration involves expanding operations into new areas of its supply chain through manufacturing or distributing. In vertical integration, a company takes control of several stages of its production process, from raw materials to distribution. There are two main types of vertical integration: backward and forward. 

Backward integration occurs when a company expands into upstream activities, such as acquiring suppliers or producing raw materials. For example, a car manufacturer that owns a steel mill or a coffee shop that owns a coffee plantation. 

Forward integration occurs when a company expands into downstream activities, such as owning its distribution network or retail outlets. Examples are a car manufacturer that owns its dealership or a clothing manufacturer that owns its retail stores. 

Vertical integration can be expensive and complex to implement, leading to reduced flexibility and a lack of innovation. Alternatively, its advantages include greater control over the supply chain, increased efficiency, better quality control, and the ability to capture a more significant share of the profits generated along the supply chain. 

business growth strategy models

12. Joint venture  

A joint venture is a strategic partnership between two or more companies that agree to pool their resources and expertise to achieve a common goal or undertake a specific project. In a joint venture, the partners share ownership, risks, and profits or losses. 

Joint ventures are often formed when companies want to combine their strengths, such as technology, manufacturing capabilities, distribution channels, or market knowledge, to create new products, enter new markets, or increase their competitive advantage.

13. Acquisitions  

Acquisition is when a company purchases most or all of another company’s shares to gain control of that company. An example would be Google’s acquisition of Android. Some common reasons for acquisition include achieving economies of scale, eliminating competition, or expanding product offerings. An acquisition can occur through various methods, such as a merger, a stock purchase, or an asset purchase. Acquisitions can be complex transactions involving legal, financial, and strategic considerations. 

14. Growth investing  

Growth investing is a stock-buying technique for companies predicted to grow faster than their industry or the overall market. Growth investing typically involves investing in companies in their early stages of development and with the potential for significant future growth. 

One of the risks associated with growth investing is that these companies often have high valuations, making them vulnerable to market volatility and economic downturns. Additionally, companies in their early stages of development may need more proven business models or untested products, which can lead to higher risk for investors. 

Overall, growth investing is a strategy that seeks to generate long-term capital appreciation by investing in companies with high growth potential. It can be an effective way for investors to participate in the growth of innovative companies and industries, but it’s important to carefully evaluate each investment’s risks and potential rewards. 

business growth strategy models

15. Productivity and efficiency  

Productivity and efficiency can be essential growth strategies because they allow companies to do more with less. By improving productivity and efficiency, businesses can increase output, reduce costs, and boost profitability. This can be achieved through various methods, such as process improvements, automation , and better utilization of resources. For example, a manufacturing company might invest in new technology that increases the speed and accuracy of production, or a service company might streamline its processes to reduce the time and effort required to deliver its services. 

Maximize your growth potential with Influx solutions  

Your time is valuable, and you likely have many responsibilities. Outsourcing to a trusted team of experts, like Influx, can free up your time and resources, allowing you to focus on growing your business. Whether you need sales teams or customer support , our solutions are cost-effective and laid out in simple, month-to-month pricing. By growing with Influx, reduce operational costs and remain competitive in today’s fast-paced environment. Find your growth solution now ! 

About the author

Mikayla fuller.

Mikayla is an avid copywriter. If she’s not out on an adventure, you can find her somewhere with a book in hand.

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17 Sustainable Business Growth Strategies: Ideas and Examples

From financial to marketing growth models, you have numerous ways to significantly increase sales or even make the next breakthrough expansion.

On this page:

  • 17 ideas of strategies of business growth (with real-world examples)
  • Infographics in PDF

First, let’s explain what is a growth strategy in business.

Simply, it is a long-term plan to develop and maintain growth in your company as well as to win a larger market share.

It is clear that the final goal is to make greater sales and revenue. However, a successful growth strategy is much more than this.

It allows you to gain a sustainable competitive advantage, helps you to communicate the value of your products, keeps your teams working towards goals, allows you to reach new markets, and reduce the risks.

To be successful a growth strategy, you need to harness many sectors of your business such as marketing, finance, operations, and R&D.

A growth strategy usually starts by collecting ideas and accessing new opportunities.

Here we collected a list of powerful, advanced, and innovative ideas for business growth strategies to get you inspired:

1. Innovation Strategy

Download the above infographic in PDF

Why innovation?

One of the eldest keys to any successful business is being able to come up with new or unique ideas to keep offers fresh.

They recreate the existing ones and transform them into new trending products that will retain customers and attract new leads.

Bringing those ideas to reality means you are creating innovation.

Today, every business claims to be super innovative and modern. So, you have a much greater task in trying to provide a product or service that will benefit customers with new values.

Now, making innovations is one of the most sustainable paths to growth because people constantly want more new products with super capabilities.

Innovations are just critical to success!

A successful innovation strategy can increase workplace productivity, make people remember your brand, help you unlock value, create a way for creative thinking in your organization, and make you stand out from the crowd.

Among the best world-famous examples of companies that never stop innovating are: Google, Amazon, Microsoft, Apple, Samsung, Tesla, Nike, P&G, Hewlett Packard, Alibaba to name a few.

Let’s take Samsung – a global leader in technology, batteries, and chip design. Their innovations seem to be endless.

They have the first bendable OLED screen, the first ultrathin double-sided LCD, etc. Samsung always displays outstanding design and engineering within a cutting-edge technology.

How To Innovate? Some Ways And Ideas:

  • Be ready to invest money in research and development activities
  • Observe customers and ask them for ideas
  • Use difficulties and complaints as a starting point for innovations
  • Watch the competition
  • Ask your staff for ideas
  • Recruit innovative people
  • Don’t just do innovations, stand out there
  • Innovate not only your products but your workplace also

2. Legendary Customer Service And Post Sales Care

Customers today are more likely than ever to require a good service. That’s why creating a customer care plan is one of the most powerful examples of competitive advantage today.

The possibility to create exceptional and memorable customer service is available to almost any business if it truly cares about their customers’ experience.

Unhappy customers won’t grow your organization. Quite the opposite.

Don’t just sell to customers. Offer them also outstanding post-sales customer care and support. View your organization as a constant way of delight for your customers.

Guide them on an enjoyable and a memorable customer journey.

For example, the online shoe retailer Zappos is delivering one of the best service experience. They respond to customer emails at an unbelievably fast speed. They don’t argue about returns.

And they even shop at other stores for customers when they want something particular that is not in Zappos stock.

How To Provide Outstanding Customer Service? Some Ways And Ideas:

  • Give your customers a platform to express themselves (e.g. live chat on your website)
  • Perform marketing intelligence to understand your customer’s preferences, experiences, and habits
  • Build a reward scheme into your customer care strategy
  • Always ask for feedback
  • Show respect and listen carefully. Train your staff to do this.
  • Respond as quickly as possible
  • Always think that your customer is for life

3. Uniqueness

To succeed in our business space where almost every market is crowded, the trick is not being first — it’s being unique as well as hard to copy.

If you can’t be unique, there’s no reason for customers to buy from you instead of your competitors.

To be unique you should find a way to be different and even much better than everyone else. Your business shouldn’t be a cliche.

A unique product provides features and benefits with unique value to customers.

For example, Tesla Motors is unique because it is not just selling cars but also offers new technologies. Choosing Tesla Motors involves choosing a new powerful technology.

Tesla creates and dominates the market for luxury, long-range electric automobiles. However, this market is different from the market for less expensive electric vehicles as well as from the market for luxury gas-powered vehicles. It is a unique proposal.

How your business operates defines how unique it is.

How To Make Your Business Unique:

You can create uniqueness in many aspects of your business:

  • In the quality of your work
  • In the prices
  • In the delivery process
  • In a personal connection with your customers
  • In superlative support, etc.

4. Simplicity

For many leading companies offering simple products is one of the key ways to grow and to do better than their competitors.

Google’s search engine, Apple’s white earbuds, and WhatsApp messenger are just a few of the products that provide great and world-famous simplicity.

Today, less is more. Simple products or processes save people time, effort, and nerves.

In our noisy and dynamic life, people are desperate for automated and super simple products that require very little attention.

Making simple products that make the customer’s life easier is one of the modern business growth strategies that work effectively.

Aldi, the world-famous German-based grocer provides a straightforward shopping experience without confusing customers with complex promotions – this is central to Aldi‘s simplicity.

The company puts efforts into understanding what size variants their audience wants and offers only the range that their customers really need.

The ability to save customers’ time and money while shopping is a vigorous competitive advantage as it allows customers to spend more time and money with friends and family.

How To Provide Simplicity? Ways And Ideas:

  • Invest in cutting-edge technology
  • Make use of automation
  • Achieve simple product design
  • Create a user-friendly interface
  • Focus on function over features
  • Focus on a single consumer need

5. Talent Acquisition And Management

There’s one thing that all the top companies in every industry have: talent.

The best companies have the best employees. Thereby those companies can deliver the best products and services.

No matter which sector you are working in, you should see people as your most valuable asset.

Talented passioned persons committed to their career are the applicants you want to hire.

SAS employer-of-choice and talent management strategy are breathtaking with outstanding results. They have been on 60 Minutes for excellent employee practices more times than any other company.

They are famous with a great range and variety of benefits that bring in an industry-leading turnover rate.

Tips And Ways For Talent Management

  • Find, hire, and train talents
  • Create an attractive culture for talents to retain them
  • Use talent forecasting and talent management systems
  • Create a rewarding system for high-performing employees
  • Develop the job description and key roles
  • Provide opportunities for the staff
  • Help for self-motivation
  • Provide a workplace where employees are free to express their ideas

6. Business Intelligence 

This is one of the most powerful, innovative, and sustainable business growth strategies nowadays.

In recent years, data analytics and Business Intelligence (BI) has become a key advantage for all businesses that want to reach the next level.

BI is a process based on technology that allows you to analyze data and turn it into actionable information you can use for successful data-driven decision-making .

Today, BI is critical for business success as it allows you to understand customer behavior, spot buying patterns and sales trends, optimize processes, and even predict sales, and financial results.

There are many BI and data mining examples .

Chipotle Mexican Grill (the famous American restaurant chain with more than 2400 locations globally) switched to a BI software that allows them to gain a centralized view of all restaurant operations.

Before that, their disparate data sources didn’t allow teams to see a unified view of restaurants. With the new BI solution, they are able to track operational effectiveness on a national scale.

As a result, the speed of report delivery has tripled and saved thousands of hours. Moreover, now Chipotle can obtain understandings to the next level.

How To Implement And Leverage BI? Ways And Ideas:

  • Employ a Chief Data Officer (CDO) and specialists with the right data scientist skills and qualifications
  • Choose the right software tools for your business such as customer intelligence tools , BI reporting tools , etc.
  • Define ways to collect data
  • Implement data management best practices in your organization
  • Use the services of the top data mining companies
  • Clean your existing data
  • Develop a “Data Dictionary”

7. Content Marketing

This is one of the most exciting, powerful, and sustainable business growth strategies you can create today.

An unimaginable number of consumers are looking online for products, services, and solutions every second. And if you could position your business in front of them, then you’d have a tremendous competitive edge.

How to put your business in front of online customers? With a strong content marketing strategy!

So many businesses take their marketing campaigns to the next level by providing quality blog posts, vigorous social media messages, engaging videos, exciting webinars, etc.

For example, Charmin (the toilet paper brand) has a unique and one of the best content marketing examples. Charmin created an app for their customers called Sit or Squat. They built a robust social media campaign around this app to populate it.

With the app, users can review and rate each public restroom on cleanliness. Thus, people can check the nearest toilets around them to see if they are clean or not.

It allows consumers to take part in the content experience themselves.

The content is creative and comical. It shows you how to create awesome content that gets to the heart of your customer’s challenges and provide a simple and effective solution.

Tips For Successful Content Marketing

Creating a sustainable content marketing strategy involves activities such as:

  • Define the best content channels for your business
  • Define the best content types and forms
  • Hire content marketing experts
  • Create a content calendar
  • Set an outstanding blog with valuable and helpful content
  • Create case studies
  • Use content marketing software, etc.

8. Craftsmanship As A Strategy

Believe it or not, craftsmanship still matters in our digital world and become to gain sustainable power. Craftsmanship is in demand more than ever.

Now, it seems like everything we purchase is mass-produced. Thereby, people are hungry for craft or something truly unique. Faster isn’t always better.

In addition, today’s generation is starving for authentic  – be it searching for organic foods, handmade goods, or celebrating artistry.

If you choose to create a craftsmanship strategy, you should devote your business to a tradition of excellence – to offering creative, unique, and even breathtaking products.

Harley-Davidson (motorcycles) is one of the most popular examples of how a craftsmanship strategy work as providing an exceptional and sustainable competitive advantage works.

Today, nearly every person recognizes the classic chopper style of a Harley.

Ways To Boost Your Craftsmanship Strategy:

  • Create something that is perceived as being special, unique, unusual or exceptional
  • Achieve perfection through the mastery of detail
  • Offer products that evoke a feeling of intimacy and harmony
  • Set quality as your top priority
  • Give your products a genuine, unconventional, and original appeal
  • Showcase your products’ craftsmanship online

9. The Strategy Of Speed and Time

As technology speeds almost every aspect of our lives, It seems that we customers are addicted to instant gratification.

We want an immediate connection, immediate satisfaction and require everything to be delivered now.

The instant-gratification culture is here to stay and you can use it to build a sustainable business growth strategy.

In business, speed can be of different types such as speed to market, speedy delivery, or speedy service. You just need to do something faster than the competition.

Amazon Prime, UberEATS, and Jimmy John’s are just a few examples of companies that gain a powerful competitive advantage via making the speed their major priority.

How To Provide Speed? Ways And Ideas:

A Speed strategy might require activities such as:

  • Shorten your production and your time-to-market
  • Implement shorter life cycles
  • Use faster and cheaper production technologies
  • Utilize new delivery channels, etc.

10. Reliability

It is human nature to always search for reliability. The thing we like most is the reliable one.

Every day we demand reliable cars that save money on repairs, reliable cell phone service to stay connected, reliable vendors who deliver on time, reliable restaurants with quality food, etc.

Serving customers reliably is one of the ever modern competitive advantages and keys to business growth strategies.

We all know the results of dealing with unreliable companies. They cost us time, money, stress, and frustration.

For example, Toyota and Lexus are so popular for their reliability that they go on a kind of another realm compared to the competition.

Toyota maintains its product updates simple, without trying to do complicated things at once with the new models. More complexity sometimes means less reliability.

How To Make Your Business Reliable? Ways And Ideas:

  • Build and inspire reliable teams
  • Create reliable services and products
  • Ensure fast response to business emails or customer phone calls
  • Invest in manufacturing high-quality products
  • Commit to achieving the highest level of safety

11. Creativity

With the rise of new technologies, customers are always on demand for improved products that make their life more happy, easy, interesting, or adventurous. And providing these products requires creativity.

Having a creativity-oriented company culture can fuel your business success and reshape your company.

Zappos (the famous shoe e-commerce business) is a great example of a company that has an outstanding creative corporate culture.

Zappos is known for its happiness at work corporate culture. The core values of Zappos are very inspiring. Here are 2 of them: “Build a Positive Team and Family Spirit” and “Pursue Growth and Learning”.

Also, the employees evolve in a fun working environment that strongly encourages their creativity.

Ways To Build And Maintain Creativity:

  • Invest in identifying, measuring, and maintaining human organizational creativity
  • Identify your most creative employees and inspire them
  • Nurture and reward the creative efforts in your company
  • Ensure a supportive culture for creativeness
  • Encourage your staff to be open to opportunities
  • Empower your team to solve customer problems

12. Competitive Market Research And Competitive Intelligence

Competitor marketing research is the process of collecting and analyzing information about your current and potential competitors and market trends.

Now it’s easy to do! Even with the help of some free online competitor analysis tools , you can track everything your competitors do – from product to people to promotions.

It allows you to find out what is working for other businesses in your industry and spot market opportunities. Thus, you can make the most effective business growth strategies and gain competitive advantages.

Competitive market research combined with marketing intelligence will give you insight into improving multiple aspects of your overall business results.

Also, they provide you with info about the industry you’re in — its highlights, new players, old established companies, innovations, and disasters.

The leading companies cleverly harvest the benefits of someone else’s successes or failures. Google carefully pays attention to the mistakes in Yahoo’s UI.

Uber exploited the public enthusiasm for Lyft. Apple redefined the mobile market  — a category that Motorola pioneered.

How To Do Competitive Maret Research?

  • Use powerful web competitive intelligence tools
  • Identify areas to spy on your competitors such as their products, employees, marketing campaigns, SEO strategies, etc.
  • Evaluate the content on the competitor website such as blog posts, white papers, eBooks, videos, podcasts, press releases, case studies, etc.
  • Research social media posts of your competitors
  • Become a customer of your competitor and purchase competitor products
  • Survey competitor customers
  • Ask your new customers who they used before, and why they turned to you

13. Go Green Strategy

Consumers all over the world are becoming more and more passionate about protecting the planet. A going green business strategy shows your customers you don’t put profits ahead of the environment.

Today clients are ready to pay more for products and services that support the green cause.

If you go green, everything your company does should reflect its sustainability values. You cannot claim to be sustainable while doing some unsustainable activities.

On its website, The Body Shop clearly identifies its values.

They are against animal testing, defend human rights, and protect the planet. And The Body Shop lives up to these values.

Its message helps the company stand out from the crowd.

Some Ways To Go Green:

  • Make green thinking a part of your company culture
  • Do business with green vendors
  • Get some relevant certificates like Leaping Bunny Certification, etc.
  • Host a fundraising event
  • Make your office more environmentally friendly

14. Leverage Global Platforms

Are you an e-commerce business that sells products online? If yes, why not use Amazon’s FBA service to extend your potential audience and reach global customers?

Or maybe you are in the business of renting vacation homes? Then you can use and leverage platforms like Airbnb, InvitedHome, HomeAway to help you grow your business.

Leveraging global, proven, and world-famous platforms is one of the quickest business growth strategies you can use easily without many efforts or investments.

Find a platform relevant to your business and industry and use it to grow your business effortlessly.

Today online platforms have tremendous power because they connect buyers with businesses, unlock new supply and demand streams, and allow you to gain valuable market insights.

How To Leverage Global Platforms?

  • Decide which platform fits your business the best – Amazon, Facebook, Alibaba, Uber, Upwork, Pinterest, Youtube, etc.
  • Create marketing strategies, messages, and efforts relevant to the platform
  • Analyze the performance and results on each platform
  • Read and follow best practices and guides on how to use the platform successfully

15. Create Strategic Partnerships

Do you know why small as well as large businesses create long-lasting strategic partnerships with other companies? It is not only because “two heads are better than one”.

There are many other reasons. For example, strategic partnerships can give you access to additional resources such as software and a large social media following.

The alliance also grows your customer base and help you reach new markets, whether that is geographically or otherwise.

The partnership between Google and Luxottica is a spectacular example.

Tech giant Google and luxury eyewear business Luxottica partnered to build Google Glasses – a great new solution. Their alliance has allowed Google to reach the fashion market, and Luxottica the tech market.

How To Create Strategic Partnerships?

  • Consider and estimate different types of partnership such as strategic marketing partnerships, financial alliances, technology partnerships, etc.
  • Be clear on the value you want to receive and the value you can provide to your partner
  • Understand why your potential partners want to connect
  • Work from a shared vision and principles
  • Aim for proactive communication

16. Reputation Management

A reputation can break or make a business. People depend on the opinions of others. Companies with a good reputation are trusted the most.

A positive reputation has enormous power. It allows a company to keep its best people, attract and retain customers, win higher trust, minimize the risk, and enter new markets easily.

We all know how easily a reputation can be changed today – online – with some customer comments, reviews, or blog posts. Every day, people review businesses from 1 to 5 ratings and comment on social media posts.

So, managing a good reputation is one of the must-have business growth strategies. Your reputation management should be solid and strong.

Sony, the Japanese conglomerate manages its reputation greatly with strengths such as top-notch customer service; generous charitable activities that focus on the arts, culture, technology and the environment; and a trailblazing product range.

How To Maintain A Great Reputation?

There are many ways you can maintain a great reputation. For instance:

  • Always be honest, reliable, act with integrity, meet deadlines, and accept responsibility for your actions
  • Join professional groups and boards, go to industry events, speak at public events, give guest lectures
  • Help customers reach their goals
  • Provide top-notch customer service
  • Be dedicated to charity
  • Makes products with outstanding quality
  • Create a blog with professional, helpful, valuable, and inspirational content
  • Be active on Social Media
  • Ask your customers to write reviews
  • Publicly respond to customer complaints
  • Use tools that monitor your reputation
  • Create an outstanding website

17. Focus on Certifications And Awards

What certifications do you have that prove your skills? What awards do you have?

These questions are becoming more and more important nowadays. Why?

Because certifications and awards validate your business. They are a form of insurance of who you are and what you are doing.

Subsequently winning awards makes your company shine and provide benefits such as boosting your reputation, attracting new customers and new employees, improving company morale, and increasing customer loyalty.

There are many types of awards your business can win. They are in categories like service, ethics, growth, employment excellence, community service, leadership, products, etc.

Many leading companies have some of the most important and prestigious industry awards.

For example, a great part of the business growth strategies of IBM is winning a long list of awards and recognitions.

Being one of the most awarded companies worldwide, IBM manages the brand to be highly esteemed and valued by clients, employees, and the general public worldwide.

Tips To Win Business Awards?

  • Be smart about which awards you want to win
  • Identify your strengths and find some appropriate awards
  • Follow all instructions and rules
  • Provide the judges a solid proof of any claims you make
  • Demonstrate that your product has great potential and that the business is sustainable
  • Be confident
  • Never duplicate
  • Be different

Download the following infographic in PDF

Practically, there are a vast number of sustainable business growth strategies to choose from.

You just need to select the plan that best fits your unique company!

Once your organization define and plan its growth path, you are ready to succeed in our vigorous changing environment.

Of course, it is not easy to create long-term value with limited resources, but every long way starts with a simple step, an idea, and great motivation.

Although sustainable growth is one of the biggest challenges any business faces, never stop improving your capabilities, both as individuals and as organizations.

Thus soon or later, you will be rewarded.

What do you think? Which strategies for business growth work the best today?

About The Author

business growth strategy models

Silvia Valcheva

Silvia Valcheva is a digital marketer with over a decade of experience creating content for the tech industry. She has a strong passion for writing about emerging software and technologies such as big data, AI (Artificial Intelligence), IoT (Internet of Things), process automation, etc.

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Growth Strategy 101: How to Design an Innovative Growth Model

Growth strategy: When you think of that term, your mind might jump to the concept of “growth hacking” (ew) or marketing. But building a growth strategy encompasses more than just customer acquisition. They may be the primary responsibility of the growth team, but the best growth strategies are rooted in data and built with the involvement of product, customer success, marketing, the leadership team, finance, supply chain, and engineering. In this article, we’ll go over what a growth strategy is, look at examples of strategies in some of the world’s top companies, and learn about the steps to develop a strategy. I hope you have your party pants on because we’re about to drop some knowledge.

What is a Growth Strategy?

A growth strategy is a data-driven experimental model that is used to help make decisions that will improve customer acquisition and retention -- thereby increasing revenue and market share. That’s the dry definition. The more fun definition: A growth strategy is the playbook you use to grow your business, make more money, and develop a customer base of raving fans. These aren’t the sole domain of the marketing team; in fact, many strategic growth initiatives have nothing to do with marketing. For a deeper understanding of growth marketing, you can read this article on What is Growth Marketing?

For example, there are many elements that might make it into a growth strategy that land on other functional teams:

  • Launching into new product categories (product team)
  • Establishing a presence in a new market (leadership)
  • Developing partnerships with micro-influencers or complementary brands (marketing)
  • Optimizing the onsite conversion funnel (engineering).

If you want to run a successful business and see your revenue grow, you need to take your growth strategy seriously.

The 4 Primary Growth Strategy Types

There are four major models of growth strategies that companies use to gain more market share and grow revenue. You can learn more about different growth channels in this article on Growth Channels .

  • Market Penetration - this strategy is used to grow your market share for a product. You can increase your pajama sales by offering specials, discounts, advertising campaigns, and celebrity endorsements to compete with competitors in your category.
  • Market Development - focuses on expanding into new user segments that you did not target previously, underrepresented segments, and repeat customers. Besides selling pajamas for kids, you can start making pajamas for adults too.
  • Product Development - this is all about creating new products to solve consumer needs that are not currently being addressed. Maybe you’ve noticed a demand for bedroom decor, you can launch a new bedding collection.
  • Diversification - an easy way to think of this is to expand into an entirely new product category. Grow your business beyond clothing and create an app to help users fall asleep at night.

Most companies will build more than one model into their overall strategy as they experiment and download learnings from the data collected in those experiments.

Examples From The World’s Fastest Growing Companies

Below are some examples of how some of the world’s biggest companies leveraged these growth strategies to become the massive companies they are today. There’s much to learn from observing how others have utilized these growth strategies. It can help you think of ways to apply them to your own business.

Market Development was one of the strategies Shopify used during their early days for growth. The company realized that when they built integrations and partnerships with companies that had a similar small business demographic but were not direct competitors, they gained more exposure to potential customers. They doubled down on this strategy and built anentire Shopify Partnership ecosystem to make integration with small businesses easier. Shopify now has over 20,000 partnerships and growing.

Disney is a great example of Diversification. Even though Disney started off as a film and animation company, it no longer relies on movies as its sole source of revenue. Disney has expanded its product categories to offer theme parks, cruise ships, merchandising, and more. Disney has managed to become an entire entertainment experience beyond the cinema.

Whitney Wolfe Herd, founder of the dating app Bumble, used Product Development as her growth strategy. She noticed that dating apps were being dominated by men and she wanted to give women a seat at the table. So she created a dating app that enabled women to make the first move. Bumble is now the second most popular dating app with over 42 million users.

Under Armour

Under Armour has a lot of fierce competition from sportswear giants like Nike and Adidas. Utilizing the market penetration strategy, Under Armour was able to see massive growth by signing an endorsement deal with NBA superstar Stephen Curry. Suddenly all the Stephen Curry fans want to wear Under Armour gear too.

Yes, these examples are from massive companies with huge budgets that may seem incredibly unattainable right now -- even if you work with a VC-backed startup. But they started somewhere, and they started with a growth strategy as solid as your ex wishes his abs were.

So now that you’re familiar with these strategies, how do you put them into action to build your own strategy?

Steps to Develop a Growth Strategy

There are a few things you can do to help you design an innovative growth strategy for your own business. For a comprehensive list of terms and acronyms related to growth marketing, you can refer to this Ultimate List of Growth Marketing Key Terms and Acronyms .

1. Get Curious

There’s an old saying that goes “curiosity killed the cat”, but in growth marketing curiosity just might save your business! Make sure that you take the time to get to know your customers. One way you can do this is by having customer interviews. Talk to your customers! Find out what they want. What are their pain points? Do people really need what you’re offering? What are your target customers’ goals, motivations? Curiosity can never fail you. Try to get inside the heads of your customers (in a non-stalkery way) and see how your business can help solve their problem.

2. Run Growth Experiments

What SEO strategy are you going to use to ensure that people can find your products online? Should you use email funnels to nurture your customers? Once you have some insights from your customer interviews, you’ll be able to identify growth opportunities in your business. Now you can start building your strategy around those insights. You won’t always have definite answers to these questions, but by running experiments you’ll be able to validate your findings. It’s best to keep your experiments lean and go after the low hanging fruit - try to prioritize experiments that will have the maximum impact for the lowest cost. For more insights on why tracking your marketing efforts is getting harder, you can read this article on Why Tracking Your Marketing Efforts is Getting Harder .

3. Take Care of Your People

Retention is one of the most important metrics for growth. This includes customer retention and employee retention. Taking care of your existing customer comes as no surprise to most people. You treat customers nicely if you want them to support your business, but it’s often employees thatget overlooked. If you manage employees you want to make sure that your team is getting the support, resources, and energy they need to be successful at their jobs. Happy employees create happy customers and a thriving business.

Now You Can Put it All Together

Keep in mind that these growth strategies are not exclusive to one another. You can use one or a combination of these strategies. Do whatever makes the most sense for your business. The most important thing to remember is to listen to your customers.

I hope these insights will help you build your growth strategy, decide where to start and kick off your first experiment.

If you would like to see a replay of our Growth Strategy webinar, you can watch it here.

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8 Growth Strategies for the Modern Business Landscape

Nov 3, 2023 | Read time: 10 min.

RJ Licata , Sr. Director of Marketing

  • A growth strategy is an action plan for a business to increase sales, revenue, or customers.
  • Choose business growth strategies that align with your budget, goals, timelines, competition, and desired market share.
  • The most effective growth strategies align with brand positioning, possess deep audience insight, and are diversified to reduce risk and maximize market share expansion.

Contents Jump to

In a business landscape where consumer preferences and behavior are constantly changing alongside technology, the significance of a growth strategy cannot be overstated. 

It’s the blueprint for success, the guiding force that propels businesses forward, and the key to thriving in a fiercely competitive market.

In this article, we’ll define what growth strategy means, discuss different types of strategies, and how to build one. We’ll also explore the transformative power an integrated approach holds in the pursuit of business excellence.

Why growth strategy matters

Put simply, a growth strategy is a well-defined plan or set of tactics for achieving expansion and increased success. It outlines how a business intends to grow in terms of revenue, market share, customer base, or geographical locations. 

MARKETING TERM DEFINITION Growth Strategy A well-defined plan or set of tactics for achieving expansion and increased success

Growth strategies encompass various approaches, such as market penetration, product development, market development, diversification, mergers and acquisitions, and more, depending on the specific goals and circumstances of the business. These strategies are critical for a company’s long-term viability and competitiveness.

To remain relevant and adaptive, large brands must continuously seek new avenues for growth, innovation, and market expansion. A robust growth strategy enables businesses to navigate these changes effectively.

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Types of business growth strategies

At a high level, there is organic business growth and inorganic. Organic growth means expanding naturally through internal efforts, like increasing sales, launching new products, or entering new markets, without relying on mergers or acquisitions. 

It’s self-driven growth from within the company, and it’s considered more stable and sustainable than inorganic growth that happens through external means.

The four most common and well-known growth strategies align with the Ansoff-Matrix: market penetration, product development, market development, and diversification. But with the expanding digital landscape and changes in consumer behavior , brands have more opportunities to diversify their approach, grow their footprint, and get in front of customers in more impactful ways. 

Here’s a closer look at 8 different types.

1. Market development (expansion)

Market development, or market expansion, is a growth strategy where you sell existing products to new, untapped markets. This strategy helps you broaden your market share beyond your current customer base. 

It might involve targeting different industries, demographics, corporate departments, or geographic areas. Successful companies often find the most profitable growth by expanding into adjacent markets. 

Uber’s global expansion is a prime example. They started in the United States and expanded internationally, adapting their services to local needs and regulations. This move extended their customer base and global presence, contributing to their significant growth as a transportation platform. 

To succeed in a new market, it’s essential to understand the entire competitive landscape, including non-direct competitors and key decision-makers.

2. Market penetration

Market penetration, on the other hand, aims to increase a company’s market share and sales within an existing market or customer base. This strategy typically involves selling more of the company’s existing products or services to its current customers or targeting similar customers who have not yet used the company’s offerings.

Amazon’s expansion of its Amazon Prime service is one example of market penetration. Amazon already had a large customer base, but they wanted to increase customer loyalty and sales within that existing customer pool.

Amazon introduced various enhancements to its Prime service, including faster delivery options, expanded streaming content, and exclusive deals. These options aimed to attract new customers while also encouraging current Prime members to use the service more frequently.

As a result, Amazon increased its market penetration by making the Prime service more attractive to a broader range of consumers.

Interested in assessing your current market position or exploring a new one? See where you stand today .

3. Market disruption

Market disruption involves entering a well-established industry that is usually dominated by a few legacy brands and proceeding to do things completely differently than everyone else. There are many ways you can potentially disrupt a market, including:

  • Using a completely different business model, as many direct-to-consumer (DTC) brands have done.
  • Utilizing innovations, such as when Salesforce offered a cloud-based CRM.
  • Offering significantly cheaper or better quality products.
  • Providing something new, such as Slack replacing traditional email.

Think of how Dollar Shave Club disrupted the male razor market with a DTC model. In a sign of capitulation, Unilever acquired them roughly five years later for $1 billion.

4. Product expansion or diversification

Developing new products or adding new features to existing ones can be a highly effective business growth strategy. Product development opens your brand up to new audiences who weren’t interested in your brand before.

Semrush is an example of a company that started with a rudimentary SEO and paid search platform.

The company launched new features over the years, and it’s now a comprehensive software suite. Although the target audience never changed, new functionalities appealed to a wider segment of that audience.

This business growth strategy worked well for Semrush which has a current market capitalization of more than $2.7 billion.

5. Owned asset optimization

Owned asset optimization (OAO) is an emerging approach to growth strategy that aims to harmonize a company’s various brand and marketing efforts around common business goals.

In OAO, a brand’s content and other marketing materials are viewed as business assets with potentially untapped value. These assets are then optimized and strategically leveraged to build brand equity and generate consistent, predictable revenue streams.

This approach creates a synergistic relationship between branding and revenue generation , ensuring that marketing efforts not only drive engagement but also contribute directly to the bottom line.

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Owned Asset Optimization (OAO) | The Foundational Guide

6. new channels.

New distribution channels rank among the top 10 business strategies for growth because they propel revenue growth without any product changes. Ecommerce businesses like Allbirds have increased revenue by also growing their brick-and-mortar presence. Whereas Allbirds was exclusively online in the beginning, they currently boast 29 real-world stores.

Sometimes, one company’s identification of a new distribution channel can trigger a tsunami of change throughout the industry. Take Salesforce. They introduced the idea of cloud-based, subscription software in an industry dominated by large, expensive, complex enterprise software requiring an army of professional service reps to get it to work.

Salesforce went on to grow rapidly, and today it’s a $21 billion+ entity. The software industry transformed, and today is filled with other SaaS offerings.

7. Strategic partnerships

Strategic partnerships with other brands can generate growth that otherwise wouldn’t be possible. For example, if you partner with a company that offers a product or service that complements yours, you get access to their audience, and vice-versa. You also receive referrals from your strategic partner and benefit from the goodwill built up around their brand.

An example of a strategic partnership that worked well is the one between Lyft and Taco Bell. Lyft offered Taco Bell delivery service to its customers, in which a Lyft passenger could request a mid-trip stop at a local Taco Bell (“Taco Mode”) with a simple tap within the Lyft app. The partnership led to free publicity for both companies and an increase in sales for Taco Bell.

Strategic partnerships can also focus on an improved or unique product. Once again, looking at Taco Bell, a partnership with Doritos resulted in the creation of the Doritos Locos Taco. To say it was a massive hit is an understatement. Within the first 18 months of the new product launch, Doritos Locos Taco sales surpassed $1 billion.

8. Acquisitions

Acquisitions are one of the most straightforward and effective paths to business growth. They typically become a viable strategy for companies with substantial cash flow and debt capacity at their disposal.

Acquisitions offer a range of advantages. They enable businesses to:

  • Reduce competition by acquiring direct competitors.
  • Gain access to proprietary technology that would be time-consuming and costly to develop in-house.
  • Tap into the customer base of the acquired company.

A prominent example of successful business growth through acquisitions is Salesforce. In 2020, Salesforce acquired Slack Technologies, a prominent business communication platform. This acquisition allowed Salesforce to diversify its services beyond customer relationship management (CRM) into workplace collaboration and communication. 

The goal was to create an integrated platform for businesses and merge customer data with communication tools. This underscored the trend of companies broadening their service offerings through strategic acquisitions to provide more comprehensive solutions to their customers.

How to build a successful growth strategy

So, how do you execute a successful business growth strategy? A comprehensive growth strategy encompasses all aspects of your brand, including digital marketing, brand identity, positioning, and customer experience. Here are the key steps that ensure your growth strategy is set up for success.

Know your brand

First and foremost, you need a clear understanding of your brand identity and strengths. Identify your core competencies, positioning, and differentiation. Consider Walmart, for instance, which achieved remarkable growth by delivering the lowest prices for its customers.

Conduct market and audience research

No matter which growth strategies you implement, start with market research. Research gives you insight into your current customers as well as potential new business from untapped markets. This step reveals trends, growth opportunities, and potential barriers to entry that could limit your success in a new market.

Audience research helps you tap into new areas of your current market, as well as new audience segments that could benefit from your offerings. You’ll uncover valuable insights about buying behavior and product preferences in addition to the channels they use most frequently along their journey .

Competitive research highlights your positioning relative to competitors in your current market. It also identifies market share leaders in new areas so you can assess their vulnerabilities and capitalize on opportunities.

Establish goals

Once you have a clear understanding of your current market as well as where you want to grow (new markets or existing markets), you can then establish specific growth goals. Goals are key to any growth strategy because they drive the actions that lead to success.

All growth goals should be measurable, and quantitative goals should be time-bound with deadlines.

By establishing clear goals, you can measure your success and optimize your activities over time. You can adjust your strategy as necessary to ensure the achievement of your growth objectives.

Determine your growth strategy

After you set growth goals, decide which growth strategy you’ll implement to acquire new customers and achieve your goals.

Will you target organic growth, or use an acquisition strategy? Alternatively, you might combine several strategies to achieve your goals. It’s more complex to implement multiple business growth strategies, but it’s certainly a method to maximize your results.

The strategy or strategies you choose will depend on a variety of factors, including your budget, goals, opportunities, competition, timelines, and calculated market share targets.

Create your implementation plan

Your execution plan contains the nitty-gritty details of your growth strategy. It’s the concrete actions you’re going to take to make your growth strategy a reality. For example, if you’re going to use acquisitions as a growth strategy, define the specific gaps you’re aiming to fill or the new audience segments you’re trying to capture.

Don’t be vague with your execution plan. Spell out all the details of your growth strategy so that you and your team members know what needs to be executed, when it needs to be done, and how it will be achieved.

All of this planning creates accountability and helps ensure that you hit your intended growth goals more reliably.

Measure results and optimize for what works

Once you have established your growth strategy and have started executing it, regularly measure the key metrics that indicate your performance. The metrics you choose should be closely tied to your overall growth goals, not vanity metrics with no real-world bearing on actual results.

The more you monitor and measure your growth efforts, the more you’ll begin to see which parts of your execution plan are producing results and which aren’t. If something is working particularly well, double down on it. If a particular tactic isn’t effective, don’t be afraid to pivot.

Continually optimize the activities of your business growth strategies, and you’re bound to come out ahead in the end.

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The power of an integrated approach to growth

Even though you’re making serious investments with any business growth strategy, there needs to be elements of flexibility in your approach. The power of an integrated growth strategy in the modern business landscape lies in its ability to harness the collective strength and flexibility of diverse approaches to drive sustainable success.

By combining market development, disruption, diversification, channel expansion, strategic partnerships, acquisitions, and emerging approaches like OAO, businesses can adapt to changing landscapes, and seize opportunities while mitigating risks.

This synergy fosters a holistic, future-focused approach that propels companies toward expansion. The most resilient, legacy-building brands are those that weave these strategies into a dynamic program, creating a roadmap for sustained growth.

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business growth strategy models

Unlocking Business Growth: 5 Essential Strategy Models for Innovative Leaders

In the business world, innovation and growth are the keys to staying ahead of the competition. Business leaders need effective strategies to drive their companies forward, whether entrepreneurs or seasoned CEOs.

Many business strategy models help leaders make these vital decisions with confidence and conviction. Whether leaders are iterating on existing solutions or pioneering completely new change, these models can be used independently or combined to guide and frame action. 

Here are 5 models that should be in every business leader's toolkit as they navigate their organisation to success.

1. Porter's 5 Forces: Uncovering Industry Opportunities

An organisation's level of competitiveness depends on the environment it operates within. Porter's 5 Forces Model is a powerful tool for assessing the competitive landscape of an industry, helping businesses identify opportunities and challenges. The model examines five forces: industry competition, potential new entrants, supplier power, customer power, and the threat of substitute products.

This information forges a competitive advantage because it highlights where the profitability lies and what the company should focus its efforts on. By understanding these forces, business leaders can craft a winning corporate strategy that capitalises on its strengths and weaknesses. 

However, use it with caution. This strategic model relies on known information about the industry, meaning the resulting evaluation could become out of date quickly in an ever-changing environment. Also, it lacks widespread applicability as not all businesses can be neatly categorised into just one industry. 

2. BCG Matrix: Streamlining Product Portfolios for Growth

Business leaders need to ensure that all products are worth funnelling resources into. While a multi-product profile can be profitable, it can also be challenging to manage. The Boston Consulting Group's Product Portfolio Matrix (BCG Matrix) can answer this question with a product portfolio analysis.

Products are categorised into four groups: dogs, question marks, stars, and cash cows. Low growth and low market share products are known as dog products, high growth and low market share as question mark products, high growth and high market share as star products, and low growth and high market share as cash cows. This analysis helps companies determine which products to invest in, where growth opportunities lie, and which products to discontinue. This ensures an efficient but powerful product profile is maintained.

It's particularly useful for highly innovative businesses that invest in developing new products to meet emerging customer needs. For accurate insights, it is an exercise that will need to be repeated due to the variability of the market. 

3. Porter's Diamond Model: Assessing Global Expansion Potential

Growing and successful businesses often consider expanding their operations to other locations. It's a massive strategic decision that could make or break the business; many companies are highly competitive locally or nationally but struggle on the international stage.

The model considers factors such as firm strategy, structure, rivalry, factor conditions, demand conditions, related and supporting industries, government support, and a chance to determine whether expansion is the right decision and whether they are ready to compete on the global stage. 

And even if it's not ready, this model forces the business to develop to meet emerging customer needs and stay ahead of local competitors, preparing them for the intensity of a foreign market. 

Here, leaders can see how their local environment influences their competitiveness and innovation capabilities and how much of this capability can transcend globally. Coupling this with the impacts of globalisation and digitisation can help determine whether entering a foreign market is viable. 

4. Gernier Theory: Navigating Growth Stages and Challenges

Businesses go through multiple stages of growth, starting as small founder-dominated organisations and developing into large conglomerates. Gernier's theory helps leaders pre-empt and navigate the inevitable challenges at each stage of their growth journey by highlighting resistances that must be overcome. 

As companies progress through these stages – creativity, direction, delegation, coordination and control, and cooperation and alliances – the primary source of leadership shifts, and so does the nature of the organisation. As the business outgrows each stage, changes must be made to meet the emerging needs and priorities of the team.  

This model helps leaders make informed decisions based on their company's current stage and challenges. However, leaders must factor in the uniqueness of a company's situation; this model does not provide specific timelines for each stage and assumes that organisational size will increase as the company matures.

5. Herzberg Hygiene Theory: Boosting Employee Experience for Success

The success of a business relies on its people, and innovative leaders are increasingly embracing the importance of the employee experience. The Herzberg Hygiene Theory offers a framework for understanding and improving this by identifying the motivational factors that increase satisfaction and hygiene factors that reduce dissatisfaction.

Motivational factors that increase satisfaction include job advancement, responsibility, recognition and achievement. On the other hand, hygiene factors that decrease job dissatisfaction include interpersonal relations, salary, supervision and working conditions. 

By leveraging this analysis, business leaders can make data-driven decisions using real and qualified data to improve employee happiness and retention. However, the subjective nature of human experiences means that the human experience can rarely be accurately distilled into a singular model, so qualitative data should also be utilised.

Strategic decision-making is critical for business success in a dynamic and competitive environment. Whether considering maximising profits by entering a foreign market and adding a new product or searching for ways to optimise the current business operations through a deeper understanding of the industry and growth of the business, these strategic models support that decision-making. Combined insights from these models can provide a solid foundation for driving business success and gaining a competitive edge.

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Growth Strategies To Expand, Extend, Or Reinvent Your Business Model

In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).

Table of Contents

Gain: solve existing problems better to make existing customers happier

In the gain section, you can apply growth strategies focused on your current customer base.

By better defining their problems you can craft an even better value proposition within your product and service.

Thus expand the business by applying higher prices (as a consequence of a better offering) or by offering more for less.

Here you grow by moving within your established business model .

Growth via price increase or expanded offering

Improved product features.

Refine the most used features your current customer base has been using more frequently.

New product features

Add essential features that your customers have been asking.

Better packaging

Offer bundles or expand the offering if your customers value it the most in a bundle (for instance, by providing more features, they will pay less, yet more than the basic package).

Or perhaps unbundle the offering if your customers want one feature or a set of features within your product (avoid the lock-in effect).

This way, you can grow by simplifying the product and making it more powerful for your existing customer base.

In this case, growth might come as a result of reduced complexity for both your organization and the customer’s understanding of your product.

value-proposition-canvas-business-model-canvas

In all the cases above, combining frameworks like jobs to be done with demand generation is critical.

In other words, you want to improve the product’s utility while also working on the perceived value for users/customers.

For instance, take the case of a digital product like an eBook.

Not only you might want to expand it with new content, but you might also want to make its formatting more compelling.

As another example, take an e-commerce company that not only increases the availability and variety of products.

But it also works on the UX to make it easier for users to find relevant things by adding high-quality product pictures, which, right on, make the same product perceived as higher quality.

Communication/product fit

Help your customers find a better use case for your product.

In short, help them understand how they can use it at best to reduce churn (develop case studies or perhaps training programs for them).

Personalization and customizations

Provide the ability to customize the product or service so your existing customers can add more on top of your product.

Change the revenue model, or expand it

You can experiment from a one-off transaction to subscription-based service.

Think of how you can make your product recurring. Or perhaps, from subscription-based, add a component of consumption.

pricing-strategies

Make it repeatable

Think of ways to add more options within your product with prompts or incentives (programs like Amazon Prime help Amazon incentivize repeat transactions on the platform, the same thing applies to Sam’s Club ).

subscription-business-model

Offer additional services

What recurring problems are your customers facing that they would rather use you to solve rather than solve those by themselves?

Those are all potential additional services that can be offered on top of your current offering.

Acquire existing products that you can integrate into your offering to make your core offering more valuable to existing customers.

acquisition-entrepreneurship

Expand: solve existing problems 2x better to gain new customers

In this case, you grow by developing 2x better solutions to problems for your existing customer base, yet also for a new customer base.

As a result, you will charge more to your existing customer base or gain new customers.

The strategies you can use here are similar to those above.

With the difference that in a 2x growth in the problem to be solved, you can be more proactive.

Here you cautiously explore beyond your business model ‘s boundaries.

Growth via expanded customer base

Partnerships and joint ventures.

partnership-marketing

You can partner up with other companies in the same space which do not overlap with your product or service and come together to expand your market (see Shopify-Pinterest partnership ).

Develop a new product for an end-to-end experience

You can also invest in R&D to develop a new product on top of your existing product.

As you know, that might make your core product more valuable to existing customers yet open up opportunities in adjacent markets to acquire new customers.

Buy a company offering a product in an adjacent space where your customers will be extremely interested in the future, or that will help you make a successful transition toward future market developments (see acquisitions like Google for Android and YouTube , or Facebook acquiring products like WhatsApp or Instagram ).

Extend: solve new, more valuable problems to make existing customers more loyal

In this scenario, you can tackle problems that might be valued more by your existing customers.

In this case, growth happens as a side effect of having a better understanding of your customer journey, thus forcing your company to be able to cover more space in the same niche.

Here you strengthen your core business model by better understanding your customer base and keeping an eye on future market developments.

Growth via extended customer journey

Design an end-to-end experience.

tesla-business-model

In this case, if you dominate ready your market niche, you can start developing an end-to-end experience.

Redefine value

You can help your existing customer base solve and tackle a set of new problems they are experiencing as part of the evolution of the market.

Reinvent: solve new problems for new customers

The company will try to grow in this growth profile by exploring a whole new space.

This is the riskiest of the growth profiles. An unsuccessful growth strategy might result in the corrosion of your core business model .

Growth by market reinvention

Be ready to cannibalize your core product.

market-expansion

Be ready to come up with a solution that has the potential to cannibalize your core offering in the short term but also to expand your market exponentially, opening the space for way more customers.

Redefine value in a whole new way

uber-market-expansion

Start by analyzing problems from first principles to come up with something that is a breakthrough that might open up a blue ocean .

Key Highlights

  • The FourWeekMBA growth matrix outlines four different growth strategies: Gain, Expand, Extend, and Reinvent.
  • These strategies help businesses decide how to grow by targeting existing or new customers and problems.
  • Focuses on improving existing products or services to make existing customers happier.
  • Enhance value proposition , improve product features, add new features, better packaging, and refine communication/product fit.
  • Explore personalization, pricing strategies, and additional services.
  • Make the product more repeatable and offer extra services to solve customer problems.
  • Develop solutions that are 2x better for existing and new customers.
  • Apply strategies similar to Gain mode but with more proactive problem-solving.
  • Consider partnerships, joint ventures, and end-to-end experiences to reach a wider customer base.
  • Tackle problems valued more by existing customers to enhance loyalty.
  • Design an end-to-end customer experience, redefine value, and understand the customer journey better.
  • Venture into a completely new space with innovative solutions.
  • Embrace risk by exploring new markets and reinventing the value proposition .
  • Be prepared to cannibalize core offerings and redefine value in a breakthrough way.
  • Gain: Improve current products’ features, communication, and offerings.
  • Expand: Partner with non-overlapping companies, develop new products, or acquire adjacent businesses.
  • Extend: Redefine value for existing customers by solving new problems.
  • Reinvent: Be ready to cannibalize core offerings to explore entirely new markets.
  • The Value Proposition Canvas ensures products or services cater to customer values and needs.
  • Combining frameworks like jobs to be done with demand generation enhances product utility and perceived value.
  • Different growth strategies entail varying levels of risk and potential market expansion.
  • The Reinvent strategy is the riskiest, involving the exploration of entirely new spaces and solutions.

Other frameworks:

  • Speed-Reversibility Matrix
  • Ansoff Matrix
  • Innovation Matrix
  • Digital Growth Matrix

Related Growth Concepts

  • Business Development

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Market Development

market-development

Growth Engineering

growth-engineering

Growth Hacking

growth-marketing

Growth Mindset vs. Fixed Mindset

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Sales vs. Marketing

marketing-vs-sales

STP Marketing

stp-marketing

Sales Funnels vs. Flywheels

sales-funnel

Pirate Metrics

pirate-metrics

Bootstrapping

bootstrapping-business

Sales Cycle

sales-cycle

Distribution

whats-distribution

Zero to One

sales-distribution-peter-thiel

Digital Marketing Channels

digital-marketing-channels

Logrolling Negotiation

logrolling-negotiation

Win-Win Negotiation

win-win-negotiation

Revenue Modeling

revenue-modeling

Customer Experience Map

customer-experience-map

Social Selling

social-selling

CHAMP Methodology

champ-methodology

BANT Sales Process

bant-sales-process

MEDDIC Sales Process

meddic-sales-process

Virtuous Cycles

virtuous-cycle

Sales Storytelling

business-storytelling

Enterprise Sales

enterprise-sales

Outside Sales

outside-sales

Freeterprise

freeterprise-business-model

Palantir Acquire, Expand, Scale Framework

palantir-business-model

Consultative Selling

consultative-selling

Unique Selling Proposition

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Read: product development frameworks here.

Read Next:  SWOT Analysis ,  Personal SWOT Analysis ,  TOWS Matrix ,  PESTEL Analysis ,  Porter’s Five Forces ,  TOWS Matrix ,  SOAR Analysis .

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How focused investment can help drive business growth strategies in turbulent times

Creating lasting value hinges on your company being fit for growth.

Businesses today are navigating volatility and uncertainty on multiple fronts: persistently high inflation, geopolitical unrest, supply chain disruptions, worker shortages, technological changes and the lingering pandemic. We believe that when companies are faced with such challenges, those that are clear-headed and focused in deploying resources and think more boldly on growth can outperform their peers.

This view is based on PwC’s analysis of the performance of 5,700 companies over the past three years—a period of rapid change. Among those companies, we identified a set of “focused investors” who achieved exceptional returns. These focused investors delivered an average of 10% higher enterprise value to revenue multiple (the ratio of a company's total value, including market capitalization, cash and debt, to the revenue it generates in a certain period) and an 18% higher EBITDA margin compared to their industry peers.

As waves of disruption currently confront all sectors of the economy, focused investors can create tremendous value through the ways they deploy every dollar to work their strategy and growth agenda. Here are five things such companies do well that could help others navigate the future with more confidence.

How focused investors can create value

Radically rethink the full cost base by measuring productivity against strategy, orchestrate bolder adoption of digital technologies, reconsider how and where work gets done proactively, strike the right balance in managing growth ideas, unify toward a focused strategy and vision.

A global pharmaceutical company deployed a value-based planning approach to reallocate all of its costs and investments. Tying operational, financial and strategic data together, it created new analytical lenses to measure the productivity of the internal, organizational and external spend. The analytics were a catalyst to challenge the norm, and the company wasn’t afraid to move away from historical approaches. While freeing up capacity and dollars for reinvestment, the pharma company also built lasting value by upskilling people and enhancing processes and technology to embed the philosophy of measuring value on total spend. They used a non-traditional, bottom-up approach toward cost management: empowering budget owners to control and tier their spend, applying value judgment and creating flexibility in budgets for agile investment planning. The effort created 15-20% additional flexibility in existing budgets globally.

A global food and beverage company used artificial intelligence (AI), natural language processing, intelligent process automation and machine learning—on top of its large legacy technology and data platforms—to help deliver outcomes faster, resulting in more than $100 million dollar increase in value in efficiencies and revenue growth. Instead of creating small pilot projects or making large investments in big tech platforms, the company applied new digital capabilities to underlying fragmented data and systems of records to transform the way it works and improve the outcomes. And the company achieved results much sooner, with sprints of 12 to 16 weeks—as opposed to the typical six to 12 months—that reimagined how to achieve the critical outcomes it needed now, instead of aiming for the perfect solution in the future.

A global technology company unlocked up to 25% productivity gains by rethinking its constraints on where people within their core operations were located. It set up technology hubs in a few countries that offer talent with the necessary skills at lower costs who could help strengthen the organization’s resiliency. Physical offices are located in major hub cities, but employees can be located anywhere in the country, giving the company access to the talent with lower overhead. The company is helping its people work in these new ways by providing training and technologies that have unlocked innovation.

As economic pressure mounts, it’s vital for companies to have a balanced growth portfolio that drives near-term performance without sacrificing business model innovations for future growth. One global logistics leader is investing billions in a short-term growth portfolio that involves building solutions for the health industry to transport and track new drugs that have specific storage and temperature requirements. It’s also investing in AI to reduce the number of manual touches of a package, increasing productivity and speed to market. To secure its business for the future, the company is exploring asset-light business models that may allow it to double revenue growth and reduce the need to invest in additional physical assets. 

Today’s uncertain world has escalated the need for executives to unify their companies with a compelling purpose-based vision and strategy. One example is a large financial services company that evaluated adjacencies to its core business in the trillion-dollar US mortgage ecosystem and crafted a strategy with new ways to deliver on its environmental, social and governance (ESG) goal of increasing affordable housing. This strategy includes opportunities to leverage the company’s ecosystem positioning to increase the availability of green housing by aligning consumer, agent, lender, construction and capital markets incentives. The company is also extending its reach to educate consumers on the economic benefits of home ownership, while also providing them with tools to help build and maintain their financial readiness.

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US & Mexico Strategy& Leader, PwC US

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8 different ways to model your business's growth.

business growth strategy models

8 Different Growth Models

After identifying the appropriate growth model strategy (or combination thereof), your business will be ready to implement growth models, track business output, and achieve targeted milestones.

1. SaaS Financial Model

This model, proposed by Jaakko Piipponen , takes its inputs from data exported from QuickBooks and Baremetrics (or similar business intelligence tools). Each factor in this model is modular, so that expanding certain areas in the future becomes hassle free. It tracks overall business growth for SaaS companies and allows founders to consider the following factors:

  • Key determinants of business revenue
  • Progress ratio of the business and factors affecting

Reporting & Analytics:

  • This model requires you to export monthly profit and loss reports, current cash balance, active customer breakout and graph, and upgrade information. Then you must feed your model with data regarding expenses, income, and cost of sold items. All of this is to be entered in categorized form.
  • The payroll section requires information about employees, their salaries, and data about contractors if there is any.

2. Greiner’s Growth Model

The main purpose of this model is to help businesses adapt to the likely challenges that come with rapid growth. Growing pains can be caused by a variety of negative factors, and it's necessary to tackle them proactively. Greiner's Growth Model addresses growing pains in the following areas:

  • Leadership (communication about information starts to fail)
  • Red Tape (slower decision making)
  • Control (new hierarchy emerges in place of formal management)
  • Growth (slow growth due to lack of new ideas)
  • In smaller firms, the staff is small and the founder is busy creating products for market. But as the staff and company grows, more capital is injected and production is expanded, which leads to leadership crises that need to be handled.
  • As the business grows further, rules and procedures needs to be standardized so that middle managers have more autonomy to avoid crisis.

Pros & Cons:

  • This model helps both small and large firms to identify growing pains as they emerge.
  • It is simple to use, but it ignores the fact that not every business faces crisis as they march toward growth.
  • It is not possible in this model to track the exact growth phase in advance, as it lacks the ability to track rapidity of growth in a dynamic environment.

3. LivePlan

This model, which is built into the LivePlan platform, enables your business to derive performance insights and grow through secure funding. It has over 850,000 small business customers. The ability to build business plans, create budgets and forecasts, and connect to QuickBooks or manual accounting information lets users track business plans efficiently.

  • Financial statements of five years are taken into account, including balance sheet income and cash flow statements.
  • Revenue modeling considers monthly or annual plans for recurring fees, pricing, and churn.
  • Cost modeling lists out the pricing options for contractors, clients, and suppliers.
  • Dozens of financial metrics to track financial performance and growth are available in this plan for a reasonable cost.
  • The absence of SaaS metrics is a negative factor for SaaS entrepreneurs, as it does not support tech startups.
  • Costs and departments cannot be categorized by profit and loss.

4. Ben Murray’s SaaS Startup Financial Model

Ben Murray, the CFO of Mobile Solutions, has built this Excel sheet model for startups to articulate their financial forecast. The latest 1.60 version possesses the feature to include actual historical data.

  • Monthly and annual plans are tracked separately
  • You can use recurring revenue to project growth for about five years. This requires input values for customer count and revenue expansion.
  • The operating expense model takes in the indirect expenses like rent, traveling, and consultant costs for early startups.
  • It is free and focused exclusively on SaaS determinants. Subscription plan tracking, whether monthly or annually is offered separately.
  • Client upgrade input needs to be entered manually on a monthly basis, which is hectic.

5. Foresight.io Financial Model

This SaaS model, which was created by Taylor Davidson, contains three prebuilt statements for five years. It targets headcount, revenue planning, direct and indirect costs, sales pipeline, annual hiring plan, financial sheets, forecasting, and projections.

  • Reports are generated using industry-standard measures, which help to communicate your business's growth externally.
  • This model consists of finance graphs and SaaS units that break down by both department and profit-and-loss. Revenue modeling is flexible and permits customization for pricing and pipelines.
  • This model also works for Google Sheets and Microsoft Excel and supports all currencies with a fully customizable dashboard.

This app is unique when we talk about SaaS solutions for startups. It is more flexible than a traditional Excel sheet and comes with built-in templates for cost and revenue modeling so you don’t need to build it from scratch, especially when you are starting a small business.

  • Ability to create charts, boards, and tables for financial investors.
  • Business growth can be depicted using one of the templates by feeding in proper business information.
  • Use cases can be generated for venture capital management and planning.
  • It is a user-friendly, modern approach that still offers deeper metrics.
  • A bit more time is required than a traditional template to learn and set up.

7.  FISY Innovation Plan

This popular business growth plan is offered in the form of a free Excel template. It's customizable to meet the needs of most businesses.

  • Its financial forecast incorporates your business strategy.
  • It handles cash flow management and validates hypotheses via an iterative process.
  • It is used by 250,000 entrepreneurs and offers individual tabs for configuration, orders, investments, financial tables, and personnel, and it has a guide tab with all basic steps required to implement the plan.
  • It isn't tailored for SaaS companies.
  • It is totally in French and built for French users.

8. Pro Forma SaaS Startup Excel Model

This growth model is specifically designed for use by startups. As a paid model, it comes with an abundance of features to enable business growth, including:

  • Recurring sales models
  • Reports are produced and calculated autonomously
  • Definite marketing report with all the client’s lifetime worth measures
  • To prepare financial sheets, you can work online within Excel and it will effortlessly calculate financial ratios and outputs.
  • 161 currency options are available, and by entering information for direct and indirect employees and seed capital, a cap table is automatically generated.
  • Hardware setups and their cost or revenue can also be managed.
  • It does not provide options to edit formulas for upgrades or downgrades.

All business growth models have their own built-in assumptions, which you can tailor to your business needs and circumstances. Whether you run an early stage startup or a faster-growing business, these models are useful for tracking a range of key stats.

Multiple factors can influence the appropriateness of a growth model for your business, so choose carefully . Firms should wisely evaluate and select their core growth models, whether their growth strategy is organic – (through internal assets) or inorganic (also referred as acquisition-based growth) – in accordance with the objectives on table.

Regardless of your preferred strategy for monitoring growth, Crowdbotics can help you implement best-in-class business intelligence tools. Get in touch with our expert PMs today to discuss how we can level up your organization's analytics.

business growth strategy models

Allah-Nawaz Qadir

Originally published:

December 4, 2020

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How Fast Should Your Company Really Grow?

  • Gary P. Pisano

business growth strategy models

Growth—in revenues and profits—is the yardstick by which the competitive fitness and health of organizations is measured. Consistent profitable growth is thus a near universal goal for leaders—and an elusive one.

To achieve that goal, companies need a growth strategy that encompasses three related sets of decisions: how fast to grow, where to seek new sources of demand, and how to develop the financial, human, and organizational capabilities needed to grow. This article offers a framework for examining the critical interdependencies of those decisions in the context of a company’s overall business strategy, its capabilities and culture, and external market dynamics.

Why leaders should take a strategic perspective

Idea in Brief

The problem.

Sustained profitable growth is a nearly universal corporate goal, but it is an elusive one. Empirical research suggests that when inflation is taken into account, most companies barely grow at all.

While external factors play a role, most companies’ growth problems are self-inflicted: Too many firms approach growth in a highly reactive, opportunistic manner.

The Solution

To grow profitably over the long term, companies need a strategy that addresses three key decisions: how fast to grow (rate of growth); where to seek new sources of demand (direction of growth); and how to amass the resources needed to grow (method of growth).

Perhaps no issue attracts more senior leadership attention than growth does. And for good reason. Growth—in revenues and profits—is the yardstick by which we tend to measure the competitive fitness and health of companies and determine the quality and compensation of its management. Analysts, investors, and boards pepper CEOs about growth prospects to get insight into stock prices. Employees are attracted to faster-growing companies because they offer better opportunities for advancement, higher pay, and greater job security. Suppliers prefer faster-growing customers because working with them improves their own growth prospects. Given the choice, most companies and their stakeholders would choose faster growth over slower growth.

Five elements can move you beyond episodic success.

  • Gary P. Pisano is the Harry E. Figgie Jr. Professor of Business Administration at Harvard Business School and the author of Creative Construction: The DNA of Sustained Innovation (PublicAffairs, 2019).

Partner Center

Palo Alto Networks CEO: ‘We Firmly Believe’ Dramatic Shift In Growth Strategy Will Pay Off

CEO Nikesh Arora discloses that the company has decided to take a short-term hit to growth — including through increasing free product offers to customers — in order to accelerate consolidation on its unified cybersecurity platform over the longer term.

business growth strategy models

Palo Alto Networks disclosed a major shift in strategy Tuesday aimed at enabling accelerated consolidation onto its unified security platform, which executives said will hamper growth rates for at least a year but should yield a significant payoff over the longer term.

The short-term hit to growth will come from providing increased incentives to customers such as free product offers, which Palo Alto Networks executives believe are necessary for customers to adopt more tools on its platform at a faster pace, executives said Tuesday during the vendor’s quarterly call with analysts.

[Related: Palo Alto Networks CEO Nikesh Arora: ‘Disrupt Ourselves,’ Transform The Industry ]

“One of the hardest things to do is to change a strategy that is working,” Palo Alto Networks CEO Nikesh Arora said during the call. However, “we firmly believe as a management team that the changes we're making today are going to give us better prospects in the mid-to-long term and allow us to drive this consolidation much faster.”

The disclosure came in connection with the cybersecurity giant’s latest quarterly financial results, which revealed lower guidance for billings and revenue as a result of the revamped investment and growth strategy. Palo Alto Networks’ stock price sank 20 percent in after-hours trading Tuesday to $291.38 a share.

The company expects it will need 12 to 18 months before its growth rate recovers, Arora said.

In part, the shift in strategy is a response to the realities that customers face while trying to move to a consolidated platform from dependence on numerous individual tools — a situation that often involves dealing with an assortment of vendors and contractual end dates, he said.

To circumvent these challenges, Palo Alto Networks plans to instead allow customers to use its products free of charge for a period of time until the customer’s contracts with its other security vendors run out, according to Arora.

“That's taking away a lot of the economic exposure and the execution risk for our customers,” he said. “Now, you can call it a discount or you can call that a free offer. Our estimate is approximately it works out about six months worth of free product capabilities to our customers.”

However, once these initial free periods expire, Palo Alto Networks should end up with a significantly larger base of customers using a far greater number of the vendor’s tools, leading to a much bigger overall business, executives said.

Beyond the initial ramp-up period of the strategy, “we expect we can sustain higher growth than we provided” previously, Palo Alto Networks CFO Dipak Golechha said during the call with analysts Tuesday.

Channel Opportunities

In response to an analyst’s question about how the new strategy will affect compensation for the channel, Arora said that he expects there will be major benefits for partners from this approach. Since the strategy is aimed squarely at increasing the total size of contracts with customers, “the channel has a lot of incentive to help us drive this platformization,” he said.

Additionally, usage of more tools on the Palo Alto Networks platform means more services opportunities, Arora said. “These platform offers actually spin out a lot more services revenue than individual, best-of-breed offers,” he said.

For the second quarter of Palo Alto Networks’ fiscal 2024, ended Jan. 31, the company reported revenue of $1.97 billion, up 19 percent from a year earlier.

In connection with Palo Alto Networks’ new growth strategy, the longer-term goal for the vendor’s business is now to reach $15 billion in annual recurring revenue by its fiscal 2030, Arora said.

Platform Approach

Under Arora, Palo Alto Networks has completed 16 acquisitions since his arrival in June 2018. The acquisitions have been key to the vendor’s efforts to assemble a comprehensive cybersecurity platform — expanding Palo Alto Networks from a network security vendor into a platform covering most of today’s essential cybersecurity capabilities.

The platform approach is at the heart of Palo Alto Networks’ growth strategy, and it’s resonating with both partners and customers, Arora told CRN in an interview last July. Increasingly, the industry’s focus is shifting to building “longer-term cybersecurity architectures to create this integrated platform, which gives a better outcome,” he said.

In addition to network security, the Palo Alto Networks platform spans protection for cloud and applications, to secure access service edge (SASE) and zero trust security, to AI-powered threat detection and security operations.

Startup vs Small Business: The Differences that Matter

Startup vs Small Business

TriNet Team

Let's get right down to the matter at hand: startup vs. small business . Here are the three main elements of a startup :

  • Creates new products, markets, and business models.
  • Takes on high levels of risk to achieve rapid growth.
  • Typically has outside funding from private investors.

And here are the three main elements of a small business :

  • Improves existing products for established markets, using proven business models.
  • Takes on less risk with the goal of maintaining stability and sustainable growth.
  • Often raises money through personal savings, bank loans, and other traditional funding sources.

With that framework in mind, read on for more details and in-depth information.

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Key differences between a startup and a small business

Some people use the terms interchangeably, but there are important distinctions between startups and small businesses:

Business model

Startup : A startup's goal is typically to provide something new that its founders hope will disrupt the market. Startups may begin as tiny businesses—the stories of startup companies that were founded in dorm rooms or garages are legendary. A startup founder's goal, however, is to grow the company rapidly and have it become a major, if not the dominant player in its market.

Examples of world-changing startups include Google, Facebook, Apple, and Amazon. Of course, not every startup will become that successful. But generally startup founders hope to provide a product or service that will make a significant difference and will eventually enrich its founders. Startups are often, but not always, in the tech industry.

Small business : A small business doesn't usually seek to dominate the market. Instead, its goal is usually to serve its community and a stable cash flow for its owners. The Small Business Administration defines a small business as a manufacturing company that has fewer than 501 employees, or a nonmanufacturing company that has less than $7.5 million in average annual receipts. However, most small businesses are considerably smaller : 89% of all businesses in the U.S. have fewer than 20 employees, and 78.5% have fewer than 10. Many small businesses are partnerships or sole proprietorships.

Growth expectations

Startup : Rapid growth is a top priority for startups. They may sacrifice initial profitability for faster growth. Having external investors gives startups the freedom to delay profitability, something they might not be able to do if they had to pay back loans from banks.

Small business : Small businesses usually prioritize stability over growth. Their owners may focus more on generating long-term income. They may focus less on quick returns that would attract investors, so they tend to grow organically and more slowly.

Market share

Startup : Founders of startups may want to create a new market and quickly gain market share.

Small business : Small businesses may not set a goal of dominating the market, though they might want to build market share. Success means generating a long-term stable income while serving their local communities by providing goods or services.

Funding methods and venture capital

Startup : Startups usually seek money from outside investors. Many startups turn to venture capital as one means of funding, which is funding from investors who are willing to assume risk to gain equity in new or growing companies that have substantial growth potential. The investments are made in multiple rounds. The first round is seed funding, which is followed by Series A, B, and C.

Small business : Small businesses typically rely on more traditional types of funding, such as loans from banks or credit unions, business credit, personal savings, or loans from family and friends.

Long-term strategy and profit potential

Startup : Startup founders hope to create substantial profits. One exit strategy is creating buyable startups. Founders develop companies with the goal of attracting other companies to buy them. Mergers with other companies can also be a goal. Other startups hope to go public and sell shares via an initial public offering (IPO). All of these strategies, if successful, can greatly enrich the founders and investors.

Small business : Small business owners want their businesses to be at least profitable enough to stay in business and generate income. These owners often want to keep control of their businesses, so they are not interested in going public or in making a quick sale to a larger company. They may, however, eventually sell the company.

Startup founders vs. small business owners

Given these differences between startups and small businesses, the roles of startup founders and business owners can be different.

The startup entrepreneur: A risk taker

To be a startup founder, you will probably need to have a high tolerance for risk. You should have a strong desire to change your industry and become a leader. You also must be motivated by a strong growth intent—aiming to turn your startup into a major company.

Startup entrepreneurs have to identify a genuine need and come up with a business idea for a product or service that may not already exist that will solve the targeted problem. You must focus on goals, build a team, raise funds, and steer the company to success.

The small business owner: A stability seeker

To be a small business owner, you will probably be more focused on meeting the needs of your local community. You probably won't be seeking growth just for the sake of growth or trying to create products or services that no one else has ever offered before. Instead, you may want to build a stable company that provides a good, steady income for you and your employees.

You'll need to create a business plan and strategy, and manage all aspects of your business to help ensure that it stays on a steady course.

Am I starting a small business or a startup?

If you are an entrepreneur starting a business, you should think at the outset about whether your new business is a startup or a traditional small business. Your choice may fundamentally change the way you need to plan for marketing, financing, growth, and business structure.

Startups and small businesses do face some common challenges. No matter which type of business you have, as soon as you start hiring employees, you will need to manage human resources functions. Both startups and small businesses can benefit by outsourcing their payroll administration and other HR tasks to an outside provider like TriNet.

Trying to handle HR administrative tasks in-house and also keep up with the constantly changing regulatory landscape takes time, money, and energy. TriNet can help with that HR administrative burden so that startups and small businesses can focus on their core missions. Our HR solutions options allow you to outsource selected HR tasks or have us support most of your HR functions with our professional employer organization (PEO) services. We invite you to connect with us and find out more about how we can help.

This communication is for informational purposes only, is not legal, tax or accounting advice, and is not an offer to sell, buy or procure insurance.

This article may contain hyperlinks to websites operated by parties other than TriNet. Such hyperlinks are provided for reference only. TriNet does not control such web sites and is not responsible for their content. Inclusion of such hyperlinks on TriNet.com does not necessarily imply any endorsement of the material on such websites or association with their operators.

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College of Nursing

A call for more nurse leaders in the c-suite.

View as pdf A later version of this article appeared in  Nurse Leader ,  Volume 21, Issue 6 , December 2023 .

As the interim CEO for the University of Iowa Hospitals and Clinics, I was recently asked to speak on a panel of nurse leaders addressing health system CEOs about ongoing disruptions in the nursing workforce. As I spoke, strong non-verbal communications for the audience heightened their intrigue with the panel’s discussion. Descriptions of the now decades-long challenges of the nursing shortage, constraints that prevent nursing schools from quickly escalating the number of nurse graduates to meet the surging demand, increased career opportunities for nurses outside of healthcare even after they are trained, the resulting strategies needed by hospitals to increase recruitment and retention of nurses, and changes in care models were all top-of-mind concerns shared by the CEOs. 

A Dearth of Nurse Leaders in C-Suite Roles 

Nurse leaders have a wealth of knowledge and experience that positions them well to lead healthcare organizations, both as Chief Nursing Officers (CNO) and Chief Executive Officers (CEOs). Although accurate estimates of the proportion of nurses serving in CEO roles are difficult to obtain, according to a study published in JAMA Network Open that reviewed 3911 healthcare executives, only 17.5% are female. 1 According to the US Bureau of Labor Statistics, 87% of the nursing workforce identifies as female. 2 These data show that nurses are underrepresented in the CEO role. As nurses are overwhelming female and have first-hand experience in patient care, nurse leaders represent a natural source to help address the gender inequities evident in the female healthcare CEO ranks. In a recent study of Fortune 500 companies, Srivastava, Kashmiri, and Mahajan concluded that “female influence in the top management team is positively associated with (1) customer orientation of the firm and (2) long-term financial performance.” 3 In healthcare, customer orientation refers to patient care. Given a keen interest in improving both patient care and financial performance, now is the time for healthcare organizations to recruit CEOs from the ranks of highly qualified nurse leaders. 

Nurses Learn from First-hand Patient Care 

Indeed, in healthcare, our core business is patient care, and nurses are essential in delivering that care. As nurses rise to leadership positions, those nurse leaders can leverage experience in caring for patients to improve their institution’s processes and resulting operational excellence and learn to apply holistic thinking (systems thinking) skills to better address challenges associated with healthcare today. 

Incorporating effective nursing processes into healthcare is fundamental to practice. With experience, nurses learn to develop and apply strong assessment skills across a range of challenging patient situations. Through those assessments, nurses analyze key issues important to the patient and collaborate with multidisciplinary team members to develop a plan of care to help the patient meet appropriate goals. Beyond collaborating to develop a plan, nurses work diligently with the patient and other team members to implement the plan. Throughout the process, nurses collect and document data and then analyze it to assess the effectiveness of the care plan. And finally, nurses adjust patient plans to better achieve established goals, for both the patient and the organization. 

Nurses also demonstrate remarkable listening skills with patients, families, and members of the healthcare team. Nurses look at situations holistically and seek to understand patients’ goals, motivations, and barriers to care. Through these experiences, nurses develop as effective communicators, infusing reason into highly emotional situations, and they do so with exceptional compassion. These strengths of nurse leaders are directly transferrable to C-Suite decision-making, where compassion for patients, an ability to place the goals of the organization above one’s self-interests, and an understanding of whether an idea can be implemented are paramount. 

Inside Modern C-Suites 

Too often, C-Suite leaders become too far removed from the work of front-line caregivers. They may not understand the challenges of delivering patient care, and that concern gets compounded when they don’t spend time with caregivers to hear and consider suggestions. Consequently, some C-Suite decision-making is not well informed about the realities of the workplace. The importance of workplace issues ranging from inefficiencies in documentation to poor communication between members of healthcare teams to staffing and workplace safety challenges influences long-term financial performance and thus warrants inclusion in strategic decisions. 

In a recent survey by the American College of Healthcare Executives, Chief Executive Officers ranked workforce challenges as their number one concern and financial challenges as number two. 4 Aiken et al. (2023) conducted a cross-sectional multicenter survey study with 21,050 physicians and nurses at 60 nationally distributed US Magnet hospitals. Survey participants reported “high burnout, job dissatisfaction, and intentions to leave their current job.” 5 They also reported a lack of confidence in leadership to take action to resolve issues identified by clinicians. Executive leaders with nursing experience can better understand the issues and subsequently work with clinicians to implement changes that will lessen employee dissatisfaction, which improves retention. Moreover, employee satisfaction impacts patient satisfaction—and that ultimately drives revenues. 

Nurse Leaders and the Business Side of Healthcare 

Healthcare centers on the lives and welfare of people, but it is also a business. While the strengths of nurse leaders are vitally important for leadership roles, nurses can acquire business skills through advanced degrees (e.g., MBA, DNP) or experience to understand the business dynamics of healthcare. Nurse leaders can learn how employee satisfaction, operational excellence, and remarkable patient experiences all contribute to the “bottom line.” Both revenues and costs must be balanced to deliver positive operating margins. 

To gain credibility with the more traditional business-focused leaders, nurse leaders need to understand the different perspectives of C-Suite members and communicate using a language understood by each member’s respective discipline. Just as nurses learn to communicate with patients, knowing such perspectives is vital to delivering a message that resonates. The following is a summary of common perceptions of C-Suite members adapted from the American Hospital Association’s C-Suite Cheat Sheet. 6  

  • Chief Executive Officers (CEOs) tend to focus on strategy for the organization and want to be certain that planned initiatives will create a return on investment. 
  • Chief Nursing Officers (CNOs) focus on patient care operations, workforce issues, and improving quality and safety. 
  • Chief Financial Officers (CFOs) speak in numbers and are focused on budgets, payer issues, and ensuring a positive bottom line. 
  • Chief Medical Officers (CMOs) value clinical data and are focused on improving clinical performance. 
  • Chief Operating Officers (COOs) focus on healthcare operations to meet financial targets and drive service line growth. 

As with any team, each member of the C-Suite team brings relevant strengths to the table. More successful leaders connect the strategic vision of the organization and leverage the team’s expertise to drive change and achieve goals. Nurse leaders can develop the requisite skills needed to bring C-Suite teams together in their efforts to improve outcomes. Focusing on the core business of patient care, achieving operational excellence, and supporting caregivers are all vital components to a health system’s success, and that success is a reward our patients deserve. 

Steps in Pivoting to the CEO Role 

The role of a CEO is broad as it includes all facets of the organization, of which nursing is only a part. CEOs are responsible for setting the strategic direction of the organization and working with leaders to develop and execute plans to meet strategic objectives. The CEO is often a champion of the organization’s culture and ensures financial and operational excellence, growth, and strong community relationships. 

A question asked by many nurse leaders today is how do I prepare myself to become a CEO? First, conduct an honest assessment of your skills and experience. Meet with your CEO and express your desire to move into a broader leadership role. Talk with them about their role and the skills most needed to be successful. Then seek learning opportunities to strengthen your knowledge of important areas such as finance, legislative issues in healthcare, and organizational development. 

Be open to accepting interim assignments that allow you to develop needed skills. Although new assignments may require you to work outside of your comfort zone, they are very valuable to your growth and demonstrate a willingness to take on new responsibilities. These assignments allow others to see your leadership capabilities through a different lens and may lead to other opportunities in the future. 

Consider serving in a COO role. Some organizations now combine CNO and COO roles into one. Many COOs demonstrate the ability to lead the operations of a hospital or health system and in doing so work closely with the CEO. This experience and exposure often lead to promotional opportunities to the CEO role. 

Above all, be confident in your ability to lead. As a nurse you possess a critically important skill of caring for and leading people. This skill is essential to lead healthcare today. 

1. Odei BC, Seldon C, Fernandez M, et al. Representation of Women in the Leadership Structure of the US Health Care System. JAMA Network Open . 2021;4(11): e2136358. 

2. US Bureau of Labor Statistics. Accessed July 30, 2023. https://www.bls.gov/cps/cpaat1.1.htm 

3. Srivastava C, Kashmiri S, Mahajan V. Customer orientation and financial performance: Women in top management teams matter! Journal of Marketing 2023;87(2):190-209. DOI:10.1177/00222429221120419 

4. Survey: Workforce Challenges Cited by CEOs a Top Issue Confronting Hospitals in 2022. Accessed July 30, 2023. https://www.ache.org/about-ache/news-and-awards/news-releases/survey-workforce-challenges-cited-by-ceos-as-top-issue-confronting-hospitals-in-2022 

5. Aiken LH, Lasater KB, Sloane DM, Pogue CA, Fitzpatrick KE, et al. Physician and nurse well-being and preferred interventions to address burnout in hospital practice. JAMA Health Forum . 2023;4(7): e231809.doi:10.1001/jamahealthforum.2023.1809 

6. C-Suite Cheat Sheet. Accessed July 30, 2023. https://sponsor.aha.org/resources/ceo-cheat-sheet 

Return to College of Nursing Winter 23/24 Newsletter

IMAGES

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  2. Growth Strategies To Expand, Extend, Or Reinvent Your Business Model

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  1. The 10 rules for a winning company growth strategy

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    Strategic Strategic growth involves developing initiatives that will help your business grow long term. An example of strategic growth could be coming up with a new product or developing a market strategy to target a new audience. Unlike organic growth, these initiatives often require a significant amount of resources and funding.

  3. Developing your Business Growth Strategy by a McKinsey Alum

    1. There are many paths to growth Understand all the options for growth, before diving into solving it. 2. Understand where you are on the growth matrix Are you in "A Special Kind of Hell", "Running in Place", Only if we...", or "Growth Nirvana"? 3. Think about it. A lot.

  4. Which Type Of Growth Model Is Right For Your Business?

    There are five central business growth strategies that drive your key metrics.

  5. Transforming for Growth: An Evidence-Based Guide

    1. Take a fresh look at your business. Transformations are not often accompanied by a CEO change. Only 14% of transformations coincide with a change in top management, barely higher than the 11% CEO churn in an average year.

  6. Business Model Strategy by McKinsey Alum

    1. To Grow, Get All of the Elements Right If you think through, analyze, and correctly solve each element of the business model, your company will grow. 2. Sequentially Solve the Business Model Strategic planning should always start with the mission, then flow through the targets, value proposition, go to market, and finally the organization. 3.

  7. Business model & growth strategy: PwC

    Business model & growth strategy: PwC Growth strategy and business model transformation Develop a systematic approach to sustain growth Sustaining your company's growth means keeping up with a rapid pace of change and market uncertainty.

  8. Growth strategy

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  9. 7 Strategic Planning Models and 8 Frameworks To Start [2023] • Asana

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  10. 10 Business Growth Strategies + Successful Examples

    1. Perform Market Research Solid business growth strategies are always based on recent and relevant market data. Thorough market research will give you insight into current and potential customer preferences, industry trends, and your company's position in the market relative to its competitors.

  11. The 6 Ways to Grow a Company

    Summary. The first step to generating real growth is to understand where it comes from. It can be boiled down to six simple categories: new processes, new experiences, new features, new...

  12. 15 types of business growth explained

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  13. 17 Sustainable Business Growth Strategies: Ideas, Examples

    1. Innovation Strategy Download the above infographic in PDF Why innovation? One of the eldest keys to any successful business is being able to come up with new or unique ideas to keep offers fresh. They recreate the existing ones and transform them into new trending products that will retain customers and attract new leads.

  14. 20 Strategic Planning Frameworks for Business Success

    1. Balanced Scorecard The Balanced Scorecard is a strategy management framework created by Drs. Robert Kaplan and David Norton. It takes into account your: Objectives, which are high-level organizational goals. Measures, which help you understand if you're accomplishing your objective strategically.

  15. Growth Strategy 101: How to Design an Innovative Growth Model

    There are four major models of growth strategies that companies use to gain more market share and grow revenue. You can learn more about different growth channels in this article on Growth Channels. Market Penetration - this strategy is used to grow your market share for a product.

  16. Nine Simple Strategy Frameworks To Grow Your Business

    When planning business growth and expansion strategies, especially when considering new markets or products. Offers a clear framework for strategic decision-making and growth planning. ... When seeking to explore and apply different business strategy concepts and models, tailoring strategies to specific business contexts, and fostering ...

  17. Growth Strategy for the Modern Business Landscape

    DEFINITION Growth Strategy A well-defined plan or set of tactics for achieving expansion and increased success Growth strategies encompass various approaches, such as market penetration, product development, market development, diversification, mergers and acquisitions, and more, depending on the specific goals and circumstances of the business.

  18. Unlocking Business Growth: 5 Essential Strategy Models for Innovative

    In the business world, innovation and growth are the keys to staying ahead of the competition. Business leaders need effective strategies to drive their companies forward, whether entrepreneurs or seasoned CEOs. Many business strategy models help leaders make these vital decisions with confidence and conviction.

  19. Growth Strategies To Expand, Extend, Or Reinvent Your Business Model

    The FourWeekMBA growth matrix outlines four different growth strategies: Gain, Expand, Extend, and Reinvent. These strategies help businesses decide how to grow by targeting existing or new customers and problems. Gain Strategy - Improve for Existing Customers: Focuses on improving existing products or services to make existing customers happier.

  20. Business growth strategy in turbulent times: PwC

    How focused investors can create value. Radically rethink the full cost base by measuring productivity against strategy. Orchestrate bolder adoption of digital technologies. Reconsider how and where work gets done proactively. Strike the right balance in managing growth ideas. Unify toward a focused strategy and vision.

  21. 8 Different Ways To Model Your Business's Growth

    2. Greiner's Growth Model. The main purpose of this model is to help businesses adapt to the likely challenges that come with rapid growth. Growing pains can be caused by a variety of negative factors, and it's necessary to tackle them proactively. Greiner's Growth Model addresses growing pains in the following areas:

  22. Business Model Innovation: Turning Disruption to Competitive Advantage

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  23. How Fast Should Your Company Really Grow?

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  24. Palo Alto Networks CEO: 'We Firmly Believe' Dramatic Shift In Growth

    In connection with Palo Alto Networks' new growth strategy, the longer-term goal for the vendor's business is now to reach $15 billion in annual recurring revenue by its fiscal 2030, Arora ...

  25. Startup vs Small Business: The Differences that Matter

    Creates new products, markets, and business models. Takes on high levels of risk to achieve rapid growth. Typically has outside funding from private investors. And here are the three main elements of a small business: Improves existing products for established markets, using proven business models.

  26. Mondelēz International Celebrates Progress on Strategic Priorities

    The Company's North American business, which accounts for more than 30% of total net revenue and nearly 40% of operating income, has transformed into a resilient, reliable driver of growth.

  27. A call for more nurse leaders in the c-suite

    CEOs are responsible for setting the strategic direction of the organization and working with leaders to develop and execute plans to meet strategic objectives. The CEO is often a champion of the organization's culture and ensures financial and operational excellence, growth, and strong community relationships.