In the business world, often things might get confusing. You: Okay, so let’s look at potential new revenue sources. They also have full control over how they want to manage and operate the acquired company. That doesn’t mean you should ignore the other potential customers in the long-run. You: After looking at organic growth opportunities, we determined that Coca-Cola could increase revenues by $600M by entering three niche drink beverage markets. If you lay out a comprehensive and organized framework, the rest of the case should be a simple process of elimination. Balanced Growth: We seek growth across and within our economies through macroeconomic policies and structural reforms that will gradually unwind imbalances and raise potential output. VIRTUAL MASTERCLASS - 24 FEB 2021. Organic growth can be segmented into growth through existing revenue sources and growth through new revenue sources. APEC aims to achieve Balanced, Inclusive, Sustainable, Innovative, and Secure Growth. One advantage of a partnership is that it is most often cheaper than a joint venture since resources don’t necessarily need to be contributed. You can find out more about which cookies we are using or switch them off in settings. For that matter, a tool like a customer/problem quadrant by Ash Maurya might help you focus right away to the customers you can serve when wanting to solve a specific problem. Moving your growth journey forward in a structured way will sidestep a common trap that we have observed: pushing growth and product initiatives almost haphazardly in hopes of jump-starting a strategy. How do you solve a revenue growth strategy question? Indeed, that stage requires a deep understanding of the customers to serve. Interviewer: They are looking to grow revenues by $1B over the next three years. Dropbox Growth Strategy: Viral Loops. Are you going to hire more engineers to add features to your product? This will imply an organization that leverages on a very specialized salesforce. You can think about growth through two major categories, organic growth and inorganic growth. Where the company’s growth is in jeopardy, and you still didn’t manage to master the proper organizational structure to scale further. The post-it business plan is a methodology that helps you focus on keeping a long-term focus on your mission and... Post was not sent - check your email addresses! When market is fully penetrated, it is advised for businesses to either proceed with the market development for existing product or product development for existing market. Developed by an ex-McKinsey consultant the guide includes best practices, examples, and a complete 54-page Sales Strategy Plan PowerPoint Presentation. You had a brilliant idea, which inspired you to take action. Also, all partners get the benefit from the brand names and customer access of their partners. Therefore, if the key customers are willing to stay with you longer because they know you will keep adding key features to the product, you’ll need to hire more engineers. And what motivates that person or group of people to keep your product in the long-run? You’ll likely need to develop some kind of rubric to evaluate each growth opportunity. The result is a comprehensive, robust and executable strategic plan. Once again, Moz is the most established brand in the SEO industry, and it can leverage its brand and business model to execute this sort of strategy. The customer/problem quadrant from the LEANSTACK. A Framework for Pivoting Into Growth I introduced this simple framework in our April webinar on resetting your marketing strategy for the pandemic . This gives the acquiring company all of the revenue that the acquisition target generates. For instance, we create many categories for companies, like differences between B2B, B2C, B2B2C, and more. Next, you want to quantify the goal or target that the company is aiming for. Using the wisdom of thousands of resilient, high-growth businesses – including EY Entrepreneur of the Year™ winners - the EY 7 Drivers of Growth is a tried, tested and trusted framework that can enable you to think differently about your strategy for protecting, building and transforming your business to … Is there a particular acquisition, joint venture, or partnership that would make sense for Coca-Cola to pursue? Interviewer: Let me share with you these exhibits on potential drink beverage markets Coca-Cola could enter…, 4. Growth Strategy Examples 1. Also, it is critical to understand the motivation of the key customers you’re serving. Indeed, if we look at some of the primary reasons startups fail; some of them can be traced back to no market need, running out of cash, pricing/cost issues, and a product without a business model. After practicing a few growth strategy cases, you’ll notice that these cases follow a predictable pattern and you’ll be able to solve any growth strategy case that comes your way. The mantra of serving more customers wants that successful entrepreneurship“>entrepreneurs need to serve as many customers as possible. Are they trying to grow revenues, profits, number of customers, or something else? After a bunch of pitches, you also managed to get some venture capital funding. I’d like to look into inorganic growth opportunities next. A disadvantage of a joint venture is that it will take time to generate revenue. Interviewer: Great. This means that it: Involves all departments of the company (versus marketing only). These two categories form the foundation of our growth strategy case framework. AUSTRALIA 24 February 2021 9:00 - 10:30 AEDT. There are two reasons that support this. If your customer acquisition for segments that are less valuable for your business (for instance, because they have a higher churn rate and lower lifetime value) is low, then you might still want to exploit those opportunities. Through that process, managers, researchers and academics have created a wide range of frameworks to guide you to structure your strategic thinking and business growth. They could increase revenues by $600M over three years fairly easily. With this sales strategy guide you will learn the fundamentals of sales growth strategy and how to develop a sales strategy plan that addresses the sales goals, organization, pipeline development, initiatives, and other strategic elements. This data is from Nathan Latka’s [list of SaaS companies]. A third and critical point is about the organizational structure. This means that every time you visit this website you will need to enable or disable cookies again. For instance, if your key customer base is willing to purchase your product because it trusts your brand. Follow these five steps and you’ll be able to solve any growth strategy or revenue growth case that you get. It’s a classic consultant’s 2×2 matrix that we’ve used to help our clients think about where and how they can pivot their businesses to recapture lost revenue and lost demand. How should they go about it?” Gather the necessary information about volume and price to … A Simple Growth Strategy Framework To Get Your Business Out From The Death Zone You had a brilliant idea, which inspired you to take action. This includes growth through existing revenue sources and growth through new revenue sources. In a joint venture, two or more companies enter a business arrangement in which they pool together resources and share risk in accomplishing a particular task. Delivered Values vs. Competition Market Offers vs. Competition Customer Needs Time for Effective Action Financial Resources Team Strengths & Weaknesses Growth Framework Links External and Internal Customer assessment, targeting, strategy Benefits, Advantages, Functions, Features Packaging, pricing, communications, partnerships Assessment, training, recruiting Business planning, risk … Look for the price point and the acquisition costs that make the most sense to build a viable. Your growth strategy is the big-picture roadmap you’ve created to get your business from where it is now to where it wants to be in the future. The three horizons framework offers a way to concurrently manage both current and future opportunities for growth. Sequencing the growth journey. You should pay special attention to the context of the case and the company’s circumstances. It is not uncommon for the plan to be maintained solely in … And at the same time, those salespeople will need to be able to reassess by time to time how those motivations change, converge or conflict with your offering. The OGSM framework is designed to connect big picture strategic elements (mission, vision, values) to operational elements (goals, strategies, initiatives, measures). However, we’ve seen how in building up a successful company, once you’ve picked up the proper customer segment, you’ve understood what the highest price you can charge for that segment (based on the value provided) is. Or those customers that might want to buy your product even if it is not perfect yet. This website uses cookies so that we can provide you with the best user experience possible. A strategic assessment of the market. And I don’t mean it in a generic way. Instead, proper distribution and sales strategy should identify right away the kind of customer to target. Usually, growth strategy cases are introduced by open-ended questions such as “A firm XYZ wants to increase their revenue. I’d also like to look into whether the acquisition price for Company X is fair and reasonable. The first step to solve any growth strategy case is to identify what the company is trying to grow. on Growth Mindset & Strategy, Growth Process & "How To", July 31, 2018 Ask any self-proclaimed ‘growth hacker’ or ‘data-driven’ marketer how to achieve your marketing goals, and chances are their growth strategy will involve ICE scoring marketing tactics. The most important part of solving growth strategy cases is to be structured and methodical in considering all of the different growth opportunities. Two, the acquisition of Company X would increase revenues by $500M, helping Coca-Cola achieve its revenue growth target. The company still focuses on SMEs as Moz has an extremely low acquisition cost for those customers. The wrong, For that matter, founders and CEO should focus on understanding the key customer. If you disable this cookie, we will not be able to save your preferences. Therefore, rather than starting from the solution you have in mind. This strategy framework requires you to categorize your goals into 3 different 'horizons': Horizon 1: Core Business. However, we are still $400M in revenue short of our goal. Rather than looking at complicated things, I want you to focus on a single idea: the wallet. Each of these methods of inorganic growth have their advantages and disadvantages. Why The … We’ll also show you the five steps you should take to solve any growth strategy or revenue growth case. Lean Startup Canvas Explained, What Is Market Segmentation? The acquiring company may be able to increase revenues by cross-selling products, up-selling products, or bundling products together. This encompasses the activities that are most closely aligned to your current business. Understanding what the company is trying to grow will help you determine what growth strategies will be most effective. Those cases, of companies built on a massive and distributed customer base, are more an isolated phenomenon, rather than the rule of thumb. Instead, companies need a more deliberate, stepwise approach to building growth initiatives and capabilities. A business’s growth plan is relatively simplistic when it is first starting up and usually consists of rolling out of a handful of products or services to a manageable geographic market. Learn the right framework and see how it is applied from ex-McKinsey consultants. Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | You need to be very specific and be able to identify the early adopters. Once you have quantified the company’s target or goal, you can walk the interviewer through your growth strategy framework. Often that death zone comes from a misunderstanding of the proper customer segment. Visit The FourWeekMBA BizSchool | Or Get in touch with Gennaro here 1. They have hired you to determine the best way to grow. View all posts by Gennaro Cuofano, Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | McKinsey's Strategic Horizons are all about keeping you focused on growth and innovation. This is slightly different from a joint venture because in a partnership, companies do not necessarily have to combine resources or efforts. Left with no choice, the small business will then look at what it currently has, right where it currently is. That means the focus will be on the current products or services, in the current market.It is pretty straigh… The growth rate can be calculated on a historical basis and average. After a bunch of pitches, you also managed to get some venture capital funding. Also, you need to understand what makes the wallet holder keep paying for your product. The stage of the company, how much free cash it has on hand, and the level of urgency the company is facing will help you narrow down your options. The material in the course has helped 6,000+ students across 13+ countries land offers at top-tier consulting firms such as McKinsey, BCG, and Bain. This type of case interview may look something like the following: Your client, Coca-Cola, is looking for new opportunities to grow after years of flat growth. Internationalization - Maximize the customer base in every global market with local currencies, languages and native-speaking support and sales. And what’s the proper balance between marketing and sales? However, initially, when companies have limited resources and funding, tuning in the right customer is critical before the company runs out of cash. And in what time period are they looking to achieve this level of growth? Is aimed at growing the company from many angles (revenue, employees, etc). The five most common growth strategies - the Growth Stars. In short, are you going to leverage marketing, sales, or both? That’s the death zone. That might sound counterintuitive, as the first examples that are readily available to our minds are those of large tech companies like Facebook and Google; which became successful by serving masses of free users, with an asymmetric business model, financed by businesses and marketers bidding for attention on those platforms. A Strategic Growth Framework. Business Model Canvas Explained, Blitzscaling Business Model Innovation Canvas In A Nutshell, What Is a Value Proposition? Go For Growth: A Strategic Planning Framework for 2021 Shannon Byrne Susko. However, it promises to solve a specific problem. Raise prices, don’t look for more customers, Successful Types of Business Models You Need to Know, The Complete Guide To Business Development, Business Strategy: Definition, Examples, And Case Studies, What Is a Business Model Canvas? Who is going to make the purchasing decision (a person or a group of people)? Next, I’d like to look into potential inorganic growth opportunities. Among the biggest mistakes, startups’ founders might make is to want to serve pretty much anyone in that industry. Also, companies do not have full control over their partners’ operations. You need to be very specific. The most common type of growth that companies pursue is organic growth, which is growth driven by expanding output or engaging in internal activities. This works best in a scenario where there are no new products, and there are no new markets to enter. This is extremely dangerous, especially in the initial stage of growth. Additionally, joint ventures are much cheaper than acquisitions. Quit your 9-to-5 job, and start your own company. These two categories form the foundation of our growth strategy case framework. The four growth strategies are Market Penetration (offering more of the existing products to existing markets), Market Development (offering the existing products to new markets), Product Development (offering new products to existing markets) and Diversification (launching new products in new markets). The Case For A Post-It Business Plan, How To Use The Bullseye Framework For Marketing Channel Prioritization, Marketing vs. Additionally, there are many revenue synergies that Coca-Cola can take advantage of to grow revenues even more over the next few years. The framework continues to be useful, especially in uncertain times. How should we proceed? For next steps, I’d like to look into Coca-Cola’s market entry strategy for entering these emerging markets. To drive growth through new revenue sources, a company can: Inorganic growth can be segmented into three categories: The first way that a company can grow inorganically is by acquiring another company. Interviewer: That makes sense. Growth through existing revenue sources We suggest moving this party over to a full size window. Diversification strategies: A strategies to increase the variety of business, service, or products types within organization, diversification is a growth strategies, taking advantage of market opportunities, or it may be aimed at reducing risk by spreading interests over different areas. That is because we like to generate useless complexity when we can get along with simple heuristics. At the same time, if your wallet is in the hand of a group of people with mixed motivations, that relationship becomes too complex to be left to marketing and branding alone. These desired regional growth attributes are deeply interconnected. The advantages of making an acquisition are that the company increases its revenues immediately. They just need to be associated with each other. You: To determine the best opportunities to achieve a $1B increase in revenues over the next three years, I’d like to use the following framework. Thank you for your recommendation. In this article, we’ll cover a comprehensive framework that you can use to structure the different ways a company can grow. For instance, if we look at companies like Algolia (a search engine for websites), it is interesting to notice how of the over six thousand customers, about three hundred might make up around 80% of the company’s overall revenues. You: Let’s look at organic growth opportunities first. Then you know you need to organize your company around content marketing. 5 Steps to Solving a Growth Strategy Case Interview. It is intended for small and mid-sized cities, particularly those that have limited population growth, areas of disinvestment, and/or a struggling economy. Learn more about business strategy in CFI’s Business Strategy Course. There are a few acquisition targets Coca-Cola is considering. Value Proposition Canvas Explained, What Is a Lean Startup Canvas? However, many do fall into that. NEW ZEALAND 24 February 2021 11:00 - 12:30 NZDT. That is a place where the lifetime value of your customer is barely sufficient to cover for your cost of acquisition. You: Is Coca-Cola looking to grow revenues, profits, or something else? In most other cases, focusing on the customer segment, which is not in line with the business might be too risky. The four growth strategies are: market penetration, market development, product development and diversification. Objective – direction setting statement. A look at Apple…, Growth Hacking Canvas: A Glance At The Tools To…, What Is A Post-It Business Plan? Common business growth strategies In his book The Breakthrough Company, Keith McFarland recommends that small businesses and startups considering growth should proceed in a way that brings “the most results from the least amount of risk and effort.” This is another important aspect of prioritizing goals. What motivates that person or group of people to make such a purchase? Visit The FourWeekMBA BizSchool | Or Get in touch with Gennaro here, Key Lessons In Lean Analytics With Alistair Croll, How To Design A Winning Business Model With Adam J. Bock, Breaking Down Digital Transformation With David L. 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