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In Business Growth is not always Good Growth!

Business Growth is not always Good Growth, it can be Bad!

For every business owner growth is the ultimate measure of success, except it isn’t! Not all growth is good growth, and bad growth can have significant negative consequences. 

Growth is seen as THE measure of success in business. Leaders are measured by what they deliver in results, and growth is the simplest measurement to communicate. Headline results of increased turnover are always eye-catching news but may not be good growth.  Turnover, for turnovers sake, is often the most dangerous result a leader can deliver.  Growth sounds like a good result but not all growth is good. 

When growth at any cost becomes the sole focus, then leaders open the pandori’s box for the wrong types of growth.  Growth for growth’s sake is a high-risk business move. It sounds great as a headline but often masks what is really going on. The short-term benefits of rapid growth often come with long term consequences for any business. This is the difference between good growth and bad growth, which need to be clearly understood by owners and directors.

So, what is Bad Growth?

Bad growth is unsustainable. It’s a short-term grab that looks good but does significant long-term damage.  Bad growth comes in many shapes such as:-

  1. In grabbing market share: buying a low value contract to win a new customer, which reduces margin sets a trend to lower margins.
  2. In opening the wrong type of customer: which pulls the business to somewhere outside its marketplace, stretching the brand into different unprofitable places.
  3. Over rapid growth by buying market share: with a low-cost entry offer or product which stretches the company’s resources, from financial causing unnecessary debt, to brand stretch damaging brand value to customer and channel trust breakdown.

The outcome of bad growth is that it stretches and pulls the company in wrong direction. Pulling a company in a wrong direction, is short-term thinking. If it is recoverable will take time, money are human resources to correct short-term bad growth. But here’s the other key problem that bad growth creates. If we incentives and measure only the growth, then we reward the people who created that bad growth. By giving them rewards and incentives to do more of the same, feeding the bad behaviour.  That creates an empowerment and acceleration off driving growth at any cost and at all costs.    

Growth at any Cost

That growth at any, and all cost, becomes a mantra which often overriders all other business and brand metrics. The first casualty is margins which become eroded, followed by key areas such as investment in new innovative product is sacrificed for cash cows. That in turn leads to brand position erosion as the brand moves from where it was. Which is where its existing valuable customers want it to be. To a new market position, which results in its former customers moving away to new brands. 

Causes and Solutions of Bad Growth

Bad growth is an outcome of poor leadership decision making. When directors, press the green button to go for growth at any cost they are the fundamental root cause of bad growth. Instead they should be developing a clear strategic plan for the business. Identifying a company’s its true value and long-term aspiration must to be laid out by its leadership team.  

Clear guidelines of what the business and brand stand for is a must be defined. and protected Growth has impacts and good assessment of the full impact should always be made. If a business outgrows a market growth rate, then how is that being achieved, and what is the long-term impact on the company must be fully understood.  

Bad growth is often cheap and easy, but destructive and expensive in the long-term. The classic phrase there is no such thing as a free lunch’ should always be at the forefront of leaders minds. Bad growth takes the company in the wrong direction, moving it away from its market position, and most importantly away its existing loyal and valued customers.

Bad Growth Business Impact

As well as driving the company into wrong markets or short-term grab growth, bad growth often also has severe and significant internal impacts. Firstly, on the company’s values and its people motivators. Bad growth does not feel right to employees, demotivating good people and putting strains and stresses on systems and people as they are pulled in the wrong direction. 

Often bad growth creates internal conflict as people and systems are set up for good growth in product development, operating systems and customer focused activities. Challenging these, or short circuiting them to override them for bad growth goals creates tension and disappointment, demoting and demotivating even the most loyal employees.

Growth is a complicated goal and rarely one where there is easy low hanging fruit. It’s not just about increasing sales or market size; it’s about building a resilient, sustainable, and innovative enterprise. 

So What is Good Growth?

In business good growth is inextricably linked to a sustainable expansion strategy. It must be beneficial to all stakeholders within the business and to its external stakeholders especially its customers and channel partners. This holistic approach that considers the long-term impacts on the company, its employees, and customers. Good growth is led by a clear long-term strategy planning. It creates a steady increase in turnover and profit reflected in market impact of new product and brand position retention and enhancement.

Defining Good Growth

We can all see good growth after it has happened. We see more of the right type of customer for the business. They are spending more and are happy to buy more and more frequently. Happy customers come back and want more of both the same but also products and services which they want to a company to supply. 

Good growth is where: –

  1. Alignment is strong between all stakeholders: with shared values and brand perceptions work hand in hand in growth planning and delivery.
  2. Good growth is sustainable: it is both manageable and self-sufficient in generating products and services which sustain the growth of the business.
  3. Ultimately it creates long-term profitability: throughout the business, not short-term growth but long-term profits, such as shareholder value.      

The signature of good growth are therefore sustainability, profitability, and alignment with the company’s core values and mission. Good growth reflects the inter-relationship of all these three factors. It’s a type of growth that supports and is supported by the company’s overall strategic plan.

Benefits of Good Growth

Good growth benefits the whole business. Not only does it support long-term sustainability It supports brand reputation, builds and develops customer loyalty, and motivates employees. Good growth is enhancing the businesses whole value as it fits within the brand values and adds to the whole of the business offering. Each off these three elements protects the business from bad growth drivers and practices.  

Strategic Thinking

Leaders who foster good growth are adaptable and responsive to market changes. Good growth leaders are open to innovation and learning. In bad growth situations, leadership are often rigid, do not listen to feedback from customers and employees that could prevent negative outcomes. The outcome is more important than how they got there.

Conclusion

Good growth balances opportunities with threats to the business. It focuses on the three key elements of alignment, sustainability and profitability. A good growth culture ensures it is aligned with all stakeholder and company needs. It is sustainable so it can be replicated without damage to the brand, its customers and its future and finally it makes money for the business and enhances shareholder value.  

Don’t be led by people who over promise to grow your business, especially if they come from outside your sector or culture. If they don’t understand the sector and your market, they don’t understand good growth.

What makes a great BRAND

What makes a great BRAND?

Despite what marketing people passionately believe most people don’t think about brands, they just get on with their lives. The coffee they buy, the supermarket they go to and petrol station they visit happen almost by accident. In Britain today we are too busy to think through these everyday inconsequential purchases, focused on saving time, not forgetting something or rushing from place to place on a tight deadline. So do brands matter as much as they used to and if so why and how?  Brands matter where consumers can value them.  In today’s wealthy world every product or service perceives itself as a brand, even if it is just a label. So what makes a great brand?

Consumer Choice 

Let’s start with the basics, the consumer has choices. Endless choices if they choose to use them. But in many everyday cases as in my examples above, the consumer sacrifices those choices for simple expedience. The inability to see (or value) brand differentiation, between Starbucks and Costa, between Tesco and Morrisons between BP and Shell, and yet they each fight for space in consumers minds through tiny differences which if we stop and think about do actually exist and we the consumer do actively value.

So much more than First Impressions 

So in today’s Britain, what is important about a brand? Is it the halo effect, the first impression, like the smile on the front of a car or is it something more, something deeper and more tangible? Ask the owners of Sunny D (the 90’s orange juice lookalike) and you will find that the halo effect does not last if your brand is not true to itself and to its consumers. Customers have to believe in a brand, it must tell the truth, be transparent and honest if it is to be successful. Gerald Ratner (former MD of Ratners the jewellers who said about his products “because it’s total crap”) also found out that in today’s world everyone must truly believe in the brand, not just the marketing department but the whole company has to believe it and most importantly practice the brands beliefs.

Clear Brand Strategy 

Being clear and precise is also important in the company’s messages for a brand to succeed, a strong undiluted brand message must enthuse internally but must also consistently connect with customers through touch points, look at Innocent, Dorset Cereals or Apple as classic examples of touch point. They also demonstrate a clear story delivered with passion about who they are what they do and why they matter. This focused and consistent message is not just a marketing message but an ingrained set of values which consumers buy into with passion. These brands not only position themselves as premium players in their fields and earn more but they also continuously find new ways to spread their key messages to customers, they have a clear brand strategy to achieve it.

Everyone Lives the Brand

Another vital aspect of any brand success is that the people within that brand demonstrate what they preach, they live that lifestyle, support that brand and contribute to its success. It is their lifestyle, it is a part of the way they and their brand do business.

Great brands go beyond the brand to understand its real value to existing customers but also to tomorrow’s customers.  Whether it is a family run local shop or a global supermarket chain great brands position themselves so they develop and hold a market position to develop long-term success.

Vision and Purpose

Great brands create, sustain and evangelise a culture which supports and drives their brand. Creating a culture which underpins an organisations vision and purpose is a key prerequisite for ensuring sustainability of a great brand. Sustainability of a vision can only be achieved if the organisation is supported by an underlying culture which fits with the brands ethos.

Great brands can only transpose from the innovative visionary founder if they create a supportive culture to sustain the brand. An effective and appropriate culture is one which supports the brand and ensures it is can sustain its market position over time.  Great brands sustain themselves through a great culture.

The culture of a brand, otherwise seen as the handwriting of the organisation, enables sustainability of the brand over time. Culture today matters from how people work together through to acquisition of appropriate talent. The right people are drawn to a brand they aspire to be part. Business partners focus on brands with likeminded cultures andante to be part of a great brand. In the exact same way customers aspire to be associated with a great brand.

Great Brands are not Labels

Great brands drive markets. By challenging them through innovation and changing perceptions. Labels on the other hand feed off brands by picking of successful innovations for downstream ‘me too’ market following customers. Great brands invest high proportions of their resources in driving markets forward, through innovative products and services. Great brands are seen to out invest other players more double the the market average.

Creating innovative pipeline cultures thinking long-term make positions rather than short-term tactical single product successes. Labels focus on creating  market winning season products, they act as followers often being low-cost alternatives to the brand leaders in any sector.  Brands focus on the longterm innovation which shift the paradigm of relationship with the customer through the brand.

Great Brands Add Value

Great brands also develop their own uniqueness, not just the product or service but the whole package is how we do it around here. There needs to be not only consistency but the brand hand writing and value on how they do it. The best brands always develop singular simple signals for customers, cutting through jargon to create clarity without patronisation.

For brands to succeed in today’s global markets these golden rules have never been more important as consumers have never had so much information, but if you follow these simple rules of brand success you can develop and maintain a great brand.

Looking for Advice  

If you want to develop your company’s brand and are looking for some advice on developing your company, its marketing, its sustainable competitive advantage then contact us at Cowden  to see how we can assist you, or read more about us in this blog or at Cowden

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Cowden Consulting is a strategic planning and implementation business which works in partnership with customers to grow and develop their business, contact us to learn more.

Posted 1st December 2011 by Richard Gourlay

Location: Old Glenstocken, Colvend, Stewarty of Kirkcudbright, Galloway

Labels: brand brand identity brand strategy brand strength branding business success marketing strategy strategic direction strategy sustainable companies values vision

Great LEADERSHIP starts with your VISION

Great LEADERSHIP starts with your VISION 

Having a Vision for your business is the most important leadership trait for a successful leader to have. For leaders to lead they must have a strategic vision for their business. A clear future state they want to achieve. One which provides not only an optimum place within their market they want to be; but one which inspires, motivates and drives the organisation to achieve. Heres is why Great leadership starts with your vision.

Great leaders may be charismatic, they may even be likeable, but for them to be successful they must be able to communicate and inspire others through their vision. A vision is a future place within tomorrow’s market.

Leadership Vision

Leader’s must create a vision which is not only aspirational for themselves but motivational for the all stakeholders.

A recent survey of 1,439 chief executives and senior HR people from 707 organizations across the globe, found that the outstanding trait of successful leadership is the ability to create and communicate a VISION.

This is the single most important characteristic for success.  Amongst those interviewed a clear vision scored an impressive 92% amongst such high level people in business. This demonstrates just how important a characteristic this is in creating a successful leader.

Vision to make change in business by Richard Gourlay in this article: Great LEADERSHIP starts with your VISION

 

“Without a clear vision no leader can succeed today in business”

Creating a VISION

Creating a vision is not easy. Leaders are busy people fighting to keep their business on track, dealing with day-to-day issues and making decisions based upon facts and figures. That last point is therefore a real challenge for leaders in developing a vision. This is because there are no facts and figures about the future. The future, by definition is unknown. Instead leaders must rely upon a range of forecasting tools, from gut feel or by benchmarking agianst others, to develop their vision of what the future might look like.

Each of these options in forecasting the future are fraught with danger and risk. Both in terms of making decisions based upon inaccurate perceptions or the damage to their credibility as a leader. Following others through benchmarking is always the safest option for leaders. But this limits leaders to be a follower within any market sector, rather than to lead it from the front in their sector.

Great Leadership deals with Change

For leaders to lead, they must be able to deal with change. Change happens in-perceivably until it is obvious. Every day we grow older but it is only when we look back we see how we have aged. The same is true for a business in any market. Even when change is driven by disruptive new entrants, the change that enables new players to enter a market is caused by subtle sometimes in-perceptivable changes within a market. Change is everything and is happening all the time.  Subtle innocuous and minor alterations in a market can become future key drivers of change which create new opportunities are areas which leaders need to keep aware of and proactively respond too.

Change is the only constant in any business. The market is always moving either through Macro market factors or through Micro market factors. Good leaders need to be continually scanning and monitoring both and assessing likely positive and negative  impacts upon their business, their customers and their channels to market and value perceptions of their brand.

Great LEADERSHIP starts with your VISION using McKinsey7-S-Model to assess a company structure for leaders by Richard Gourlay

Challenges for Leaders Vision

Failing to validate and then alter a business model to reflect changes in the market towards the delivery of a vision. This is the single biggest single reason chief executives fail to succeed. 

Leaders have to carry people with them for their vision to be live. Poor communication skills are at the heart of why visions and therefore leaders fail to succeed. Leaders must be able to create, verbalise and rationalise to others their vision to generate buy-in and carry their senior people with them. Being able to visualise their vision and communicate it to a wide range of stakeholders often stalls or causes failure in strategy delivery.

For a vision to succeed leaders have to build relationships. This starts in developing trust in their future and develop a team culture all working towards that vision. The inability for leaders to invest in developing their vision often results in the lack of trust and development within the senior team.  This failure to develop leadership soft skills, is a major area leaders must invest in to improve their effectiveness as a leader.

Leadership is both Science and Art

Leadership is a balance between science and art. Creating a vision is often seen as an art, but for a vision to connect with senior stakeholders visions require a scientific rationale. It is the old adage we buy with the heart and justify with our head. A solid vision is both a visual message but one backed up with both direct and indirect evidence of that future state in which the leader’s vision sits. A successful vision pulls people together through shred valued values across the organisation what creates and sustains those values.

Great Leadership requires Communication Skills

The importance of being financial and operationally literate to the CEO role is always seen as core leadership skills. These hard skills are often key drivers of leadership assessment. Which is why so many CEO’s come from finance and operations leadership backgrounds. Today these competencies are seen as important for any CEO role.

In todays’ business environment CEO’s are being selected based upon having a demonstrated track record of delivering strategic vision. The ability to inspire others through delivering a strategic vision is now being seen as the most important track record for successful leadership.

Succession Planning 

The importance of succession and smooth transition is becoming more important element for successful leadership. Companies today are investing time and effort in succession planning. Well planned succession planning ensures long-term shareholder value and the ability of avoiding the football management culture of overnight change. Poor leadership choice often leads to cultural conflict and short-term reactionary thinking leads to rapid and unsustainable change. Both these mentalities damage the long-term sustainability of a successful business.  The leadership teams ability to develop successors who are able to support and follow through a vision is becoming an integral part of the CEO role.

Business leaders all recognise that talent management plans, including succession management have become essential for sustained performance in today’s organisations.

If you want to develop your company’s position then there needs to be a clear vision for it. Vitally answering the questions where it is going and why? If your are looking for some advice on developing your company, its marketing, its sustainable competitive advantage then contact us at Cowden.  Let us see how we can assist you, or read more about us in this blog or at Cowden.

Or learn how to plan your business successfully see our video to learn more:-  http://www.richardgourlay.com

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Strategy The Leader's Role by Richard Gourlay

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Strategy: How to outcompete the competition

Vision leads to success in business by Richard Gourlay

Sustainable Competitive Advantage 

In strategy: how to outcompete the competition is about how business leaders can create a sustainable competitive advantage within your market.  Sustainable competitive advantage is a position where a business can continually hit the sweet spot in bringing the right product to the right market at the right time. Few companies can lay claim to this holy grail market position for any length of time, retaining a sustainable position within a market.

Here are some that come immediately to mind: Ferrari, Rolls Royce, Hoover, Apple, Boeing, Sky, Microsoft Windows, are all good examples of global companies who have achieved that today.  Sustainable competitive advantage is the ability to create and sustain a position within a market. Sustaining a desirable market position provides long-term competitive posiitoning for that brand.

The competitive advantage most companies strategically aim for is to own the space of early adopter within an adoption curve. That position is where a brand is seen as a premium player. Producing innovative new products and services and able to command and earn premium prices for those products. That premium position, finding, and holding the early adopter position in any market, is seen as the optimum competitive position within any market.

By finding that competitive position, a brand often helps creating the structure of the market in the process. A brand which can and does take ownership of that the competitive position can drive the development and evolution of that market.  A company can choose to operate anywhere within a market. Market makers, who develop a sustainable competitive advantage, and make it competitive, can build their business model to a defined market position.

Making it Sustainable

Making a competitive position sustainable requires a brand to develop its ability to sustain its position over the long term. That sounds easy in theory, but in reality is hard. Short-term attitudes in growth and profit can easily distract a leadership teams focus. Failing to invest in sustaining their brand’s market position, or stakeholder demands short-term profit taking, are the two of the most common pulls that destabilise a brands’ established market position.

The challenge for any leadership team with their business is to be able to see the market position they want within that market position. Sustainable competitive advantage, the holy grail of a successful business is not easy to find, straight forward to own or simple to sustain, and that’s why it is every leaders’ holy grail.

How to Outcompete the Competition 

In mature (and often saturated) markets developing a unique strategic position can give a business sustainable competitive advantage. A sustainable competitive advantage in any market is the holy grail for business owners. To be somewhere that your competitors aren’t, and to have something that cannot be taken away, is what every business leader wants to achieve in setting up in business.  It is one clear defining way of out competing the competition is to develop a sustainable competitive advantage in a market.

 

Dyson Vacuum Cleaners: How to Outcompete the Competition

To be recognised as the market maker, such as Hoover, whose name is synonymous with vacuum cleaners, gave the Hoover brand unbelievable control of the market for most of the 20th century.  Hoover, the brand leader owned the global market, with an unparalleled history, and complete market dominance. The brand name itself became synonymous with the product category, everyone hoovered with a Hoover.

So what changed? A loss of focus and desire to continue to own the market coupled with the airplane ticket fiasco which opened the door to new competitors.  One man in particular James Dyson who grabbed the opportunity to replace Hoovers’ once held position in the market, launching his own Dyson brand through technology shift of his cyclone bag less vacuum.

His passion, created from vacuuming at home and becoming frustrated. Then seeing the cyclone idea at a sawmill which then took 15 years, 5,127 prototypes to turn into a winning product. Today this winning product benefits upon 60% recommendation purchases and has allowed Dyson to spin his cyclone technology into hair and air dryers as well as washing machines.

 

Features of Strategic Competitive Advantage

What are the key features of sustainable competitive advantage for any company in their market. Well here are the most commonly found top five:-

  • Charge a premium for its services; even low cost suppliers out price other low cost suppliers.
  • Lead the market through innovation; will get to market new ideas quicker or in a more dominant way to shift the market to your agenda.
  • Controls the key channels to market; from buying decision processes to pricing structures.
  • Owns the pace of change within the market; from technology development and consumer mind set, being the pace setter in the market.
  • Control of buyer activity; the significant majority of the Share Of Buy (SOB) and Share Of Space (SOS) decisions through its dominance.

Sustainable Competitive Advantage

Sustainable competitive advantage is an extremely difficult goal. Most successful brands only ever achieve the challenger market position, one that challenges existing perceptions within a market. Developing a sustainable competitive advantage requires an organisation to constantly challenge not only the competition but also itself, to sustain its desirable position within its market.

Creating dominant sustainability requires the leadership to create a clear vision of where the company is going. That requires leaders to assess where the market opportunity exists.  It takes leadership with passion, dedication and drive, for a brand to succeed in moving from a challenger brand to one which can dominate its market such as Dyson.  For men like James Dyson, the advantage was that he was in the right place at the right time, with the right product.  That has enabled a technological shift in the market with his bag less vacuum and a move to smaller cable-less products dominate the innovator position within the market.

Strategy The Leader's Role by Richard Gourlay

Strategy: How to Outcompete your Competition

If you want to develop your company’s position then there needs to be a vision for it. Where it is going and why. If your look for some advice on developing your company, its marketing, its sustainable competitive advantage then contact us at Cowden  to see how we can assist you, or read more about us in this blog or at Cowden.

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