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Product line extensions, geographical
expansion and new technologies and
adjacencies aren't enough.
Performance shortfalls create a "results
gap." But limitations of growth are caused
by organizational and process gaps.
Building the team and its methods.
The characteristics and processes of an
"Entrepreneur in Residence."
Going beyond the creative into a
practical and executable model for
sustained growth.
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Oyster-centric definitions of terms used
on this site.
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The core issue is the long-term vitality of the organization, its ability to foster insight and take advantage of that vision effectively in a changing world.
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Three Significant Gaps
Stakeholders of every kind respond to "average" growth with dissatisfaction. In any business environment successful growth rates are measured against broad norms and leaders and owners are rewarded based on their success in comparison to those benchmarks. Inevitably, goals are set to exceed "average" performance and, almost as inevitably, those goals aren't met.
Under-Performance
So the first "gap" is the shortfall between the growth rates mature companies intend and those they experience. The shortfall comes from the sources of growth that companies turn to in their planning process. Consider the elements of such growth, the sources of it:
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Core Businesses: Existing businesses yield growth through asset productivity, cost control/margin improvements and iterative growth.
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Product Line Extensions: Logical extensions of existing products that provide similar products, addressing the same or similar needs among members of the currently exploited marketplace.
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Geographical Expansion: Proliferation within a territory (Starbucks) or global expansion (Coca Cola).
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Adjacencies: New product development that leverages the currently applied IP, leveraged technology, value chain structure, operating processes, brand attributes, pricing models and employee experience, capabilities and skills of the existing business in a new industry or market segment.
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The sources of growth described above, by and large, are fated to parallel the growth of any able competitor. They are destined to result in the average. In order to out-perform these norms, genuinely new business platforms must be created. But new business creation requires both organizations and processes that are entirely different from those that manage efficiency and extensions of proven businesses. To promote new business creation as a permanent part of an organization, process and organizational changes have to be sponsored by leadership at the highest levels.
The real assets to be built from this process go beyond the new platforms themselves. They are the systems and people who make real growth their purpose. The institutional change lies in the organizations, leaders and processes that make substantial, new growth their raison d'etre. The most critical issue for CEOs with vision goes beyond the sunnier stock valuations of "growth" companies. The core issue is the long-term vitality of their company, its ability to foster insight and take advantage of that vision effectively in a changing world.
From Insight to Structure
Ideas aren't the starting point in new platform development. Creating the organization and processes that will uncover those ideas and then know what to do with them is the key. Thus, the team is more important than any single idea. And a disciplined process has to be put in place to transform mere creativity into effective business innovation.
Creativity, in this use, implies that the idea is good in and of itself, that the creation of a new idea is intellectually worthwhile, per se. Ideas aren't enough in business. It is the premise here that executing ideas in the practical world to useful and profitable result is the purpose of the endeavor. This requires new people and new functions and so a new organization with different missions, structure and processes.
This new organization operates within the pre-existing one. There is no short-term effort to alter the culture of the larger enterprise. Instead, the growth organization and its leaders develop tolerance and strategic agreement to the effort. The new organization nests in the old one, taking advantage of its resources without absorbing its cultural DNA. As new platforms appear and the methods of the new organization are observed, the culture inherent in it will have its impact on the enterprise as a whole.
The cultures will always coexist, however. Business unit management requires a devotion to attitudes and methods that are counter-productive in the growth organization. It is leadership's challenge to create a context for managers to understand what's going on and then create strategic alliances at a very high level in the organization. These alliances aren't voluntary. Instead, the chore is to build a consensus around new domain exploration as a universally agreed strategy. Once agreed to, support for the effort is a requirement.
The new group is differentiated but fully integrated. The tensions in such a circumstance become productive, spawning creative conflict and new perspectives. A free market of ideas becomes the method of the place. It is the responsibility of the team to create new value.
Filling the Gaps
Oyster International consults with organizations to help them develop the processes, organizations and talent to develop new growth platforms. We help institutionalize substantial growth. We examine existing business structures and processes and prescribe new ones. We define roles and, in a very detailed way, outline the organizational and process management required to empower entrepreneurs and the team that surrounds them.
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