A Different Way to Achieve Strategic Growth
The Antidote to Over-Diversification
Should we swing for the fences, or rack up singles and doubles?
That’s a colloquial way to sum up a trend I’m seeing among the leadership teams we work with on growth strategy initiatives. In recent years, there has been an overall shift away from organizations pursuing one “big hairy audacious goal” (BHAG) — say, a lone $100 million initiative — in favor of a more diversified approach — perhaps a handful of (or even many) $10 million ideas.
This diversification of risk makes some sense, of course. Embracing the mentality and truism that approximately 70 percent of all new ideas fail, why “bet the farm” on one huge, costly BHAG that has a 70 percent chance of coming up empty, when the organization can hedge on a number of smaller, less risky, less costly projects? This more measured, careful approach allows companies to plant a lot of small pockets of seeds, perhaps across markets, product lines, or the company, rather than going all-in on that one big, and maybe more uncertain, swing.
But this approach carries a certain degree of risk as well, just in a different form. For one, think of a business as a 40-acre farm, with those small pockets of seeds spread here and there across the acreage. Consider how difficult such a spread-out field of crops would be to manage, to tend to, to water. It is inefficient, more time consuming than the ideal, and keeps the farmer (corporate leadership) running in a lot of different directions at once, trying to keep everything alive while maintaining the direction of the overall enterprise and its primary mission.
Too often, the result is a growth portfolio that is overly diversified — too spread out, far too segmented, having little strategic alignment…disparate services, products, and market segments, all competing against one another for time, attention and resources.
Perhaps there is a better way. What companies are doing now, and where we’re likely going in the future, is a more strategic and methodical approach that protects the organization against both kinds of risk: too little diversification, as well as too much.
Back to the Future
As a company, Upland has always emphasized the importance of Foresight in the planning work we do with companies and nonprofit organizations. We have discussed in prior articles the importance of strategic planning that begins by painting a clear picture of the organization’s future state, then mapping initiatives, milestones and initiatives backward to the present day.
While this concept can be explained or conveyed intuitively, in practice it is a more rigorous process than the easy explanation implies. Additionally, even though it may sound fairly straightforward, it is often difficult for organizational leadership to fully embrace, as it requires a holistic and exhaustive examination of the entire future the company will map toward. In fact, our own company is so committed to the future-backward approach that have an entire Foresight team dedicated to the work, and we have developed a proprietary methodology known as DisuptorID that empowers this visioning work while urging organizations to embrace (and even pursue) future disruptions to markets, products, and conventional wisdom.
What results is typically a more purposeful and intentional approach to innovation and diversification. As opposed to a “tinkering in the sandbox” mindset, which often advocates for experimentation for the sake of experimentation itself, futurist growth strategy work endeavors to keep the organization aligned, focused and committed to a common vision for the future, not merely a disorganized (and risky, as noted earlier) set of siloed “what-ifs,” each pulling on the organization’s reins to their own ends and ambitions.
Start by getting internal alignment on that crystal-clear vision for the optimal future, then work across the organization to build and document roadmaps from the current reality. Remember, this strategic growth planning can impact everything from pricing, to product/service portfolio, to merger and acquisition strategy, to organizational design and hiring, to sales, marketing and branding. Any initiative that requires investment of time, focus and resources should map to the future ideal, and if it can’t, should be reconsidered.
Don’t Miss the Unobvious
We all know that shiny objects have a tendency to distract, as well as attract — too often fleeting optimism, enthusiasm, attention and support. When the luster eventually wears off, as it often will with new ideas and initiatives, that attraction fades, and all that remains is the distraction. This creates anchors on the organization’s trajectory forward. So when there are many potential anchors, the ship gets held back all the more.
In collaborating with organizations on growth strategy, we are most often urging everyone to sharpen the pencil and focus on fewer things, not more. This doesn’t necessarily mean pushing the pendulum all the way back to a single BHAG. Quite the contrary. It simply necessitates that all innovations and diversifications be aligned, and only those that map to the future be pursued.
This means asking and answering questions like:
- What business are we competing in today, and will that shift in the future as the result of our growth strategy?
- Let’s start by defining ourselves. Who are we? What do we stand for? And what will be in the future?
- What do we know about the competitive landscape we may be veering into? Don’t miss competitors that enter from the side — unexpected market entries from competitors we never considered ourselves in competition with in the past.
- How are we going to position ourselves as distinct and different from a crowded market that already has existing and incumbent service/product providers, in order to be competitive and offer the market an alternative they weren’t aware of or expecting?
- Do we need to take a fresh look at our positioning and brand strategy? Does it align with and appeal to a new customer base we need to better understand before we go into product development?
- How do shifts in supply chain impact our future plans, with so much changing so quickly and dramatically in recent years?
- What external forces are we not anticipating or considering in our zeal to innovate and iterate? In recent years, we’ve suffered a global pandemic, a disrupted supply chain, and ahistorical inflation. What could be next, and how do we better prepare for unknowns?
The key to success in today’s growth strategy planning is thinking holistically and acting with focus, purpose and clarity. Don’t allow the dreaded organizational silos to mute the impact that the organization is able to have on the world in which it operates. Because there is so much at stake, and because we advocate for such a measured, methodical approach, we sometimes start with one department, or one product roadmap, or one initiative. But even in doing so, we never lose sight of the organization and its constituents in their entirety.
We’ve quoted Abraham Lincoln previously in this context, but it bears repeating: “The best way to predict the future is to create it.” Once it’s created, start today to work backwards from it and you are more likely to set out on a path to achieve the vision of your ideal.
To reference another famous quote, remember what Lewis Carroll observed in Alice in Wonderland: “If you don’t know where you are going, any road will get you there.”