It is common for firms of all sizes to reach a plateau where revenue growth seems to stall. This growth tip references research contained in the book Stall Points.
Political and economic factors beyond our direct control have an impact on company growth of course, but surprisingly the research shows that 87 percent of growth stalls are preventable, and are related to the strategic decisions made in the past.
It is critical to measure the Key Performance Indicators that drive your current business model on a weekly and monthly basis. However, these metrics may not register that a significant change is occurring in your industry.
If you are not vigilant about industry changes and do not take corrective action quickly, it can be extremely difficult to kick start things to get your company growing again. In fact, the research shows that the odds are against you ever returning to growth.
Most growth stalls occur because a strategic assumption that was once true, no longer applies to your business model. In fact, it is the assumptions that you hold most deeply – or have “known” so long that you no longer question them – that pose the greatest threat to your long-term growth and survival.
The tendency to cling to obsolete or incorrect ideas has been characterised as “group think”.
Typically the large incumbent company has enjoyed a long run of success with their existing business model. The leaders become closed-minded; there is peer pressure toward uniformity. Leaders overestimate its abilities based on their past success. They fail to consider alternatives, and filter out new information that does not match their existing view of the world.
They keep expanding the features of their current offerings, adding more costs, rather than more revenues. They become bloated and unfocused. They fail to realise their customers are increasingly attracted to new entrants, with disruptive new business models. They mistakenly think their brand name will protect them from these “inferior” competitors. This classic trap is called the “Innovator’s Dilemma”.
Industry change comes at you quicker than you think, and leaders have to be faster at responding. Questioning your strategic assumptions on a regular basis is critical, but seldom something that leaders do well (if at all). Every month we read about the death and decline of well-known brands who failed to adapt to new entrant upstarts with new business models.
Information kindly provided by RESULTS.com: www.results.com
