In this Issue

🔨    Revenue Ceiling
🦖    3 Types of Predators
🚏    The Choice Is to Pivot

🔨  Revenue Ceiling

Companies hit a natural ceiling of complexity. The business is optimized for its current size, and can stay there for a long time.

Some years are good, some pull back a little, but over five years the average growth rate is marginal: between zero and five percent.

That’s a Revenue Ceiling.

You feel the ceiling when business is harder: margins shrink, costs rise, revenue slows.

There are two distinct paths to break through a Revenue Ceiling:

• Execution: You’ve got a good business model and an available market, but your business isn’t optimized effectively. With better systems, better people, and better infrastructure, you unlock growth.
• Positioning: Your market changed, but did you get the memo? External shocks challenge your business model and market positioning with steeper competition, higher costs, and a potential loss of relevance. You need to reposition and transform the business to grow.

When you face the symptoms of a Revenue Ceiling, look for a path to break through it.

More and more, we are finding that external shocks and uncertainty are preventing companies from being profitable with Execution alone. In CoStrategy, we show you how to converge the two paths into a predictable sequence:

1. Position: Identify and validate your next stage of growth.
2. Build: Adapt your business model and capabilities for the new growth market.
3. Scale: Increase throughput and capacity to meet demand.

Growth starts from within. You have to change to grow.

📊  One Stat to Watch

5 Years

The average lifespan of a business model has fallen from 15 years to less than 5 years.

🦖  3 Types of Predators

What will eat your business if you don’t eat it first?

You can have a powerful vision for your business, but an aggressive predator can stop you in your tracks.

There are three types of predators:

External Shocks: The World Changed

Since 2020, external shocks have been the biggest force disrupting businesses. They are typically centered around three forces of change: political, economic, and technological. For the past year, the shocks have been primarily political: from tariffs to trade wars to reshoring and now oil. Companies are taking blow after blow that are beyond their control.

Competitive Pressure: Your Market Changed

Competitive threats are the most common and understood source of disruption. Competition can take many forms, from outsourcing to low-cost competitors to new product or service innovations. These threats eat away at your margins and draw customers away from you. Fortunately, competitors are a lot easier to spot and manage than external shocks.

Strategic Vulnerability: Your World Will Change

What separates great companies from good ones is their ability to respond to obstacles or threats before anyone else. For instance, AI is disrupting the professional services industry. I went through something similar 20 years ago when the internet and LinkedIn disrupted the recruiting industry. The next generation of professional services firms will transform with and through AI, and the laggards may become prey.

🚏  The Choice Is to Pivot

Every time you face an external shock, it’s a signal to pivot. Your market is changing.

Disruption is nothing new. The issue is the rapid, successive blows. It’s hard to build an enduring growth strategy when you’re facing shock after shock.

Uncertainty has become a tax on business. It’s leading to shrinking margins with slow-to-flat growth. You’re working harder than ever with fewer results, and it’s making your business brittle.

A leadership skill we develop in CoStrategy is rapid positioning: being able to identify, validate, and commercialize new growth opportunities.

Rather than fearing disruption, embrace it. Use its energy as a tool to grow your company.

The first step is to be helpful. When you’re hit with an external shock, ask three questions to find new markets and revenue streams:

1. Who needs our company and its expertise the most right now?
2. What products or services can we deliver to solve real problems that are valued?
3. How can we proactively sell and deliver our services to the people who need them the most?

When you look for ways to be helpful, you start to see opportunities that didn’t exist. More importantly, the questions help you be resilient and opportunistic in the face of constant change.

🤔  Thoughts on Today’s Issue?

We’d love to hear your feedback. Message with any thoughts, comments, or ideas for future issues.