In this Issue

📈    Opportunistic vs Strategic
🧠    Pull of Homeostasis
🪴    Simplify to Grow

📈  Opportunistic vs Strategic

Growth strategy is a bit of an oxymoron. Many companies don’t grow out of a deliberate strategy. Rather, they grow opportunistically.

When a market booms, they go all in: hiring, expanding, and investing to keep up with demand. That was the post-pandemic playbook.

For instance, demand for bicycles exploded in the pandemic with 100% year-over-year growth. Bike manufacturers rapidly ramped up production, investing in people, sales, and manufacturing capacity.

For two years, these leadership teams had a genius “growth strategy,” until it all came crashing down.

By 2024, demand all but dried up with over 9.5 million excess bicycles in the market. Several prominent brands declared bankruptcy or sought creditor protection.

Chasing growth is not a growth strategy.

Harnessing opportunities is part of growth, but profitable, sustainable growth is more thoughtful and deliberate. It starts by answering three questions:

1. How fast do we want to grow?
2. Where is the next stage of growth, in terms of market demand, revenue, and customers?
3. What capabilities and capacity do we need to build to serve our customers and keep up with demand?

🧠  Pull of Homeostasis

The smartest growth strategy will fail if your team doesn’t have the motivation, skills, and resources to get it done.

Strategic planning is the easy part. Where companies stumble is in their internal commitment to change management.

All organisms are resistant to change. It’s not that they don’t like change or want change. Rather, it’s they are programmed to maintain a state of equilibrium called homeostasis.

‍Homeostasis is a very good thing, unless you want to make a change.

95% diets fail because of the tyranny of homeostasis. Your body desires equilibrium more than you desire a beach body.

Organizations also suffer from homeostasis. Growth strategies are derailed by an organization’s unstated desire to maintain equilibrium.

‍Your company has the systems, culture, and talent required to maintain the status quo — where you are right now:

• Growth rate
• Profitability
• Average Size Sale 
• Culture

Growth requires breaking these norms, which starts with a decision: Are we committed to the change required to grow?

That is not a question you ask once. It’s asked and answered again and again as you face decisions and habits that pull your organization back to homeostasis.

📊  One Stat to Watch

2X

Organizations are twice as likely to achieve rapid growth when managers are aligned on shared priorities, according to research in HBR.

🪴  Simplify to Grow

Focus is the #1 tenet of a growth strategy.

There’s a natural pull to expand to grow: more products, more services, more markets. The irony is diversification is more often than not a growth inhibitor.

In 2010, Tim Cook, CEO of Apple, said, “This is the most focused company I know of, am aware of, or have any knowledge of. We say no to good ideas every day so that the company can keep its focus on a small number of areas.”

Tim Cook then made a sweeping claim. Pointing at a boardroom table, he said that Apple’s product line could fit on this table “and we had revenue last year of $40 billion.”

Apple’s has grown ten times to over $400 billion, but its product portfolio is roughly the same size.

The most successful companies in the world are highly focused.

To grow to the next level, it’s not about adding more products and markets. It’s about focus: Who and where are the customers that will drive your next stage of growth?

For instance, I often advise companies to reduce their product portfolios to grow from $10 million to $30 million in sales. Focus empowers them to increase capacity and throughput, the two primary drivers to scale.

🤔  Thoughts on Today’s Issue?

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