Choosing a Growth Strategy

You will be focusing on selling more of what you’ve built to an expanding customer set at an increasing rate. This is what growing is all about. Choose the right growth strategy for your company and your vision.

Transcript

The best entrepreneurs that I know get really passionate, not just when they’re talking about their product, but when they’re talking about their customer, how their product solves their needs, is the solution to the problem they’ve got—that’s what gets them excited, that’s what turns them on. Why does that make a difference for you? That’s what growing’s all about—selling more of what you’ve built to an expanding customer set, at an ever increasing rate.

I’ll give you three examples. Nike—of course, they’ve made their brand around the elite athletes, but they’re really about empowering you and me. All of their product development is around us. Starbucks—they’re not just selling us coffee. They’re giving us a sense of community. The free WiFi, the music—it’s all about being part of that Starbucks family. And another example, Southwest. Not only are they selling you descent tickets, they’re also one of the most reliable airlines, certainly in my experience, and they make the ride quirky and fun. Making the customer number one in everything you do from now on is going to be the key to successful scaling.

As companies grow over time, growth can take different forms. Some of the ways we talk about it are inorganic or organic growth. Organic growth is the core growth you think of when we first talk about it—hiring more people, continuing to broaden my product set, doing the kinds of things that you normally do with the materials you have in front of me. So that’s an investment in your core growth. That’s organic. Then you have inorganic growth. It may mean acquiring a like shop across town, and we’re now a unit, we’re going to centralize processing, we’re going to share our hiring and firing, we’re going to share advertising. If you’re a small company just starting out, an acquisition’s a pretty big investment. As you begin to scale, get confident, understand how you execute and how to get successful, beginning to consider acquisitions can be an incredibly efficient way to grow. Rather than building something from scratch, I can pick up something that’s already built. Similarly, companies acquire as they want to grow geographically, I can be more effective across the globe when I pick up like companies that are already doing business in Denmark, that are already doing business in Asia as a way to go to market quickly. So acquisitions, that inorganic growth, can be a really nice complement to your organic growth as you really go on to scale and establish market leadership.

The many cases, growth is an imperative, and there’s a reason why companies with little proprietary technology but a great idea, like Airbnb or Uber, really have to scale quickly. They realize that within the first months, certainly year, everyone around the world will understand how exciting this is. And if they don’t get there first, somebody else will. And that’s why there’s an Amazon of China instead of Amazon in China. You have to keep up because you don’t want to get left behind in a market that you created.

A good example of this is Peet’s versus Starbucks. Peet’s started in 1968 in Berkeley with Alfred Peet and it’s now famous of course for its coffee. Three years later, some of his employees moved from Berkeley to Seattle and Alfred Peet even helped them think about how to roast coffee. The Starbucks team though had a different vision for growth. They really saw the sense of community, how big they could be. And you fast forward, Peet’s today is 200 stores. They sold in 2012 for a billion dollars. That’s a good amount to a company in Germany. Well Starbucks, 22,000 stores, and they’re worth $84 billion. And the lesson is, being first doesn’t always mean you’ll be the winner. You need to stay ahead of the race.

Suggested Readings

Founders School || Scaling Your Company || Choosing a Growth Strategy || Impact Guide (PDF).

Jonha Revesencio. “Three Strategies for Scaling Your Startup Sustainably.” Fast Company. August 5, 2015.

Questions for You

What do my customers value most about my product/service?

What kind of growth strategy makes the most sense for my business?

What kind of timeline does my growth strategy require?

What financial implications will my strategy have on my business?

Questions for Your Team

What do our customers value most about our product/service?

How will the growth strategy affect our day-to-day jobs and objectives?

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