Strategizing for Revenue Growth | The Hunt for Profitable Growth
While for many organisations revenue growth is an imperative, it is often difficult to deliver without a trade-off in margins.
The size of the challenge is clear – for listed organisations revenue growth supports nearly 70% of shareholder returns in a ten-year period, yet fewer than 50% of companies that go for growth create value in the process.
While an organisation’s starting position suggests the most likely paths to growth, true value-creating growth demands the right balance of core versus adjacent investment, engaged leadership, and aligned supporting capabilities.
Inovyse supports firms chart a path to sustained profitable growth by combining a deep understanding of growth’s underlying drivers and of the select strategies that will actually enable growth in a given context.
Strategizing for Revenue Growth | Four Steps to Profitable Growth
1 Aspiration Calibration
Strategizing for Growth begins with a shared understanding of the challenges. Too often there’s a gap between an organization’s stated growth targets and the risk-adjusted assessment of its growth portfolio.
The Aspiration Calibration combines insights from –
The Growth Audit – which compares the risk-adjusted potential of the current growth portfolio and the stated revenue growth target; and
The Value Driver Analysis – which comprehensively surfaces and calibrates the factors that drive growth and value creation.
2 Advantage Audit
The Advantage Audit surfaces and stress-tests the sources, sustainability, and extendibility of an organisation’s competitive advantage.
The evaluation and stress tests are conducted for six crucial parameters –
Core Competency. Surfaces and maps the core competencies of the organisation as perceived by the various levels of management. Its output is a two dimensional grid (Extent of Competitive Advantage vs. Level of Management Consensus) which drives the Competitive Advantage stress test.
Competitive Advantage. The identified core competencies are stress-tested for Uniqueness – resistance to imitation; Robustness – capable of withstanding change, and Embeddedness – residing in the collective DNA of the organisation. In particular it examines the question whether existing competitive advantage builds or becomes obsolete as the industry landscape changes and becomes disrupted.
Pricing Power. Measures the ability of the organisation to set and get a price increase across the various markets and segments in which it operates. And the sources of this pricing power.
Customer Stickiness. Explores the extent to which customers can switch to and away from the organisation. And the sources and drivers of this stickiness.
Value Positioning. Comprehensively maps the price/value positioning of all products and services that contribute at least 80% of revenues. The maps are derived from user and customer research and insights.
Cost Scope Scale Positioning. Calibrates the firm’s position relative to existing and potential competitors on three curves – Cost, Scope, and Scale.
To create successful growth strategies, Ideation combines a rigorous analysis of consumers, customers, forces and trends to create a portfolio of truly-possible business scenarios – not just flights of fantasy.
Our ideation process challenges legacy mental models to unleash, shape, and prioritise tangible ideas for revenue growth in the truly-possible scenarios envisaged.
The ideation process is supported by three of our capabilities –
Trend Analysis – maps and follows the significant trends impacting the organs ion
Consumer and Customer Insights – leverages proprietary research and analytics techniques to develop a deep and actionable understanding of customers.
Core Asset Extension – explores adjacent and innovative application of core assets and IP.
In order for growth to create value organisations must firstly narrow the growth options created by the Ideation process.
In this regard we support clients by facilitating trade-off and prioritisation analysis centred on three dimensions – Size of Prize, Ability to Win, and Ability to Implement
The result of the Prioritisation process is a step-by-step action plan and accountabilities with detailed risk-adjusted financials.