Sometimes, new growth is closer than you think
In July and August, I am focusing on good growth: deliberately and intentionally planning the growth of your business. Last month, we encouraged you to gather all ideas into a growth portfolio, compare, and make choices.
The simple act of gathering opportunities in one place is worthy of celebration - and more than many organizations do on the regular. In my opinion, the single most important tool of strategy is a pencil. By committing ideas to writing we reduce ambiguity and raise awareness and alignment.
In July, I shared several tools for choosing which ideas to devote your resources to. Whatever decision-making tool you choose - try to strike a balance between simplicity and thoughtfulness. Don’t get caught in analysis paralysis or procrastination. Also resist making pure gut, emotional choices. Instead, create a simple filter or scorecard to sort ideas and choose which growth bets to place in the next six months.
Setting strategy and ranking new growth ideas are the first steps to build a foundational case for investment. Next, we head into what my former boss called “cold and budget season”. The season where teams pitch for future investment. If you are getting ready for growth planning, avoid three mistakes teams commonly make:
Mistake #1: Ignoring the Core
Idea incubation is exciting. Scrappy teams holed up in a living room tenaciously testing, learning and pivoting time and again. We all love ideas that are “new to the world” - especially investors. But if you are building a sustaining growth plan for your company, try to avoid the new is better bias.
Don’t ignore the core. If you are a CEO, start by looking for growth close to home. I regularly use this super simple model to explain three kinds of growth. It’s a modified version of the Ansoff matrix from HBR’s “A simple tool you need to manage innovation.” I use this visual to help unpack what specific kind of growth my clients are ready for.
Years ago when I was running a corporate innovation portfolio, I came across a fact that has stuck with me. A Corporate Strategy Board 2014 study on Growth Stalls indicated that nearly 60% innovation value comes from innovating in the core - in your existing industry with your existing business. As an innovation leader working in the cash cow division of a company, this was an aha moment. I realized I have a lot of power to grow our business from my position in the core.
Years ago, the golden ratio of innovation investment for large companies like Google, Amazon and Meta was 70/20/10: 70% core, 20% adjacent and 10% transformational. I believe this ratio is still a good guideline for most companies today. Let me know in the comments if you have a different opinion.
Teams big and small get excited to work on new to the world, transformative innovations and may overlook growth ideas closer to the core. For small to mid sized companies, I recommend first exhaustively examining core growth opportunities, then exploring adjacencies.
Mistake #2: Growth planning as a single episode
Once teams have invested time testing, learning, and gaining traction - they can go no further without investment fuel. At this Shark Tank moment teams demonstrate the strength of their breakthrough concepts to the people with the capital to fuel them.
Try not to treat this proof of concept as a single Shark Tank episode. Rather, think of it as a full SEASON (or three). Concepts need time to pivot, reframe and reshape throughout the learning journey. One support tool for the Shark Tank season is process. Create a disciplined approach to guide teams through new idea incubation.
I often led non-technical teams of subject matter experts (not MBA’s and developers). By building a set of templates, tools and timelines, I provided structure in the chaos of idea incubation.
As a shark or investor, be mindful of bias as you move through milestones. Consider updated findings and facts with fresh eyes.
Mistake #3: Overlooking the viability question
In the OG venn diagram below, innovation is defined as the intersection of three things: desirability, feasibility and viability.
Is it viable for your organization?
I watch teams get caught up in the excitement of user interviews (desirability) and prototyping various forms and factors (feasibility). If you are a small company or a company of one - don’t gloss over the viability test.
Ultimately, a solid growth idea fits all three. It’s desired, feasible AND viable. Why is viability hard to assess? Because it’s introspective and involves tradeoffs. It requires leaders to perform the challenging task of evaluating the highest and best use of resources: people, time, money. To help, ask yourself:
Does our team have capacity and capability for this?
How will we reassign resources to bring this to life?
Is this a bet we want to make?
How can we best execute? Make, build or buy?
Is it viable for you as an entrepreneur?
Recently, I’ve noticed a bias toward “new to the world” ideas. I was coaching one solo-preneur to identify what’s next for her in-person business post COVID. She was experiencing the natural conflict between the common perceptions of entrepreneurship - overworked, overextended, ride or die - and what her life could actually bear at this moment.
She felt the friction between what she should do and what she can do. On one hand she believes her role as an entrepreneur is to disrupt an industry with a breakthrough “new to the world” idea. Her reality: personal constraints necessitate bootstrapping the business and preserving time for her family and young children.
This is a common discord among entrepreneurs and small businesses. What we believe we “should” do and what is truly viable at this moment - are at odds.
If you are struggling with the viability question as an entrepreneur, ask yourself:
Is this business / concept currently framed in a way that is viable for me right now?
What is my risk profile? Am I willing to stretch finances and capacity?
What tradeoffs will I need to make to execute this well? Are they worth it?
As I wind down this blog post, I wonder if my words seem overly guarded and cautious. I love breakthrough ideas and have cultivated many of them in my corporate life. The point of this post: you may have good growth right under your nose in your core business.
Consider all three growth types: core, adjacent, and transformational. Acknowledge the common bias toward “new to the world” ideas and remember that there are many paths to growth.