Why 99.6% of businesses fail to reach $10m in revenues
Can you and your team state your strategy simply? Is it driving sustainable growth?
“I’m always amazed how overnight successes take a helluva long time.” – Steve Jobs
“Strategy is not a lengthy action plan. It is the evolution of a central idea through continually changing circumstances.” – Jack Welch
“Hidden champions teach that exceptional management means doing small things better than competitors, instead of managing only one big thing.” – Hermann Simon
“I’m as proud of what we don’t do as I am of what we do.” – Steve Jobs
And my favourite…
“Strategy is the creation of a unique and valuable position, involving a different set of activities (from competitors).” – Michael Porter
A must-read is his defining article from the Harvard Business Review “What Is Strategy”.
So, competitive strategy is about being different.
A company can outperform rivals only if it can establish a difference it can sustain.
It must deliver greater value to customers or create comparable value at a lower cost, or do both.
Why do so many companies fail to have a strategy?
Why do managers avoid making strategic choices?
According to Porter, various management tools used today – like total quality management, benchmarking, time-based competition, outsourcing, partnering and reengineering – enhance and dramatically improve the operational effectiveness of a company.
However, they fail to provide the company with sustainable profitability.
Thus, the root cause of the problem seems to be failure of management to distinguish between operational effectiveness and strategy.
In other words, management tools have taken the place of strategy.
Get the Edge by Finding New Strategic Positions
One company with clear strategic positioning is Ikea, the global furniture retailer.
‘Flat packed’ furniture makes up about 6.9% of the global furniture market. IKEA ‘owns’ 72% of the ‘flat packed’ furniture market.
Anyone who has been into an IKEA store understands that IKEA’s strategy “is the creation of a unique and valuable position, involving a different set of activities (from competitors).”
With 433 Ikea stores in 53 countries and 2019 global retail sales of about $45.5 billion, I think it’s safe to say that Ikea understands strategy.
In his article in Forbes “Even Today, Having A Strategy Is More Important Than You Might Think”, Roger Trapp refers to The Strategy Profiler report, which showed that companies having leaders who were most committed to and confident in their strategies grew faster and were more profitable than their peers.
The Strategy Profiler study included a survey of 6,000 executives. It found strong evidence of rapid growth and profitability at companies where leaders said they had done the following:
- Clearly stated how they added value for customers;
- Clearly defined the particular things they needed to do better than everybody else in order to win with their strategy;
- Focused the organisation on developing those capabilities to be world-class and competed only in sectors where they were set up to win.
How Does Your Strategy Look?
- Can you and your team state your strategy simply? Is it driving sustainable growth?
- Are all your team aligned with your company strategy, making the right decisions and thinking and working smart?
- Is your strategy on track to – as a minimum – double your revenue in 3 years or less and achieve 10X valuation of your business?
If the answer to any of these questions is no – you need help.
If you’re really serious about 10X your business value, then there’s no better way to get started than scheduling a free strategy session.
In 30 short minutes, we’ll give you the exact blueprint we’ve used with dozens of businesses to double their revenue fast, and we’ll even share a few secrets you can use to 10X your business value.
This is a completely free, no-obligation strategy session.
Book a session here. Or, feel free to email us at jonathan@scaleupgrowth.co or call +61 (0) 408 748 980.
I hope you have enjoyed these insights. Have a great week and stay growth-focused!
Best wishes,
Jonathan