Tim Beyer is global COO of technology scale-up Sana Commerce.
Growth is good, right? It’s a sign of vitality, isn’t it?
Of course. But growth for growth’s sake can be unsustainable. Growth can fuel a company’s success, or it can consume it.
In a time of uncertainty—of pandemic disruptions, market volatility, supply chain snarls, inflation and the Great Resignation—it’s wise to shift from a grow-at-all-costs obsession to pursuing smart and strategic growth—growth that sets a company up for success now and in the long term.
How has growth changed?
Back in the days of the Ford Motor Co., the biggest companies were all in manufacturing, where you had a complex assembly line with a lot of overhead costs. Digital transformation has changed that.
Now, software as a service companies sell software instead of manufactured goods. This shift to digital goods allows companies to scale with fewer infrastructure costs and to sell their services to anyone around the world. The process of growth has changed; the philosophy of growth and work should reflect that.
As companies grow, leaders assume that operations will get easier as they gain more resources. In reality, operations only get more complex. In Scaling Up—a favorite text at my company—Verne Harnish wrote, “Expanding from three to four people grows the team only 33%, yet complexity may increase 400%. And the complexity just keeps growing exponentially.” Taming that complexity is one of the greatest challenges to growing sustainably.
This is where the adaptability of an agile team must be fortified by executive team vision and alignment. The executive team should have one overarching goal for the organization that is communicated clearly and consistently. Team goals and individual goals should cascade underneath the overarching goal. Through this process, individual success will evolve into company success and velocity.
What do companies need to do to grow in 2022?
If your company has examined the benefits and consequences of growth and has chosen to pursue smart growth, then there are steps you can take to set your company up for success.
Here are the five key ingredients for growth that my team has discovered.
1. Invest in, and never cut back on, research and development.
Your product needs to be superior in the market—today and tomorrow. When you’re in a budget bind and need to reduce spending, it can be tempting to scale back on your research and development. This is a mistake. Keep supporting your R&D—even after you’ve achieved a significant breakthrough.
Keep an eye on your competition and product-market fit. Use continuous product feedback from your customers to make prudent investments and innovations.
Remember: Today’s competitive advantage can be tomorrow’s obsolescence. By continuing to invest and innovate, you will always position your product at the forefront of the competition.
2. Align your product’s success with your customer’s success.
It’s easy to get bogged down chasing the market trend. But remember, a market trend is simply an aggregate of individual customer preferences and spending.
Instead of fretting over a prevailing trend, focus on aligning your product success with your customers’ successes. Develop and refine your product around your customers’ business needs and their feedback. Then, tie your commercial model to your customers’ successes. As they rise, so, too, do your fortunes.
3. Win the war on talent.
Make sure you get the best people and keep them on board. The pandemic and the Great Resignation have caused a shift in hiring dynamics; candidates are now in a buyers’ market. Companies need to adjust to this reality by embracing best practices, including hybrid work schedules; competitive pay; strong recruitment that sources talent globally instead of only within commuting distance of a physical office; and consistent employee development opportunities.
Employees should feel empowered, respected and valued. They should understand how their work impacts the company and how the company enables them to grow as individuals.
4. Adopt an agile workforce philosophy and stay flexible.
There’s a famous military adage, “The enemy gets a vote.” I’d like to modify this to say, “The market gets a vote, the consumer gets a vote and nature gets a vote.”
Your company’s strategy and execution don’t exist in a vacuum; external forces, be they consumer trends or acts of God, are constantly demanding that you act, react and adjust your calculus.
By structuring your team around an agile workforce philosophy—one that prioritizes collaborative communication, flexibility and employee autonomy—you can adapt quickly to external changes. At my company, for example, we practice this by empowering all employees to own their roles and responsibilities and by promoting based on merit and talent. We place our workers in stretch positions and encourage them to make autonomous decisions that will have significant impacts. Our philosophy is, “If you’re good enough, you’re old enough.”
5. Relentlessly execute your vision.
It’s one thing to have a great vision. It’s another to make it happen. Companies that achieve strategic growth are the ones that have the determination and discipline to follow through on execution.
Don’t simply ideate, and don’t simply initiate.
Implement. Execute. Follow through.
Position your company for growth in 2022.
Growth is important. It allows your company to chart its trajectory with confidence. But the era of reckless growth—growth that consumes a company—needs to be put to bed. Your vision should focus on smart and strategic growth: growth that enables your company to thrive. For my team, this is based on continuous and sustained investment: investment in R&D, talent, agile workforce philosophy and our customers’ successes.
The question isn’t, “Are you ready to grow?” Instead, the question is, “Are you ready to make the investments necessary to achieve the right growth that will ultimately benefit you and your employees?”