Growth Carousel™

Before optimizing the customer lifecycle, we’ll need to consider where we’re at and what we are facing. It makes no sense to increase marketing or sales efforts if customer expectations, i.e., their frame of reference, has changed dramatically due to far superior value propositions from competitors.

16.1 - SITUATIONAL ANALYSIS

If the business enterprise isn’t facing disruption (premature discontinuation of current revenue streams) it generally focuses on:

• OPTIMIZATION (= increased efficiency; fragile, doing things better)
• INNOVATION (= increased effectiveness; antifragile, doing better things)

In the simplest of words: the business enterprise can either decide to increase its performance or redude costs to make more profit (optimize), or choose to offer additional value (innovate).

However, if the business enterprise is faced with disruption, it needs to shift its focus to:

• ADAPTATION / CHANGE (= increased robustness; fragile, doing things better)
• TRANSFORMATION (= increased resilience; antifragile, doing better things)

Simply put, the business may choose to offset the competition (change its products, processes, or business model), or reinvent itself and its entire operation (transform).

16.2 - READINESS TO CHANGE

Before applying the ROUNDMAP, you will need to assess the actual business situation, both external as well as internal, including:

• Externalities, from producing or consuming the product, that may harm the image of the brand,
• Internalities, following the decision to consume the product, that may harm the image of the brand,
• Changes in competitive forces, such as new market entrants or threats of substitute products,
• Changes in customer behavior, such as a preference to work remotely. For instance, Fujitsu announced to reduce its office space by 50% by shifting 80.000 of its 140.000 employees to work primarily remote,
• Side effects of public scrutiny, for instance, side effects from the Me-too movement or the Black Lives Matter Movement.
• Changes in disruptive exposure, f.i. due to technological advancements, political choices, social change, or environmental concerns,
• The ratio between risk-seeking and risk-aversion amongst senior leadership members,
• The attitude toward creatives and innovators and the existence of an applied support structure,
• The intensity, rigidity, and frequency of interrelationships and interdependencies throughout the organization and beyond,
• The level of collaboration, cooperation, and commitment.

After you’ve assessed the business situation, you’ll need to consider their likely (or unlikely) effects on the course of the business, thereby creating scenarios that allow the business to benefit from or mitigate against these effects.

Underneath you’ll find the Growth Carousel™, containing four ways to react to a given situation.

16.3 - BUSINESS CAROUSEL™

To understand the impact of (often technological) disruption, we’ve created the Business Carousel™ (was Cycle of Disruption™) consisting of four stages: Assumption, Adaptation, Acceleration, and Assimilation ─ inspired by the theories of recurring Business Cycles (Expansion, Crisis, Recession, Recovery) by Kitchin, Juglar, Kuznets, Schumpeter, Perez, and Kondratieff.

16.4 - COMPLEMENTARY MODELS

As you may have noticed, Growth Carousel™ and Business Carousel™ are complementary: if a business decides to transform, it will enter the arena of the Business Carousel™ as a technological innovator. It will still need to drive adoption to be able to displace old technology. However, its heading will be regarded as disruptive.

Based on a detailed assessment, ROUNDMAP™ Professionals will be able to reveal the Conditional and Situational Readiness™ of your company relative to market conditions while providing insights into what could be a more lucrative heading.

You can find the slide (PDF) here.

"Why is it that we don’t worry about a compass until we’re lost in a wilderness of our own making?"

~ Craig D. Lounsbrough

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Primary Business Models

 The Primary Business Models, identified by Edwin Korver, each has a distinct dynamic. Complementary to Don Peppers’ graphical representation of Product and Customer Centricity (the AS-A-PRODUCT business models to the left), we added two new graphs to complete the series.

13.1 - CREATING LEVERAGE

Leverage greatly determines the growth potential of a business model. Prior to the Business Model Matrix™ business literature recognized two levers: Share of Market (blue) and Share of Wallet (green). We pride ourselves to have completed the set with two additional types of leverage: Share of Utilization (yellow) and Share of Transaction (red).

It is important to emphasize that these levers aren’t particularly ‘new’, however, they gained traction due to the rise of digital technology which took away most of the physical barriers that previously limited the growth potential of the underlying business models.

13.2 - DRIVING GROWTH

A product-centric business model is based on generating customer demand driven by product development in order to profit from so-called economies of scale ─ in general, these types of companies looking to increase and defend their Share of Market.

A customer-centric business model, on the other hand, is driven by customer development. Your objective is to fulfill more of the needs of a select group of customers that are more likely to spend more and thereby allow you to increase your Share in their Wallet.

The leverage of a resource-centric business model, Share of Utilization, comes from an ROI on deployable resources. For instance, if you deploy a car in a car-sharing concept, your objective is to increase the utilization of the car, limited by its maximum capacity (Car2Go).

If you offer a ride-sharing platform ─ which is a network-centric business model ─ your objective is to bring together as many riders and ride-hailers together into one ‘space’ to increase the likelihood of a ride to occur from which you can obtain a Share of Transaction (Uber).

"The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man."

~ George Bernard Shaw, Man and Superman (1903)​

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Mind the Gaps

 Concerns over technological disruption, globalization, growing inequality, and the environment are ubiquitous. Despite these challenges, we believe businesses can sustain growth at an affordable cost, not just to the business but to society and the planet as well if the (growth) gaps are closed.

Our motto: Profit can be meaningful, provided that it serves a purpose.

ROUNDMAP™ IS A CREATION OF EDWIN KORVER, CEO OF CROSS-SILO BV, THE NETHERLANDS

2.1 - CLOSING THE GAPS

Studies show that 80% of organizations fail to achieve their desired growth targets in terms of revenue and profitability. Closing the growth gap ─ the gap between growth aspirations and growth activation ─ is one of the applications of the ROUNDMAP.

A growth gap may occur due to:

• Inadequate considerations of the opportunities for growth, i.e., the attainability of growth.
• The limited capacity of the organizational infrastructure to support successful execution, i.e., the serviceability of growth.
• Adversarial forces inside or outside the organization ─ think of Porter’s Five Forces.
• So-called growth traps ─ deeply embedded assumptions that can lead firms into misconceptions about growth opportunities.
• Fleeting competitive advantages ─ reducing the growth cycle, forcing firms to rotate through the cycle much more quickly.

2.2 - GROWTH PROJECTIONS

Let’s have a look at a typical growth cycle (bell curve) of a single line of business:

To appreciate a level of growth that is both attainable as well as serviceable, we’ll have to make sure that any misconceptions about growth, the growth traps, often caused by inadequate market research, are removed from the equation. This will give us the green line. If current growth does not match the green line, we’ll need to consider what causes the growth gaps (the misconfigurations).

By assessing the operation, ROUNDMAP Certified Professionals will be able to reveal what causes these gaps. This brings forth an actionable plan which may include changes to be made to the infrastructure, business strategy, business model, market segmentation, partnerships, revenue streams, marketing strategy, cross-functional collaboration, individual mindsets, or the customer development process.

2.3 - STANDING AT THE EDGE OF A CLIFF

Additionally, we need to account for disruption, whether due to fleeting competitive advantages, gradual changes in demand, or even shock effects like a virus outbreak, as it makes no sense to work toward a discontinuous future.

While the Corona crisis may be a once in a lifetime occurrence, shock effects are far from exceptional. During one of our assignments, we identified a single point of failure (SPoF) in our customer’s value chain: the company sold 90% of its merchandise via one channel. We were able to convince the CEO to mitigate the risk and offered to transform the out of date website into a fully integrated webshop. When the SPoF gave way, revenue dropped by 90% and everyone panicked. But we came prepared and sales rebounded within days.

About 10 years before the event, we had to deal with a similar shock effect ourselves. As a serviceprovider, we rented a large number of server racks in a datacenter, some IP-space, and an internet uplink; all from one supplier. When we received a call from the datacenter that our supplier had filed for bankruptcy, all hell broke loose. It took five days and nights of relentless efforts and a lot of capital, to untangle our operation and make it out of this trap alive. It was a tough lesson to learn but since then, SPoF’s are a red alert on our radar.

2.4 - EQUITABLE GROWTH

As forementioned, ROUNDMAP is designed to drive sustainable growth. The difference between sustaining and sustainable growth is that sustaining growth means to keep growth at a certain rate, regardless of the costs, while sustainable growth is the ability to sustain growth at a rate that doesn’t require the firm to sell its stakeholders short ─ we prefer to call this EQuitable Growth.

EQuitable Growth aims to:

• Identify and develop growth opportunities,
• Identify and mitigate threats/risks,
• Close growth gaps (misconfigurations),
• Elimate growth traps (misconceptions),
• Account for interruptions (scenario planning and simulation),
• Uncover what makes a brand or product relevant (now) and significant (future),
• Increase awareness of a firm’s Corporate Social Responsibility,

by means of:

• Encouraging experimentation with active senior-level sponsorship,
• Assuring a growth mindset with steadfast cross-company alignment,
• Reskilling the workforce to match the rules of the digital economy,
• Rethinking the business model to create a better future for all stakeholders,
• Repurposing resources to allow idle capacity to be put to good use,
• Replicating succcessful business models to create new lines of business,
• Designing nimble and agile operating lines.

By encouraging frequent experimentation in small groups, companies deemed ‘excellent’ by Peters and Waterman, authors of In Search of Excellence, managed to create an abundance of opportunities while mitigating threats before becoming manifest.

2.5 - HORIZON MODEL

Both McKinsey and IFF* encourage senior executives to pay equal attention to ‘Three Horizons of Growth’ (Horizon model):

1. Horizon 1 = ‘Keeping the lights on‘ ─ driven by optimization and sustaining innovation (change).
2. Horizon 2 = ‘Building future ventures‘ ─ driven by disruptive innovation, operating in known markets.
3. Horizon 3 = ‘Imagining the future‘ ─ driven by disruptive innovation, entering uncharted waters.

See image below:

(*) The Three Horizons of Growth framework has two sources. One is a collaborative effort by the IFF (International Futures Forum), published in the book Three Horizons by Bill Sharpe. The other source points to McKinsey, published in the book The Alchemy of Growth by Mehrdad Baghai et al.

2.6 - SITUATIONAL GROWTH™

Our perception of growth is slightly different. We believe growth should be perceived as ‘situational’ ─ given the internal and external forces ─ which has led to the belief that Situational Growth™ (compare: Situational Leadership) has four ways of manifesting itself:

1. EXPLORATION ─ Discover new product-market fits and business models
2. EXPLOITATION ─ Scale the operation, benefit from economies of scale, and increase market share
3. EXPANSION/EXTENSION ─ Find new markets while optimizing performance and reducing costs
4. EXPIRATION ─ Delay expiration for as long as possible while looking for new opportunities for growth

During each of these manifestations, a gap may occur: we may overlook profitable revenue streams, try to expand the wrong ones, or start change-initiatives while we should initiate transformation, and so on.

While the primary concern of management is to operate existing product-market centers as cost-effective as possible, ensuring predictable outcomes (high quality, a responsive customer service, etc.), revenue may suddenly turn south, changing the situation we’re in. During Expiration phase, it is the responsibility of leadership, besides defending existing revenue streams, to encourage creatives and fund innovators, operating at the edges (Red Monkey by Jef Staes) of the organization, to explore new opportunities for growth.

Mastering Situational Growth™ or Situational Mastery™ focuses on developing transactional and situational awareness to drive corporate Performance Readiness, while Situational Leadership®, developed in the eighties by Paul Hersey and Ken Blanchard, focuses on the relationship between leaders and followers, to increase individual Performance Readiness.

To select the most effective style of corporate leadership, we’re using the term Conditional Leadership™. It suggests that to lead a company in a certain timeframe, and given the internal and external conditions that may influence the business, the style of leadership needs to adapt.

These two frameworks, Conditional Leadership™ and Situational Leadership®, will greatly determine a firm’s capacity for Growth Activation™ *.

(*) We’ve derived the term Growth Activation™ from the term Marketing Activation (the execution of the marketing mix as part of the marketing process) and Customer Activation (motivating customers to move to the next stage of their lifecycle faster than they would on their own).

2.7 - MIND THE GAPS

Growth gaps are often the result of a series of misconfigurations. We’ve addressed some of these gaps in more detail here: Mind the Growth Gaps. It is important to realize that every gap has an adverse effect on the desired outcome that will not go away until it’s identified and dealt with. Compare: Growth traps are misconceptions about growth opportunities.

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2.8 - VENTURE DESIGN

Even if you are not familiar with the (eight) principles of excellence, mentioned in In Search of Excellence by Peters and Waterman (1982), you shouldn’t be surprised to learn that the way successful companies operate today resembles those that were researched by the authors. Indeed, as the renown economists, Schumpeter and Kondratieff uncovered, history tends to repeat itself in so-called business cycles.

The organizations that were deemed ‘excellent’, such as Texas Instruments, IBM, McDonald’s, and Hewlett-Packard, were extremely nimble and entrepreneurial, had a strong culture, were customer-driven and human-centric, highly disruptive, and often very effective ─ they were true frontrunners; much like their present counterparts, Microsoft, Google, eBay, Amazon, Netflix, and Tencent.

Today, we’re seeing a similar approach, driven by fleeting competitive advantages, which is now referred to a Venture Design (VX):

The VX-approach is to intentionally set out to conquer a market, based on opportunities for growth that have not been explored before ─ by anyone. It doesn’t perceive the core competences as a holy grail. On the contrary, employees are allowed to explore any opportunity, as long as it serves a real customer need and is highly scalable.

Compared to the Horizon Model: these brave companies choose to ignore Horizon 2 and jump straight in Horizon 3, with Agility, Creativity, Determination, and Courage (AC/DC).

In Systems Theory: “A system is said to be in a transient state when a process variable or variables have been changed and the system has not yet reached a steady state.” In other words: a system is in a transient state as long as it is in a change state.

Before you jump on the VX-bandwagon, consider the fact that a multi-core operation does increase complexity dramatically. More on this subject can be found here: Where to find future growth?

"Fast and roughly-right decision-making will replace deliberations that are precise but slow."

~ Rita McGrath, Harvard Business Review

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