MICHAEL GRABER & JOCELYN ATKINSON
As an industry matures it becomes saturated and players in the market struggle to maintain the robust growth they saw in the early days. Back then, the formula for growth was simple: invent a product or service, get distribution, expand internationally, then acquire and consolidate to dominate the market. What’s left?
Cut costs and raise prices when the market will bear it. Once this is done, growth becomes dependent on factors such as the economy and population growth. Enter increasing global commoditization that drives down price and the prospect of growth is dismal.
A disturbing growth deficit may be under way. From 1990 to 2000, just 7 percent of publicly traded companies in the U.S. experienced eight or more years of double-digit growth in revenues and operating profits. This was before the recession hit.
What’s worse than doing business in a saturated market? Competing in that market with a minority market share.
What about your company? Do you really know what your market share is? Has your growth flat lined? If your company is over 10 years old, is ranked third or lower in the market and your growth rate is under 10 percent you are likely in trouble.
Next question. Do you know what the time horizon is until your market is saturated? How long until it no longer makes sense to be your business? The timing is crucial because you are on the clock. If you stick your head in the sand, the problem compounds. It can take up to four years for a company to reinvent itself and stimulate new growth. We encourage you to get out ahead of it to improve your chances of success.
After the old growth tricks of line extension, incremental product improvement and acquisition are exhausted it is time to look for growth opportunities elsewhere. The good news is that there is always opportunity for growth if you expand where you look and how you think. Consider the features and benefits of your product or service and explore new markets that exhibit demand in these areas. Look in adjacent markets that enjoy strong growth to see if there is opportunity to move in or borrow trends that can be put to work in your market. Most importantly, talk to your customers and others in the value chain to learn about their pain points. Innovation is rooted in empathy with the customer and solving a problem in a new way.
The world has changed and you must change with it. Charles Darwin said, “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” Take a hard look at your company and your market, and then make 2013 a pivotal year.
Jocelyn Atkinson and Michael Graber run the Southern Growth Studio, a strategic growth firm based in Memphis. Visit www.southerngrowthstudio.com to learn more.