What are Growth Strategies in Business

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For all businesses, having a growth strategy is fundamental to a business’ survival. Otherwise, you will always be at the mercy of your current consumer base and market fluctuations.
The market will always be searching for something new—and you, not your competitor, must be the one to give it to them. Understanding and enacting growth strategies is essential to kick-starting a state of constant and successful evolution in your business.

Innovation is the only way to win.

Steve Jobs

Previously, we explained different growth strategies along with some examples. Next, we want to explore how PDCA Model and SWOT Analysis can help choosing one.

In short, SWOT Analysis and PDCA Model are the means to generate ideas, goals and action items.

What is PDCA Model

Plan-Do-Check-Act model or as it is commonly known as PDCA, is a rapid improvement cycle developed by W. Edwards Deming in the 1950’s.

PDCA is an iterative, four-stage approach for continually improve processes, products or services, and resolve problems. So, it involves systematically testing possible solutions, assessing the results, and implementing the ones that delivers.

PDCA or PDSA has four Steps
  1. Plan:  Identify and analyze the problem or opportunity. Develop theories on what the issues may be and decide which one to test. Define what is expected. Establish targets and goals. Determine potential changes needed to reach the goal, the Target Condition
  2. Do:  Implement, test the prediction by taking the next steps according to the plan
  3. Check / Study:  Observe what happens. Analyze and measure the results
  4. Act / Adjust:  Evaluate the results and compare what happened to set expectations. Accordingly, take next steps. Standardize based on what worked and adjust or improve based on what you learned and start a new the PDCA cycle

How to Apply PDCA to Choose the Right Growth Strategy

Obviously, executing any of the growth strategies discussed previously, when fully executed, define a new direction which cannot be fully reversed. As such, it is very important to plan carefully and strategically.

Plan

The most important step is planning and continuous measurements and evaluations.

“Plan is where time is invested for deep thinking, strategizing, and assessment,”

Establish your Goal or Target Condition. Remember the goal should be SMATR – Specific, Measurable, Achievable, Relevant and Time-bound.

For example, looking at your business model, you decide to establish an E-commerce store to achieve an extra 30% market share and to increase your customer base in 3 months.

To do so, you have to identify each step necessary to create a website, join an online e-commerce platform, write the content and market the online store.

Do

Utilize the second step to really test your plan; ideally, on a small-scale project. Indeed, this step is to test and generate feedback and NOT to execute the plan fully.

Following our example, you could create a social media page such as Facebook to start selling your products.

Check / Study

While testing your pilot project on social platforms, observe and learn what happens. Do new customers embrace your products online? Are they ordering high ticket items? What is going right and what could go wrong?

ACT

Compare the results to the set expectations based on your observations. Can you anticipate an increase of 30% market share? Is 3 months enough time to execute the plan and reach your goal? Are you going to offer all your products online or only a handful?

So, by answering these questions, you are creating a new plan and a new cycle of PDCA starts.

Consequently, PDCA is a cyclical process and the potential for fine-tuning your plan is endless.

SWOT Analysis

SWOT (Strength, Weaknesses, OpportunitiesThreats) analysis is a well-established approach to strategic planning. So, it involves analysis of business’s internal factors (the ones we can control) and external factors (the ones we can only impact).

Therefore, you should build your strategy based on your Strength in order to exploit Opportunities, while managing risks from internal Weaknesses and external Threats.

Hence, to better understand the internal factors, use brainstorming sessions with your team, gather and analyze relevant information such as customer feedback, employee surveys, industry reports and market data.

How to Apply SWOT Analysis to Select Growth Strategies

Strength / Opportunities

This pillar of the analysis focuses on the organization’s core competencies by considering companies’ assets, resources and processes to take advantage of opportunities the market or the industry offers.

For instance, your company has a strong balance sheet and it is financially well positioned to consider an acquisition. At the same time, one of your competitors is possibly going bankrupt or your brand presence is strong enough for the current market which makes it easier to expand a new line of product as your growth strategy.

Thus, studying the cross section of Opportunities and Strength will provide a clear picture of what the next steps are in developing strategies to Capitalize the strengths to Invest in growth opportunities. Here, you can find Amazon SWOT analysis and how they utilized competitive advantages to become the dominant player in the retail industry.

Weaknesses / Threats

Following S/O pillar, studying your Weaknesses or gaps can equip you with insights on how to overcome external threats.

For example, if your business doesn’t have strong IT Infrastructure, it might open your network up to cyber-attacks or that might hold your company back from entering the competitive E-commerce space.

Another internal weakness can be your high structure and pricing model and the fact that you can not compete with competitive pricing threats. Hence, if you know that your margins are pretty slim already, you can come up with cost reduction practices. Consequently, you will be able to lower prices and gain a bigger market share.

Also, you can study SWOT to turn threats into opportunities by capitalizing your strength. For example, seeing how the economic threat of COVID-19 pandemic forced companies to expand their businesses virtually.

Conclusion

Now that you have a complete picture of where your business stands and its external environment, you would be able to evaluate your strategic options and make a smarter and more calculated choice.

In particular, studying different process improvement methods, proves that rapid experiments and focusing on ONE area at a time provides clarity and establish next steps. Moreover, make sure to engage your team, communicate action items and give them specific directions.

In conclusion, SWOT Analysis and PDCA Model are the means to generate ideas and to create goals and action items.

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