not risk takers. They are pragmatic and know that successful growth is measured not by what you promise, but by what you deliver. And delivery is extremely easy to measure for most clients by answering a single question: Did you hit the top line revenues associated with the plan when you were supposed to?
If it were just about sales, this would be a relatively easy exercise, but sustainable growth has to also be about return on investment (ROI) and profitability. If I gave you an unlimited budget, then inorganic growth, or growth through acquisition, would let you easily hit any revenue target. You would just buy companies until their combined revenue hit the goal you had. Problem solved, right?
While for some companies acquisition is a core weapon in their arsenal, generally the mixed bag of acquired company profitability and the ongoing challenges of integration of the different companies would likely fail on sustainability and ROI. A reality of business, especially large enterprise, is the sensitivity to a predictable, defined return on investment, so we will consider that in our process. Cost matters, and as you think about a successful growth plan, it has to include the level of expenditure required to achieve that growth.
Simply put, growth strategy is a plan to drive revenue growth. More practically, it’s a way that leaders of businesses think about how they will align resourcing with opportunity to achieve a goal. As an optimist coming through the ranks in the consulting industry, I’ve always believed that there is no growth goal that is unachievable if the will is there. History shows that to be true, but it’s never without extraordinary challenge. For sustainable success there is always a balancing act that you find best represented in the profit equation:
You will always hear the critique from reviewers that a plan is “pie in the sky.” By that, they really mean that the resourcing to achieve the plan isn’t reasonable, or available, or within plan. We will come back to the cost side later, but what’s important to realize is that cost cutting is a finite game. You can only cut cost to what is required to produce the good or service being offered. Revenue, however, is infinite, limited only by imagination and determination.
That’s how you think about it, right? Entrepreneurs understand this well, as do newly minted general managers (GMs) or even those like Harrison, tasked with taking point on an annual plan. You can literally do anything to drive growth! It’s overwhelming. Hell, everyone today wants to be visionary, a disruptor, a magical leader of change in the markets. Consistent growth strategy development takes time, focus, effort, and knowledge.
No one exemplifies these qualities better than James Klein, one of the most successful, accomplished strategists I know. James is the President of both the Infrastructure and Defense Products Division at Qorvo corporation, as well as their newly formed Qorvo Biotechnologies division. I can’t show you his financial performance in the decades I’ve known him due to disclosure restrictions, but if he was a major league ball player, he’d be in the hall of fame. James has created more value for his employers in his career than just about anyone I know, but he doesn’t forget how he got there.
I grew up in technology as an engineer early on and then really went into project management and program management. And then I took over a group. So now I had a “business” to run. This was the first time I had to think – “Okay, well, I’ve got this thing, now what in the world do I do with it? Where do we go? Where do we invest money? What business do we want to be in?” It may have come naturally to me because of my dad. He had retired from the Air Force and started his own couple of small companies and I remember what we would usually argue about was where we should invest money. So strategy was an early thing to me. Since maybe in my teens I’ve thought about how you grow a business and so it’s been a part of me for a long time, but probably reduced to practice when I first took over as a director of an organization.
James is a master of growth strategy development and execution. He’s pretty rare. You come across people who can think about how you could grow, but very few of them are capable of driving that growth. I really enjoy his recollection of where he started:
Early on… I was at TI (Texas Instruments) and I took over the space business. We were trying to decide what we had. We had started the space business on one very particular set of products, and we said, “now that we’ve got this, how do we expand it? Where else do we go?” So the first thing for me was just try to look at, what did the market look like, and it is particularly hard on the defense side to understand markets. What are we good at? What were the markets? How big could we be? What did we need to invest? And we went through that process. Now you know at TI and other large companies that usually have some guidance, you fill out these charts and so you get a little bit of guidance on how to move forward. But I would say it was really trying to understand what the market looked like and how did that intersect our technology.
I am a really big James Klein fan. And he’s representative of the people I sought out to participate in this book.
Throughout this book, I’ll share stories from varied perspectives at a broad array of companies. Companies matter, because they are all very different. Companies are literally “creatures” that are organically composed of people with a shared value system. You can’t say “Apple announced today…” and believe that it’s only a corporate act. Any announcement has been approved by legal, and not just legal: Katherine Adams, Apple’s General Counsel (at the time of writing). It was also likely approved by Luca Maestri, Apple’s CFO (at the time of writing), and I’m pretty sure that Tim Cook signed off as well. Investor relations, marketing, production, and sales all had to sign off on it, and because of the announcement lives are in flux. People will be hired, companies will be bought, people will be fired. Whenever I discuss the success of a growth strategy of a large company, I like to use the 50× rule. Take the number of direct staff involved in executing a strategy and multiply than number by 50. That’s how many people within the company it will take for a plan to succeed, and any one of them can potentially cause it to fail.
This book is meant to serve as your playbook to develop clean, clear, effective, pragmatic, and executable growth strategies. It’s for both new and existing practitioners of our art who aspire to become scientists of the discipline. Through the use of parable, framework, and process, my goal is to educate you about the method used by some of the most successful companies in the world. This method includes organic and inorganic growth, regional and global footprints, large‐scale enterprise, and entrepreneurial ventures.
The truths of growth are physical laws that we are all bound by. Ideally, you read this because you want to learn, but even if you’re being forced to read this for class, you’ll learn something that could create a market of billions for you someday. So, open your mind, be ready to think, and enjoy learning from some of the best and brightest business minds in the world as they tell you their story. This is incredibly fun stuff, and if you are lucky enough to be responsible for this function, then you know it’s pretty rarefied air and should be savored.
CHAPTER 1 The Growth Matrix and the Four Key Questions
Growth is an infinite game, with the revenue line limited only by your ability to convince new or existing customers to buy the products or services you currently or will produce.
Ever think about how to bound the question of growth? I’m a growth strategist, so I worry quite a bit about the sources of growth. Where does growth come from?
Turns out the question has a simple answer.
All revenues come from two variables: (1) customers and (2) the goods/services they buy. Full stop. It’s really that simple: who buys and what they buy. Every business, from the first fish seller bartering his daily catch for salt to the world’s biggest consumer goods company, grapples with these two fundamental questions. Let’s talk about customers first.
Customers
There