"Yesterday's Home Runs don't win today's games," said Babe Ruth.

You might take that to mean "don't sit on your laurels.". But I take it another way.

1. It means what you did yesterday won't get you the growth you want today.
   
2. It means what you did yesterday isn't good enough anymore... you need to extend your advantage to stay ahead
3. It means your market may have shrunk so you have to look for new things to do
4. It means you have to do multiple new things at a time to significantly achieve growth objectives.

So... do you know what those things are? Do you know how to build a strong foundation for growth and grow in the right sequence of growth strategies so your business model won't collapse on itself and will make a profit, not just sales? Read the rest of this article... or watch this movie featuring Neil Gillespie on "The Sound Growth Progression."


Growth Initiatives Stemming from the Core

Think of growth opportunities as stemming from the core and forming successive bands around it, much like what you see when a large tree trunk is sliced horizontally. The tree develops successive bands of growth outward around the trunk as well. Each successive layer uses resources that are already established to support the core, increasing ROI and establishing superior productivity versus competitors. The areas of intense activity are the “meristems” at the tip of the company’s current market “reach”. Here’s how to grow from the core:

1.     Maximize Core Customer Retention

2.     Get More Business from Core Customers

3.     Take Share from Competitors Customers

4.     Create Demand

5.     Get High Early Share of The Fastest Growing Segments

6.     Expand into Adjacent Markets

a.     New Customer Types

b.     New Product Lines

c.     New Services

d.     New Store Formats

e.     New Channels of Distribution

f.      Different Value Chain Position

g.     Geographic Expansion

h.     New Technologies

Notice that I don’t have acquisitions or startups listed. That’s because an acquisition is only one way to operationalize a growth strategy. ON the one hand, you might acquire another company to get into another line of products or customers. Distributors most often acquire other distributors to expand geographically. Expansion options work best when they are "adjacent" to markets you are already in. You might even choose to parachute into a non-adjacent geographic market if you think you can grow from a new core there or fill in later.

I also urge you to work on this while simultaneously maximizing productivity. You need to automate operations so as you grow, you don’t need to add people, which are variable cost additions. If you automate before you grow, you have fewer growing pains, fewer mistakes, more responsive customer service, and more satisfied customers. The bottom line is that your variable cost curve is more flat compared to a gross margin curve that rises at the same rate. Hence, more revenue returns to the bottom line as profit.

Distance From The Core Increases Difficulty

 

Each successive growth initiative in the prior list has an increasing degree of difficulty associated with it. That’s a good reason to create a strong core before venturing out from it. It’s also a good idea to execute the close-in “adjacency” initiatives first as well. The payoff for executing close-in initiatives is that you get closer to the farther out initiatives and they get easier as you add the bands around the core.

An example of a “far reaching” initiative for an electrical, plumbing, or HVAC distributor is acquiring a retail establishment selling electronics in an adjacent county. The product is one degree of difference. The geography is another. The channel position is another, which is three steps away. I don’t recommend tackling initiatives that are more than two steps of difference away. If you still have opportunities that are one step away, like selling new product lines to existing customers where you have some strength, do those first because that leverages a core position.

I also advise you to optimize your core business as quickly as possible, but soon after that, move on to taking share and adding adjacencies, the big payoff growth initiatives. You need to execute multiple growth initiatives in this environment, because growth is not going to return like the surf does for expectant surfers. We’re grasping for a stimulant to this economy this time around, having exhausted just about every artificial stimulant we could find. You’re going to have to make your own waves.

Yesterday's home runs won't win in today's new league.

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