GROWTH SECRETS: Developing a clear vision

More successful ventures have focus. High growth ventures typically are developed around multiple products and services where synergies abound.

Developments in one part of the business are readily imported to other parts of the business. New products are able to be cross sold or readily adapted to serve multiple markets.

A focused business clearly knows what problem it is solving; it has well defined markets and a very good description of its customers. Thus it is able to articulate why it exists, often in very simple terms. It is able to provide a short, focused vision of the venture which shows that all parts of the business are heading in the same direction and are mutually supporting and not undermining it. In such an environment, decision-making is easier, actions are more targeted and results can be measured in terms of where the business should be heading.

There are two parts to the clear vision which high growth ventures are noted for. The first is focus and the second is a view of where they are heading – the vision of the future they wish to build.

While many businesses would claim they are opportunity focused, you sometimes wonder whether they ever stopped to evaluate which opportunities they should pursue and if the combination they have makes sense. In emerging markets, it is very easy to see new business opportunities in every conversation and every customer contact. Most of them seem to be related to other things you are doing; maybe it is the same customer or the same underlying technology or another use of company resources. Of course each one takes a little investment and then it needs some specialised staff to develop the idea and bring it to life.

Once developed, you find out that it actually needs different people to agree to buy it and the process of selling it is a little different to the last item you sold.

Then you discover that it has slightly different risks to the products and services you already have in the market and you need to modify your sales process, agreements and after sales support to manage the new risks. Before you know it, you are actually running a different business.

Many firms fall into this trap. They start in one product or service and then see extensions which take them into other markets. Or they start in one market and then find they have an internal problem they need to solve and decide to make a business out of it. So a software business becomes a product business, a recruiting business and then a training business.

Or a manufacturing business becomes a trucking business and a maintenance engineering business. High growth businesses look for synergies across their business. Thus a new product should not only be able to be developed within existing research and development capabilities but it should be sold into markets where similar buying processes are utilised and where current staff can be readily deployed. Market growth comes from finding comparable markets which will buy the same product or market or product extensions which can be serviced using the same product/market approach.

Different products are developed or acquired if they have the ability to leverage existing products. Thus platform products might be developed which can support multiple applications. Common components might be developed which can be utilised across multiple end products. Processes might be developed which can be used in many parts of the business.

Every business sector has its own risks, idiosyncrasies, networks and opportunities. But knowledge of these takes time. During the learning time mistakes will be made, resources will be wasted in false starts and competition will erode opportunities. However, once the learning has been done, risks understood and networks established, risks are more readily identified and mitigated, opportunities are spotted earlier and networks provide sources of leads, recruits and synergies.

Few people are able to build up knowledge across multiple markets and stay up-to-date. Thus the more markets in which a business operates, the higher the chances of making mistakes or missing opportunities. High growth businesses tend to be relatively tightly focused around some common underlying asset or capability. They specialise in one major dimension of their business and other parts of their business hang off it. They typically have an underlying capability which unifies all their products and services. This could be a technology which they apply in multiple situations, a type of customer they specialise in or a capability they are able to apply to multiple situations.

In a high growth venture, the senior management team is able to deal readily with situations which are brought to them from different parts of the business. Each member has the experience and knowledge to apply their specialist knowledge to help arrive at a solution to a problem or opportunity. This does not mean that the business has to operate around a single customer type or single market, but it does assume that the markets are sufficiently similar that the combined knowledge of the senior management team in that market or similar markets makes them effective at making decisions.

The best high growth businesses have very simple visions around a major capability or a single objective. That vision often capitalises on their most important competitive advantage. It usually has a clear definition of a common customer or customer type and often states what problem they are solving.

A good test of focus is to answer the following questions:

• What business are we in?
• What market do we serve?
• What problem do we solve?
• How would we define our customer?
• Where do we derive our competitive advantage from?
• What do we do better than everyone else?

High growth businesses usually have very simple answers to these questions.

Their focus helps them identify how best to grow their business as they are able to test new ideas against a set of criteria which represents why they were successful in the first place.

The second part of the clear vision is having a well-defined goal in mind for the whole business some years out in the future. This vision should encompass the whole enterprise and not be an overly convoluted general statement. Thus an enterprise which does everything has clearly lost its way. A business which provides multiple disparate products and services, even if to a single focused market, is highly likely to get into trouble.

If you were to project the growth of your business out five years – what would it look like? Would you see a business which worked closely together, where synergies existed between the different parts of the business?

What if your business was to grow by a multiple of 10 over the next three years with each part of the existing business growing at that rate. What would the business look like? Would it be a business which made sense from a market and management perspective?

High growth businesses tend to hang together – they make sense. The various parts of the business seem to complement each other. The core parts of the business support all the extensions. While any part could be split off, it would not be as attractive to the buyer as it is to the original business.

If your business was to grow by a multiple of 10 – is it a business which you would be comfortable managing? Will you end up with one business or several separate and distinct businesses? If it is the latter, then you have a lack of focus and it would be difficult to develop a clear vision for the business.

Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the former Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia. A series of free eBooks for entrepreneurs and angel and VC investors can be found at his site here.