In my experience, most businesses have ambitions for growth but many find themselves struggling to achieve their self-imposed growth targets and hence fail to drive revenues above a “steady-state” run rate.
The need for a clear & measurable growth plan, together with the key steps that businesses need to take for a successfully execution, is the basis to break through the Glass Ceiling.
From an experienced NED perspective, based on real life successes in several PE backed and entrepreneur owned businesses; I have concluded that:
“Too many businesses get caught up in day-to-day operations and fail to find the time to look forward; insufficient management time is allocated to developing plans for taking the business to the next level both organically and/or through M&A”
The critical first step is to get executive management to recognize and acknowledge the importance of planning; once this is accepted, the hard work begins and the right NED support for the exec team can significantly accelerate the transition to growth.
Getting management teams to understand a Growth Plan is the starting point. The plan needs to be challenging, ambitious and most importantly, realistic, deliverable & achievable all at the same time.
The NED ideally needs to work with the exec team to constructively challenge the current business model and the various growth options. Bringing valuable independent & objective views to the table will help management to assess, consider & select the best growth options. For this to be effective, the NED must work hard to build strong relationships with senior management to gain their confidence and trust which will, in turn, lead to more effective engagement in both the growth planning and execution “to grow” phases.
Building the Growth Plan
“The plan is a living everyday working document – the business needs to live & breath it; too many see it as a one-off exercise – do the plan, tick the box & go back to the day job focused on the here & now”
A Growth Plan is the framework & platform that gives everyone in the business a focus, clear objectives; and expected outcomes. At the same time, a Growth Plan needs to drive sustained growth.
First, the business needs to have a clear focus:
- What is it going to deliver and to whom?
- Why/how will it be better than its competition?
- Which specific products & solutions will be provided?
- What is the target market/customers?
- What is going to make it unique?
“Where are we now?”
To develop an effective plan, the business needs to honestly assess its current position This provides the start point and will include current strengths and, also, weaknesses that will need to be addressed if growth is to be achieved
“Where do we want to be?”
Next, it is critical to establish the targets and goals for say 1-3 years. By setting targets for each year, the business can progressively evolve, develop & grow incrementally.
“How we are going to get there?”
Actions with clear measures of success then need to be established and implemented across the business.
“Just do it!”
Finally, it’s all about relentlessly measuring progress against the agreed actions ensuring the plan stays on track monthly, quarterly and annually.
This sounds incredibly simple and it is. Having a clear plan and measuring progress against it ensures the business stays on track, takes early corrective action and makes real progress.
Leadership to execute the plan
The CEO and his team
The role of the CEO and his team is critical to a successful Growth Plan implementation. Any identified shortcomings with the plan need to be proactively and constructively challenged at the earliest opportunity – this allows corrective actions to be taken but, more importantly, demonstrates to the whole organization that the plan will be achieved; this, in turn, will breed a positive culture of success.
The NED role
The primary role of the NED is to help the management team to be more effective and allow them to run the business with increased focus and direction; this facilitates accelerated business improvement and provides strategic options for all stakeholders.
It is often difficult to directly measure the impact and success of the NED – this can only really be seen in the context of the overall business performance. If the management team are performing better and the results show growth, it is a sure sign that the NED has made a difference.
As an NED, constant coaching, cajoling, challenging and inspiration is essential – the CEO and his team need to live and breathe the plan. Bringing the plan to life will be tough but it will ultimately deliver the just rewards.
In my experience, the difference between success & failure is, in most cases, down to leadership. Most, if not all, businesses have a decent proposition, solid customer base & good staff; whether these assets are leveraged to drive success is down to how the business is led, driven, goaled, measured & rewarded. A change in leadership approach can have an immediate impact on performance as proven recently by Ole Gunnar Solskjaer at Manchester United.
For a business to be sustainable, it is important the execution of plan builds ultimate value for all the stakeholders.
This can be measured in several ways and in my experience of Technology businesses, there are always a few key factors that drive value. These are Value Drivers:
- revenue & margin growth
- levels of recurring revenue
- customer retention & development
- customer cross-sell & upsell operating profit
- operating cash generation
- value of sales opportunities
- size of order book
Whatever the Value Drivers for the business, the growth plan needs to identify these and measure progress against them; once these are moving in the right direction the business will be on a growth path which will accelerate over time.
In a recent assignment, a successful acquisition and subsequent integration resulted in rapid cross-sell to the enlarged client base which led to significant growth in sales, margins and profits allowing the stakeholders to achieve an exit within 18 months.
Businesses can transform to growth in a matter of months; the growth is sustainable, the management team gains the confidence both in the plan and the NED advice. This inspires the business leaders to push on, again, to the next level.
In summary, sustainable business growth is, without doubt, a highly satisfying achievement. The overall effect on all stakeholders; management, staff, customers, suppliers and, of course, shareholders & investors is a positive one.
Growth is not easy. However, having a plan with clear actions, measurable targets & outcomes and, most importantly, clear ownership will provide a platform that makes growth deliverable.
It is crucial this growth mindset is instilled into executive management in a constructive and supportive way, as ultimately it is they who are responsible for delivering their plan.