Growth platforms

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Growth platforms are specific initiatives selected by a business organization to increase their revenue and earnings growth. [1] There are two types of growth platforms: strategic or tactical. Strategic growth platforms usually take from 3 to 6 years to implement and give the desired results being long term initiatives. On the other hand, Tactical growth platforms take less time to implement as they are shorter term initiatives and both the initiative and the results are based on the current budget year of the particular business. [2]

Contents

Stages of growth strategy

There are three stages in implementing a growth planning process which are based on three basic questions:

  1. "Where are we now?"
  2. "Where do we want to go?"
  3. "How do we get to here?" [3]

Strategic analysis: referred to the environment (which could either be internal, external and marketing) where the business operated. It also looked at the resources possessed by the business or that it could possibly have and at the expectations and objectives of its main stakeholders and owners.

Strategic choice: it basically generates options which have to do with the strategic analysis. This process evaluates the options based on acceptability, feasibility and suitability and then selects the suitable strategy

Strategic implementation: this process focus on achieving the correct organisational structure, planning the resources (physical and financial) and sorting out the systems and the people by implementing the change process. This process has been developing and it can be considered one of the few "big company" management theories which can be used effectively and simply. [3]

Most businesses have a growth strategy which is based on "acquisitions and partnerships that create shareholder value by creating or reinforcing platforms for long-term growth". [4]

Growth sustainability

When a business is in a high-growth industry it is able to maintain high growth rates for a longer period of time. However, many investors take this high growth as granted which usually lead to much slower growth rates once the industry stops booming. [5] It is believed that 65% of acquisitions which businesses buy in order to grow in size have destroyed more value than they actually created, an acquisition can’t be a substitute for a growth platform. [6]

New growth platforms help companies grow as they created families of products, services, and businesses and extend their capabilities into multiple new domains. The NGPs acted as a method of growth in which each business was acquiring new capabilities and further market knowledge. The size of the growth platform is strategic to the corporation. [5] Small scaled businesses can only have a NGP when provided through a partnership or government funding, usually these exist in the agricultural sector and improve the knowledge and infrastructure ensuring better food security. [7]

New growth platforms (NGPs)

Opportunities for building NGPs lie at the intersection of a company's actual or potential capability set, unmet customer needs, and forces of change in the broader environment. R0605D B.gif
Opportunities for building NGPs lie at the intersection of a company’s actual or potential capability set, unmet customer needs, and forces of change in the broader environment.

Creating a new growth platform

Rediscovering the technology and the talent present in an organization a company or exploring its external networks, a business is able to find capabilities needed to create a new growth platform. Then a company should evaluate the potential capabilities which it needs to develop. Companies tend to undermine the number of possible growth platforms that could be created to increase customer needs. This is a consequence of senior managers not thinking more broadly and only thinking about a product or service that would beat the competition. [5] After identifying suitable new areas of growth, a business needs to quantify and evaluate the opportunities to generate the lines of the business. [8] In order to meet a new or uncovered customer need a new growth platform has to form as a result of a force of change which include new technologies, social pressures or changes in the legal system. [5]

Possible places for growth

In order to generate an opportunity for sustained growth a business needs to widen its capabilities into innovative domains. NGPs provide a structure for creating business processes, services and even families of products. The size of each NGP is essential to the strategy of the organization. A successful NGP requires "a well tried process, high quality information and external insights – often from well outside the company’s own market space". [9]

Difficulties in finding a new growth platform

Some studies[ citation needed ] have shown that more than 90% of companies are not able to find new possible sources of growth. Through the understanding of these difficulties, it makes it simpler to deal with the problem. Many argue[ citation needed ] that poor processes and skills lead to this high failure rate. Consequently, the main advice given to these companies is to be willing to take more risks and do the same "approaches used in the venture capital industry and build a pipeline of new businesses". It has been detected that the success of companies lies in new growth areas which have existing mindsets fitting the critical success factors of the business. Therefore, failure results when the company involves with factors that do not fit when the company is trying to grow in different new areas. The low success rate of finding a new growth platform can also be explained by the shortage of opportunities theory, which suggests a new way of resolving the problem. This theory proposes that "efforts to generate additional ideas or to experiment with a portfolio of new ventures are likely to be fruitless". In addition, failure can also be caused by less risk aversion and more broadmindedness of entrepreneurship. In order to resolve this issue the corporate mindsets need to change or investing only in cases that match with what is needed having a high chance of succeeding. [10]

Examples of growth platforms

Examples of strategic growth platforms which in these cases are using specific and innovative product areas or entering into a new distribution channel:

Examples of tactical growth platforms include specific new sales force programs or a new emphasis for the advertising for the year. [2]

See also

Related Research Articles

Business model Rationale of how an organization operates

A business model describes how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. The process of business model construction and modification is also called business model innovation and forms a part of business strategy.

In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of resources and an assessment of the internal and external environments in which the organization operates. Strategic management provides overall direction to an enterprise and involves specifying the organization's objectives, developing policies and plans to achieve those objectives, and then allocating resources to implement the plans. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision-making in the context of complex environments and competitive dynamics. Strategic management is not static in nature; the models often include a feedback loop to monitor execution and to inform the next round of planning.

GE multifactoral analysis is a technique used in brand marketing and product management to help a company decide what products to add to its portfolio and which opportunities in the market they should continue to invest in. It is conceptually similar to BCG analysis, but somewhat more complicated. Like in BCG analysis, a two-dimensional portfolio matrix is created. However, with the GE model the dimensions are multi factorial. One dimension comprises nine industry attractiveness measures; the other comprises twelve internal business strength measures. The GE matrix helps a strategic business unit evaluate its overall strength.

Marketing management is the organizational discipline which focuses on the practical application of marketing orientation, techniques and methods inside enterprises and organizations and on the management of a firm's marketing resources and activities.

In business, a competitive advantage is the attribute that allows an organization to outperform its competitors.

Marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage.

Business performance management is a set of performance management and analytic processes that enables the management of an organization's performance to achieve one or more pre-selected goals. Gartner retired the concept of "CPM" and reclassified it as "financial planning and analysis (FP&A)," and "financial close" to reflect two concepts: increased focus on planning and the emergence of a new category of solutions supporting the management of the financial close.

Business process re-engineering

Business process re-engineering (BPR) is a business management strategy, originally pioneered in the early 1990s, focusing on the analysis and design of workflows and business processes within an organization. BPR aimed to help organizations fundamentally rethink how they do their work in order to improve customer service, cut operational costs, and become world-class competitors.

A sustainable business, or a green business, is an enterprise that has minimal negative impact or potentially a positive effect on the global or local environment, community, society, or economy—a business that strives to meet the triple bottom line. They cluster under different groupings and the whole is sometimes referred to as "green capitalism." Often, sustainable businesses have progressive environmental and human rights policies. In general, business is described as green if it matches the following four criteria:

  1. It incorporates principles of sustainability into each of its business decisions.
  2. It supplies environmentally friendly products or services that replaces demand for nongreen products and/or services.
  3. It is greener than traditional competition.
  4. It has made an enduring commitment to environmental principles in its business operations.

The term "Intelligent Enterprise" refers to a management approach that applies technology and new service paradigms to the challenge of improving business performance. The concept, as articulated in James Brian Quinn's seminal book Intelligent Enterprise posits that intellect is the core resource in producing and delivering services. The book describes the management approach and computing infrastructure needed to harness that intellect effectively. This approach is referred to in business jargon as Knowledge Management, of which Quinn was an important proponent. Quinn was the William and Josephine Buchanan Professor of Management at the Amos Tuck School at Dartmouth College.

Business development entails tasks and processes to develop and implement growth opportunities within and between organizations. It is a subset of the fields of business, commerce and organizational theory. Business development is the creation of long-term value for an organization from customers, markets, and relationships. Business development can be taken to mean any activity by either a small or large organization, non-profit or for-profit enterprise which serves the purpose of ‘developing’ the business in some way. In addition, business development activities can be done internally or externally by a business development consultant. External business development can be facilitated through Planning Systems, which are put in place by governments to help small businesses. In addition, reputation building has also proven to help facilitate business development.

Business partnering is the development of successful, long term, strategic relationships between customers and suppliers, based on achieving best practice and sustainable competitive advantage. In the business partner model, HR professionals work closely with business leaders and line managers to achieve shared organisational objectives. In practice, the business partner model can be broadened to include members of any business function, for example, Finance, IT, HR, Legal, External Relations, who act as a connector, linking their function with business units to ensure that the technical, or functional, expertise they have to offer is placed within the real and current concerns of the business to create value.

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A Business Intelligence Competency Center (BICC) is a cross-functional organizational team that has defined tasks, roles, responsibilities and processes for supporting and promoting the effective use of Business Intelligence (BI) across an organization.

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Product strategy

Product strategy defines the high-level plan for developing and marketing a product, how the product supports the business strategy and goals, and is brought to life through product roadmaps. A product strategy describes a vision of the future with this product, the ideal customer profile and market to serve, go-to-market and positioning (marketing), thematic areas of investment, and measures of success. A product strategy sets the direction for new product development. Companies utilize the product strategy in strategic planning and marketing to set the direction of the company's activities. The product strategy is composed of a variety of sequential process in order for the vision to be effectively achieved. The strategy must be clear in terms of the target customer and market of the product in order to plan the roadmap needed to achieve strategic goals.

Yves Doz is a French academic. He is a professor of strategic management at INSEAD, where he holds the Solvay Chaired Professorship of Technological Innovation, and is a Fellow of CEDEP. His research interests focus on innovation, the strategy and organization of multinational corporations, strategic alliances, and on how business organizations can develop the capability to adapt quickly to changes in competitive environments. More recently, he has been working with a number of national governments on strategic adaptability and agility. He is the author of numerous books and articles, which include the first comprehensive book on strategic alliances, co-authored with Gary Hamel, and the Multinational Mission, co-authored with CK Prahalad.

References

  1. ↑ "growth strategy". www.boundless.com/. Boundless. Retrieved 27 October 2014.
  2. 1 2 "Growth Platforms". pages.rediff.com. Retrieved 21 October 2014.
  3. 1 2 3 Nyandat, Christine. "Corporate Strategy" (PDF). gaksu. Archived from the original (PDF) on 4 March 2016. Retrieved 21 October 2014.
  4. ↑ "Growth platforms". sanofi.co.uk. Sanofi. Retrieved 24 October 2014.
  5. 1 2 3 4 L. Laurie, Donald; L. Doz, Yves; P. Sheer, Claude (2006). "Creating New Growth Platforms". Harvard Business Review. 84 (5): 80–90, 156. PMID   16649700 . Retrieved 23 October 2014.
  6. ↑ Laurie DL, Doz YL, Sheer CP (2006). "Creating new growth platforms". Harvard Business Review. 84 (5): 80–90, 156. PMID   16649700.
  7. ↑ "Growth Platforms for Smallholder Farmers". action2020.org. Action 2020. Retrieved 24 October 2014.
  8. ↑ "Strategic Growth Platforms". www.edengene.co.uk. Edengene. Retrieved 27 October 2014.
  9. ↑ "Innovation growth platforms". nu-angle.com. nuAngle. Retrieved 23 October 2014.
  10. ↑ Campbell, Andrew. "Why is it so hard to find new growth platforms?" (PDF). ashridge.org.uk. ashridge. Retrieved 23 October 2014.[ dead link ]
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