What prevents business growth the most? When business growth stalls are characterized by an abrupt or lasting drop in revenue growth, they are, in fact, preventable. A seminal study, When Growth Stalls, published nearly 15 years ago in The Harvard Business Review, probed more than 500 corporations to identify root causes, such as faulty management decisions on strategy, organizational design and economic downturns. Perhaps unsurprisingly, these factors are still the primary inhibitors for growth a decade and a half later.
What should leaders look out for if business growth has stalled? Here are three key areas that deserve consideration:
Premium Position Captivity
Having a strategy to respond is key, along with monitoring how customers value your product features. Insigniam consultant Greg Trueblood says, “many large, successful organizations often have management structures (including incentives) that reward squeezing more profit out of the same value proposition.”
Innovation Management Breakdown
If product innovations are inefficient, it can produce systemic issues that may take years to correct. “Large, successful organizations put themselves at a disadvantage when they focus their attention on extracting profit from historical value propositions,” says Mr. Trueblood. “Companies with sought-after positions in the market, either through market share or margin, have enormous sunk costs they must recuperate. They’ve built these infrastructures over decades through a successful value proposition that customers reward with repeat business.”
Premature Core Abandonment
Jumping into a competitive terrain too soon by misjudging core market saturation can be costly, creating operational issues that impact revenue.
Additionally, Mr. Trueblood recommends empowering a group of new leaders to make intentionally bold proposals that inject new thinking. “Waiting for the market to shift means that organizations must move quickly to adjust—something few excel at,” he says. “Instead, leaders can deliver breakthrough growth by proactively disrupting themselves and incubating innovation.”
A version of this article appeared in the Fall 2022 issue of Insigniam Quarterly with the headline “What’s [Still] Killing Growth?”
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