Unlocking exponential growth, once and for all
Making an exponential leap requires exploring uncharted decisions. Do we have clarity on what those are and how to make them? And can we break the incremental curve by repeating the decision habits we have used in the past?
Growing exponentially, in many companies or business categories, is no longer an option. Increasingly demanding shareholders, increasingly prepared competitors, and consumers with greater purchasing power mean that the need to grow faster has become an essential requirement to stay in business.
Our understanding of growth requirements has evolved. Developing a business today will require those categories or products used as the engine to push the rest of the organization to evolve well above average. In those categories, products will be demanded to grow well beyond an incremental curve with stated ambitions. For example, a company operating in a mature market may only require incremental growth from its “core” or mature product categories but may require exponential growth from new categories or innovations operating in new markets or market segments for the organization.
An exponential curve is not just a faster incremental curve. On the contrary, it will require a different perspective, a different way of thinking, and certainly a different set of organizational capabilities than what we currently have. An incremental growth curve, faster or slower, implies doing better or more intensely what we are already doing. An exponential growth curve implies doing something different from what we already do.
How to unlock exponential decisions?
To enable exponential growth, it is key to understand which decisions are involved in achieving it. Once those decisions are identified, it will be important to understand the reasons why those decisions may be blocked and find a different approach to unlock them. For this, we can classify decisions into four categories:
Decisions we make poorly
Repeating past decision paradigms and habits will not allow us to jump from an incremental to an exponential curve. Incremental and exponential decisions require a different process and way of thinking to make them effectively. In incremental decisions, which we are surely very used to making, we could be guided by our intuition, probably built on years of experience and past learnings.
On the contrary, in exponential decisions, that intuition and those usual decision processes are useless and sometimes dangerous. Making exponential decisions based on incremental processes, methods, tools and mental models is an excellent recipe for failure. Incorporating new approaches, new expertise and new practices requires relearning how to make some decisions. And it is very likely that these changes will also require organizational changes to enable them, allowing them to flow through the organization. Exponential decisions will require a new way of making them, and leaders prepared to effectively tackle them.
Decisions we do not dare to make
This second group of decisions tend to be taboo decisions. Decisions we know we have to make, but don’t dare to bring to the table due to the risk they pose. However, hiding the risk is not the way to unlock them. From our experience in implementing decision models, we see a number of enabling factors that promote and accelerate the adoption of this positive attitude towards exponential risk.
First, we must acknowledge what we do not know. We need to understand uncertainty, understand what could happen and what risk each possible future holds for our decision. Rather than trying to kill uncertainty with assumptions, we need to incorporate probabilistic tools that provide us with valuable information about future scenarios.
Another key factor in these decisions is ensuring mechanisms that allow us to fail quickly through real prototypes tested in the market with consumers, so that we can anticipate key moments in our change process. Launching a more gradual, smaller and therefore faster change will allow us to fail sooner, minimize its impact and accelerate the process. When a gradual change is not viable or convenient, a safety net may also exist that includes mechanisms to minimize the impact of errors on the rest of the business and prevent irreparable damage.
In addition, this whole process must be accompanied by a focus on organizational learning. Failing fast only helps if the organizational muscle exists to quickly learn from that mistake and spread the learning across the organization. Failing is valuable, but if we can learn from others’ mistakes, it’s even better.
Decisions we do not know we have to make
By their very nature, these are the most difficult to see. As a first step to detect them, instead of trying to project current business trends into the future with traditional planning, future-oriented questions should be asked starting from an ambitious vision we want to achieve. Only then is it time to ask what decisions we will have to make before, in order to get there.
For example, questions like: “How can we capture consumers who don’t buy from us today?” will lead us to make incremental decisions, but questions like: “Who will our consumers be in the future and what value will they seek from us?” will trigger exponential decisions. With this logic, decision plans can be built that are not based on projecting current resources into worlds we know, but on building a clear vision of where we want to get to and what decisions we need to make to get there.
How to plan for exponential growth?
How can I double or triple the business of a product in three or five years? This seems to be the million-, or billion-dollar question, literally. To answer it, it is essential to understand and agree on certain steps that we often take for granted in growth plans.
First, it is important to align growth ambitions and expectations among all the organization’s change agents. This means expressly and clearly agreeing on the amount of growth and the timeframes required. Once this guideline is established in the medium- or long-term plan, we must understand how much growth will be necessary in year 1 to align with our annual plan.
Secondly, we will need to fully understand what capabilities are needed to achieve this and the implications that change will have for both the organization and the business. The skills and capabilities required to jump from a 2X curve to a 3X curve are very different.
Finally, we will have to face the indispensable and non-negotiable need to incorporate an honest, outward-looking perspective in our strategic definition process.
Growing exponentially requires courage and is also a decision. Questioning how we are making decisions, becoming friendly with uncomfortable risk, and being able to look outward to overcome cultural resistance are some of the factors that will allow us to take a big step towards making those decisions we are not making today – those that will transform our lives and our businesses.
Partner at Tandem.