Fight for Share During the Growth Phase
Win the Biggest Market Share Before the Markets Begin to Mature
In Crossing the Chasm, Geoffrey Moore characterizes the Growth Phase in two ways: The first half as a bowling alley and the second half as a tornado. People make mistakes in bowling alleys and tornados.
Even small mistakes made during the linear growth phase can mean a difference of one or more market share positions as the mature phase sets in.
The difference between the first and second place positions in a mature market is roughly 2:1 in revenues and 4:1 in profits. And those differences are hard to change in a mature market. They can persist for years, even after the declining phase sets in. That is very good news for #1, but not for #2.
The mistakes often go unnoticed. Therefore, they go uncorrected. There is no understanding of cause and effect, so the causes can persist. There is no learning from those mistakes, so they are likely to be repeated.
So gaining market position during the growth phase can be accomplished by simply making fewer mistakes than your competitors do!
We can help clients to foresee some of the typical mistakes growth businesses make, to understand their potential consequences, and how to avoid them.
We can help growth businesses to quickly realize when a mistake has been made, and to correct the situation quickly.
We can help growth businesses to learn from their mistakes, realize the consequences, and let obstacle prevent the achievement of the number one market position well before market maturity sets in.
Daniel Kahneman won the Nobel Prize for Economics in 2002 for a body of work that, among many other things, concluded that people making economic decisions do not behave rationally. Like people in social groups of all kinds, people in businesses decide in their gut and then defend their decision with rationalizations.
Here are two of the most common rationalizations that prevent growth businesses from achieving the #1 market position before their businesses reach maturity.
Read a hundred quarterly press releases and you will find 101 different usages of the term growth. And you will see another 101 rationalizations that compare growth figures with something else to provide context. Some of the more common comparisons are: Unprecedented growth, better than plan, better than other divisions, better than Wall Street expectations, much better than inflation, etc, etc, etc.
In the context of this page, growth has only one meaning—an increase in market share.
People define markets to serve their own purposes. If they are seeking funding for a new product development project, they may characterize their markets to include huge unserved segments offering lots of potential new business. When they are presenting a progress report, the markets may be limited to served segments demonstrating the high market share they have achieved
The executives and the investors in the business are at a distinct disadvantage. The people at the working levels, those facing the customers and focused on narrow product groups, simply know more about their markets than their managers and executives do. The managers and executives are further from the customers and their interests are broader, but they have the power.
In this game, the working level people try to "work the systems", using ploys like characterizing markets creatively to get what they want from management. Managers and executives try to stop that behavior with rules and edicts. There must be a better way?
We help people in a business to combine diverse perspectives like those above into working definitions for every significant market available to the business. Rather than continue the game of manipulation and coercion above we help clients create a different set of choices that are not even on the continuum between the extremes or manipulation and coercion.
Emerging businesses are challenging. Most fail. A good outcome is to not fail. Creating the invention or the new business idea was a lot more fun.
Mature businesses are bureaucracies. The mission is to make a lot of money before the declining phase sets in. Making a lot of money sounds like fun, but is it? Here in the US, the Internal Revenue Service, our tax collection authority, is a bureaucracy that makes lots of money. But I have never seen anyone working for the IRS who seemed to be having fun.
As the growth phase begins, lots of businesses are in a vigorous competition with each other. Their product developers are working hard to develop the best new products and services. Their marketing and sales people are completely dedicated to creating demand and selling those products. The manufacturing people are working tirelessly to develop robust production processes that will deliver high quality products at low cost.
The situation changes continuously. New obstacles pop up frequently. New people are being added as the revenues ramp up. But most people are focused on winning. They rise to each new situation, to each new obstacle. Cross-functional communications are more natural than at any other time in the life cycle.
As the business grows, the focus gradually migrates from the products to the brand. Mass communications with the customers gradually replaces the one-on-one personal networking. It seems that every day requires something important to be done differently.
Andrew Lo, MIT Sloan School of Management, has demonstrated that stock traders who make a series of what they believe to be good decisions go into a kind of euphoric state that causes them to underestimate future dangers and overestimate their own capabilities. A similar phenomenon takes place in the minds of people in growth businesses as they realize a string of successes.
Small, skilled, detached, empowered cross-functional teams naturally tone down the euphoria and skillfully maintain situational awareness. They can keep the goal in focus: To achieve the #1 market position before maturity sets in. They can continuously adjust the potential courses of action to fit the changing situation. They can balance the benefits and consequences of the potential courses and decide dispassionately on the best courses of action to pursue to reach the goal in the situation they are facing.
Some one business among those competing in the growth phase will be in the #1 position as maturity sets in. In most cases, that is decided more by chance than by design. We help growth businesses take full advantage of combining the zeal of the people engaged in the frenzy of competition AND the cool, objective, logical processes of well-trained and well-coached cross-functional teams.
Please browse through OUR CORE BELIEFS section to understand the fundamental motivators that provide the foundation on which all we do is built.
The frameworks on which we develop our deliverables that put growth businesses on course toward the #1 market position during the growth phase are presented in the PROGRAMS section.
And the generic vehicles that deliver the training needed to build the teams that will deliver the #1 market position are described in the WORKSHOPS section.
If you have questions or you want to give us your opinions, CONTACT US, and we will serve your needs.