The economic consequences of the coronavirus crisis will be felt for a long time to come. Many companies, especially smaller ones, are fighting for their existence and agonizing over the question of how to keep up with their running costs. At first glance, giving any thought at all to the next stage of growth seems pointless in the current situation. A second glance, however, will tell you that it is a good decision – if you think of growth not just in terms of quantity, but also of quality. Oliver Wegner, who advises firms during their various stages of growth, explains in our interview how healthy growth can be achieved in the current climate – and why now may even be the ideal time to do so.
Is now the time to think about growth?
Many small companies have been hit hard by the coronavirus crisis. In this interview, growth expert Oliver Wegner explains why now could be the ideal time to think about growth.
Mr Wegner, what does growth actually mean?
Companies rely on growth to secure their future. For that reason, achieving and managing healthy growth is one of the core tasks of every entrepreneur – particularly during and after periods of crisis. Nowadays, when people talk about growth, they are usually referring only to a rise in revenue or profits. In addition to these external growth parameters, however, there are also internal factors such as skills, innovative strength and corporate culture (see drop-down menu) to consider. In other words, growth does not just mean “higher, faster, further”, but also “better, different, unique”. In order for your company to grow healthily, these factors need to be in harmony. Healthy growth is possible only from the inside out.
The majority of the internal parameters are factors which can be influenced from within the company.
- Innovative strength
- Sickness-related absences
- Employee satisfaction
- Corporate culture
- Willingness to take further training courses
- Process automation
- Leadership culture
The external parameters are dependent on one or more internal parameters and can also be strongly influenced by other market participants.
- Market position/share
- Number of employees
- Customer needs
- Services offered
- Customer base
- Business model
And what does this mean specifically for companies that have found themselves in difficulty because of the crisis?
They are battling with the fact that their revenue and income have suddenly collapsed due to external circumstances. They are therefore in the restricted growth phase (see diagram), which means that external growth parameters are currently negative and internal ones are (ideally) positive. The question now arises as to how companies can get their businesses up and running again in the future. Maybe orders will return to the same level as before the crisis and the situation will ease. But maybe something fundamental has changed, and the path back to success is stony or even impossible with the old business model. In both cases, I believe that now is precisely the time to think about what it takes to achieve healthy growth and ask the following questions: how can we differentiate ourselves more effectively from our competitors in the future? What is our unique selling point and how can we make better use of it? After all, growth is never certain: every company is competing against others on a level playing field. It is essential to regularly redefine your position, because our environment is changing constantly and at ever increasing speed.
The growth quadrant: growth is dependent on external and internal growth parameters
Many companies have experienced a drop in revenue and income, despite good internal conditions. In other words, they are in a phase of restricted growth.
What’s the best way to go about achieving this?
The entrepreneur and his or her team should work together to consider which problem they would like to solve for their customers and how they are going to go about it. What are their real strengths and what do their customers need? In our part of the world, the majority of customers are “pain avoiders” – both in the B2B and B2C sectors. This means that they will only buy a product or a service when they have an acute problem. Let’s take a car repair shop as an example. As a customer, I don’t want my car to break down while I’m on holiday, so I have it serviced before I go away. For the garage, it is important not just to provide this service, but also to make the customer feel welcome and happy throughout the process. This doesn’t cost the garage any more – it’s primarily a question of attitude, good customer service and a visible range of services. These three factors ensure that the customers will come back, recommend the garage to others and, as experience shows, be willing to pay a little more. This example underlines how important it is that internal and external parameters are in harmony.
What are the risks involved in neglecting the internal growth factors?
If a development is imposed from the outside, growth is often artificial and is not borne with conviction. It may even feel like a “foreign body” has invaded the company. For that reason, it is essential to be aware of and develop your own capabilities and to simulate future scenarios in advance if you begin to operate in new areas (e.g. through cooperation agreements or acquisitions).
And finally, to sum up: how is it possible to get back on track towards healthy growth?
The very first thing you need to do is to assess your current situation – ideally using the growth quadrant. If your company is going through a period of restricted growth, it is comparatively easy, as all you have to do is activate the potential that has not yet been fully utilized. To this end, it is often important to increase your company’s visibility among the chosen customer target group. If a company has slid into unhealthy growth, the answer is also internal and rests on one or more internal growth factors that are not on track. In this situation, it is necessary to act quickly, as unhealthy growth is deceptive – while the external factors are positive, the company already has a problem internally.
About Oliver Wegner
The link will open in a new window Oliver Wegner is an advisor, initiator and keynote speaker on the subject of growth. He is the author of The link will open in a new window the book “Die Wachstumsformel: Wie Unternehmen florieren statt einfach nur grösser zu werden” (“The growth formula: how companies can flourish rather than simply getting bigger”) and, with his company evolutionplan®, helps firms in various sectors in Germany, Austria and Switzerland to achieve healthy and sustainable growth.