Blog | April 26: Effective Company Essentials | Navigator Business Solutions, a SAP Gold Partner®

Navigator Business Solutions, a SAP Gold Partner®

Navigator Business Solutions

April 26: Effective Company Essentials

Almost all enterprises are in business to grow, and all companies want to be effective. Whatever your motivation for being in business in the first place-to change the world for the better, create a great place to work, offer a great product or service, and/or present shareholders with an excellent return on investment-growing a company is a must do.

But what are the habits, or what I call the essentials, to grow your business successfully to the next level? To be effective from both a managerial and financial perspective, and have this success be long-term?

Whether you are at a million, $20 million, $100 million or $500 million in revenue, applying the 7 Essentials to achieve exponential growth is the secret to become a highly effective company. Of the companies that grew to a billion, over 90% applied 5 or more of these 7 Essentials. Applying one will improve your growth prospects. Applying 5 or more will truly turbocharge your company's growth.

Here are 7 Essentials:

1. First, aligned to your innovation investment or R&D, is the ability to create and deliver "Way Better Value or Benefits" that truly differentiates your business and makes it relevant and valued in the eyes of the customer. We call this a Breakthrough Value Proposition.

There are three essentials to creating exponential revenue growth:

2. Target a high growth market segment, by which I mean a category within a market that is experiencing growing customer demand. Look within $200 Billion markets to redefine a potential billion dollar market segment that already exists, such as in retail, healthcare, technology, etc. You don't always have to create a new market.

3. Leverage Marquee Customers to propel your company's revenue growth. These are your most important customers who are the source of exponential revenue growth per customer. They uniquely help you define your benefits in customer terms and they essentially sell for you! Yes, turn your best customers into your sales force. eBay PowerSellers are a wonderful example of how a company turned a handful of early Marquee Customers into a force that is over a million customers today. Cisco utilized customer case studies with companies like Salomon Brothers (which has since been acquired) and Motorola in the early days to spread the word. Crocs transformed a small company to a billion with customer testimonials on its website.

4. Leverage Little-Big Brother alliances to break into new markets. Big companies need small companies to fill critical portfolio gaps. P&G is just one example of a Fortune 500 company that explicitly searches for smaller companies to partner with as they recognize their company cannot innovate in all markets.

A company cannot acheive sustainable revenue growth without generating profits to reinvest in the company. There are three essentials that drive profit and cash flow performance.

5. Become the Masters of Exponential Returns by becoming cash flow positive early. In contrast to today's conventional wisdom to leverage debt, these companies were cash flow positive early, often by $20 million in revenue, and remained cash flow positive all the way to a billion. They had little or no long term debt. They reinvested their profits to fuel growth.

6. Utilize a Dynamic Duo of Inside-Outside Leadership to execute the internal and external essentials. One executive or team innovates with customers and alliances while the operating leader(s) focus on operating and innovation performance. Together, they are a dynamic duo high performance team.

7. Balance the Board of Directors with Essentials Experts. Boards dominated with Investors and Management board members tended to be associated with companies that struggled in the long term. Balance your board with customers, alliance partners and a CEO who has led a company to a billion (or a CEO who has led a growth company larger than yours). These members will balance short- term with long-term interests.

And now there is an 8th Essential...

As companies grow from a million to a billion in revenue, the most highly effective leadership teams balanced profitability and cash flow with investing in infrastructure. For example, strategic investments were made in people, processes, systems, assets and IT infrastructure. This may sound like a no-brainer, but it's amazing how many companies, intent on growing, do not make the necessary investments in human capital or general infrastructure.

By now you may be wondering: Do the 7 Essentials to Achieve Exponential Growth apply globally? The latest research indicates that they do. While the US graduates an average of 36 companies/year to a billion, over the past five years, there is an average of 175 companies achieving a billion (USD) in revenue globally. I like to quiz my audiences: Which country is #1 for the greatest number of new billion dollar companies? China, the United States, or Russia? It is the U.S. However, the world is definitely regional. Asia generates over 40% of new billion dollar companies vs. 24% for North America, with the other continents capturing the difference. Asia, therefore, is the new regional leader for billion dollar company creation and growth.

Whichever country or industry your company is located in, applying the 7 Essentials will truly turbocharge your prospects to become a best run growth company.

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