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11/08/2011

Five Harsh Realities Halting Your Company�s Organic Growth

Making a lasting change is usually easier said than done. Think about it. Most of us spend more time talking about that next diet or exercise program we plan to start than we do actually going through with it. Businesses have just as much difficulty going through with change as individuals. Too often, like those of us who are unwilling to get up a little earlier to go on that morning run or invest in the right pair of running shoes, companies are unwilling or unable to carry out the changes that need to be made in order to grow organically.

Growing organically by creating differentiated products and services is difficult. It requires constancy of purpose and a willingness to invest over time. The problem, says Dan Adams, is that consistent, successful organic growth is steeped in change.

�Investment in profitable, sustainable organic growth must be done at two levels,� says Adams, author of New Product Blueprinting: The Handbook for B2B Organic Growth. �First, you must learn the new skills and tools of direct customer engagement, and second, you must apply what you�ve learned with customers very early in the new product development cycle.

�One important point needs to be made,� he adds. �Too many companies hear the word �investment� and immediately decide they can�t undertake this kind of change when the economy isn�t great. You probably work with colleagues who behave in a perfectly rational manner most of the time. But when your business creates its operating budget and growth plan, do you find that logic and clear thinking yield to a bit of self-deception?�

There are four distinct signs, according to Adams, that your company�s plans for growth just aren�t based in reality:

1.    Your budget predicts your sales will grow faster than the markets you serve.

2.    Your competitors � serving those same markets � believe their sales will do the same.

3.    You don�t have a track record of consistently taking market share from competitors.

4.    You can�t identify a key event or initiative that will change all this.

The bottomline is that relatively few businesses know how to achieve profitable, sustainable, significant growth. In fact, notes Adams, most do not. If your business is among the many strugglers, what can you do? Read on for Adams�s organic growth reality check:

Reality Check #1: You can�t sustain faster growth than competitors through better quality, service, or operational efficiency. Those battles were fought in past decades and � while still necessary � are not sufficient for a sustainable competitive advantage today.

Reality Check #2: �Remember, the growth you desire comes only from giving customers differentiated value. In other words, value they can�t get anywhere else,� explains Adams. �Businesses that focus on understanding and meeting customer needs, are the ones my money is always on.�

Reality Check #3: Most companies do a miserable job of developing new product differentiation, a.k.a., �new customer value.� On average, three out of four products fail after they enter the costly development stage. Can you think of any other area within your company that abides a 75% defect rate?

Reality Check #4: Most new products don�t fail because R&D can�t come up with good answers. They fail because R&D is trying to answer the wrong questions. The supplier doesn�t know what the customer really wants, because the supplier is deciding what the customer wants in his own conference room. 

Reality Check #5: The great thing is that these problems are completely solvable. In a study representing 84% of all global corporate spending, Booz Allen Hamilton found that directly engaging customers gave suppliers superior results. The profits grew three times faster than those that just used �indirect customer insight� to develop new products.

Adams says a great example of a company that accepted the organic growth reality check put before them is DuPont.

�DuPont has a rich history of delivering differentiated value through its products,� says Adams. �We have DuPont to thank for nylon, Teflon�, Kevlar�, Tyvek�, Corian�, and Lycra�. Winning companies know what provides their winning edge � understanding and meeting customer needs. And they continue to win because they figure out a way to invest in and consistently build this edge.�

Dan Adams, president of Advanced Industrial Marketing (AIM), is an author and an award-winning speaker who conducts workshops in every region of the world to train commercial and technical teams in advanced B2B product development.


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