Turbulent times call for transformative thinking
There’s growth, and then there’s Growth, with a capital G (and italics). Growth might seem less immediately impactful at first – usually it has small revenue potential in the beginning, and is almost certainly unprofitable for a while. So, it slips down the priority list. But there are three big reasons why you need to pay attention to it:
- It taps into bigger, bolder, more existential changes being driven by evolving behaviours, expectations and technologies
- You can’t build it overnight. To win tomorrow, you need to start playing today
- It has a different, more significant and more lasting value – and your shareholders and employees know it when they see it
We call it ‘Entrepreneurial Growth’, and it looks like building your company for the future. It’s what makes people excited to invest in you, whether it’s with their money or their time – and it’s what impressive companies like PingAn (the Chinese insurance incumbent where 17% of profits come from businesses incubated in the last 6 years) and Shopify are doing.
It’s bolder than ‘Replicative Growth’, which is (quite rightly) the focus of so many strategy teams and consultancies. Where Replicative Growth is about finding and optimising core profitability drivers in pursuit of consistent improvement, Entrepreneurial Growth strategies focus on driving value through consistently staying ahead of the market and exploring new opportunities beyond business-as-usual. And those companies that invest in what differentiates them – despite the uncertainty and volatility a recession – outperform their peers through recessions and for years afterwards. Topical, huh?
Unleashing the inner entrepreneur
Of course, there’s no silver bullet. Perhaps the most important thing is not to expect one: entrepreneurs iterate, adapt, learn – they take calculated risks and pivot or fail far more often than they get it right. But they persevere and inspire others to stick with them along the journey, as investors, employees and clients.
We’ve been applying our lessons learned in founding and running start-ups to working with large organisations for nearly a decade. Through that, we’ve identified several key attributes that great founders focus on that large corporations can use to effectively drive step-change growth:
- Beliefs – No one will invest in your vision unless they truly believe in it – that’s true for your employees as much as it is for the markets. Outperforming your best competitor isn’t a bold vision; how are you going to leapfrog them into a world that you’re defining, rather than playing catch-up in? You need to articulate an insightful view on how your sector will evolve given market forces, societal trends and tech developments – and you need people to understand why you’ll win. Start-ups are good at identifying those market opportunities, and they’re even better at telling stories to attract the people and investment who roll with the punches and push hard to generate lasting value.
- Ambition – To drive substantive, tangible change, start by defining clear, focused initiatives with punchy targets. This will enable teams to go beyond ‘business-as-usual’ and to be proactive and deliberate in how they pursue the activities that will result in success. Client shout-out: bp’s commitment to Net Zero Carbon by 2050, which has led to bp Launchpad, bp VISTA, bp Incubation and bp Ventures, all of which are helping develop and scale sustainable innovations.
- Portfolio – It’ll take more than one initiative to fulfil your ambitions and truly live and breathe your beliefs, and they won’t all succeed. That’s why it’s important to actively manage a suite of ongoing projects. It’s an approach Santander has taken to heart as part of its four-year EUR20B technology pledge. It has, for example, invested in challenger businesses like iZettle, incubated its own international money transfer service, PagoFX, and partnered with Tradeshift to launch an end-to-end digitally-enabled working capital solution.
- Structures –Unlocking budgets and having processes that allow new projects to be managed differently to ‘business-as-usual’ is fundamental to them having a fighting chance of survival. Setting up structures that provide clear governance and stage-gated resourcing and investment are great ways to facilitate this and make it repeatable with lower risks. There is no one-size fits all, so it’s critical to think backwards from the desired output to design the right vehicle and pipeline that can deliver against the targets.
- Experimentation – Change is constant. Testing, learning, creatively exploring and evolving is the only way to stay ahead. This needs to be a part of your culture, with ‘failure’ truly being celebrated as proof of the process. Some places speak about creating a ‘culture of failure’ (mistakenly, I hope?), but you can start by replacing the word ‘failure’ with ‘experimentation’: it’s much more authentic and embraces the notion that you still succeed by learning from it. Stay abreast of the innovation that matters with an always-on ‘radar’ function, make sure you know how others are betting on the future of your industry, and work out how you can help create win-wins with organisations outside your business who can help you get where you want to be.
- Empowerment – Create a supportive environment that allows the entrepreneurial people within your business to thrive and act like founders, with accountability, agility and commensurate rewards. Nurture new ideas and initiatives to get the most from that entrepreneurial talent, attract more to your company and find ways to do this at scale. Two powerful routes we see are: 1) crowd-source concepts from one of your most core constituencies: your employees; and 2) leverage your assets and capabilities to become a uniquely attractive partner for great start-ups.
Every company will index differently across these six factors, with more thought and investment needed in some areas than others – we get into more detail in our White Paper on Entrepreneurial Growth, which you can download here.
Or get in touch and we can discuss how we’ve developed and delivered strategies to drive Entrepreneurial Growth at organisations like ITV, bp, LEGO Foundation, Fannie Mae or Unilever.