Growing, expanding, or building: what is the difference for a startup?

Sia Partners is celebrating its 18th anniversary with a presence in 20 locations and more than 950 employees.

The 18 year anniversary does not correspond to any symbolic threshold or coming of age. However, this is the average age for most French companies. Few of them have achieved 17 consecutive years of double-digit growth, of which we are particularly proud. Having accomplished this journey over such a period of time leads one to question the meaning of our healthy focus to deliver steady growth. There comes a time when one cannot be content with growing just to grow; one has to grow to build. I am taking advantage of this symbolic anniversary to share some thoughts on this subject as a consultant and how to implement them and as an entrepreneur for 18 years.

Let us first analyze the difference between growing and expanding. To expand is to grow too fast. This is what some start-ups do when they are too hurried and obsessed by financial targets - particularly in relation to revenue or cash flow. These targets may well be devoid of any form of reality. This may also be the case for some more mature organizations that, exhausted, are embarking on external growth because they can no longer deliver organic growth or innovate. However, by doing so, they can easily end up destroying their value. The role of management is to maintain safeguards against this pitfall as sustainable growth must remain a rigorous performance exercise.

If everyone can agree that growth is a fundamental element for survival, it is insufficient for injecting meaning into a business project, even with a taste for challenge. There should be more than financial goals, especially in a world where the concept of contestability of economist William Baumol now dominates almost all industries. To move from growing to building, one has to fulfill many conditions. I see at least three essential and common issues in which duration plays a central role: (1) developing a shared long-term vision, (2) proving resilient, and (3) having the ambition to become a game changer.

1 / A shared vision of the long-term

Wanting to build, and displaying that ambition, must not be an enemy of agility. Over the last decade following the 2008 financial crisis, few companies have dared to assert their long-term vision. It must be acknowledged that markets have become rather perilous, but it is a necessity. Despite the uncertainties, macro-economic trends are back which offers a good opportunity to re-inject meaning.

The definition of meaning must resist what has been termed VUCA (Vulnerability, Uncertainty, Complexity, Ambiguity). In concrete terms, this approach must be calibrated for compatibility with possible shifts, since the long-term vision is not contradictory with real flexibility in its realization. More importantly, we must share this vision with all who build the business on a daily basis.

Regarding Sia Partners, we have always wanted to be a leading consulting firm in business transformation. We were able to adapt to the new demands of our customers. For example, yesterday with a demand for business expertise, today with the addition of data science, and tomorrow with a predominance of cross-border projects. Still, we have never deviated from our course.

2 / Proving resilient

Proving resilient means gaining market share, regardless of the direction of the business cycle. To demonstrate this, one needs the test of time and to be confronted with several economic cycles. Since the mid-1970s, the sequence of economic cycles has been increasingly short and violent. Since 2000, we have witnessed the bursting of the Internet bubble, the financial crisis of 2008, the euro crisis, the rollercoaster of the barrel price of oil, and the return of heightened political risk.

On the agenda for the next few years, are among other things, the anticipation of potential macroeconomic financial imbalances (American student loans, bad debt in China, real estate bubbles, central banks’ balance sheets and over-indebtedness in Western countries, extreme volatility of Foreign exchange, and commodities ...) that the Trump administration's financial deregulation agenda could increase.

From a microeconomic point of view, without being exhaustive, digital transformation brings two central strategic questions. The first being the increase (or, more precisely, the rate of increase) of the competitive intensity attacking the annuity businesses of yesterday. The second being disruptions in consumption patterns, such as the forthcoming and significant arrival of personal assistants.

In other words, resilience stems from the ability of management to consolidate the solid foundations of the business model and prevent negative change, whether incremental or more violent.

Sia Partners is active in the strategy and management consulting market, which is globally pro-cyclical. Resisting macroeconomic or sectoral crises requires parallel action on all market segments, including those that are pro-cyclical (growth strategies), counter-cyclical (cost reductions), and/or acyclic (regulatory transformation). None of the major crises have prevented us from doing better than the market, delivering double-digit annual organic growth, even in the middle of each of these crises. Macroeconomic developments can obviously affect the consulting market in the event of a turnaround, but the transformations to be carried out in companies are so powerful that capturing growth is always within reach.

3 / Being or becoming a game changer 

 Being or becoming a game changer is probably the most difficult condition for entering the top player’s club. First, because it was pre-empted by the omnipresent media of the unicorns and the great actors of Tech. If the company is positioned in an innovative breaking market that creates competitive monopolies (where the "Winner takes all" rule presides), its very nature is one of a game changer. 

Becoming a game changer can and should become one of the goals of leaders of any business.

For markets governed by logic of incremental innovation or for business models with a strong local dimension and/or not conducive to scale effects, market shares are by nature broken down. Being a game changer takes on a different life and meaning. This is mainly based on the ability to impose market standards and therefore format it by design, usage and/or price. This is what happened, for example, in the development of low-cost models in airlines. Tomorrow, low-cost airlines will not have 100% of the market but they will have imposed a complete transformation of short and medium-haul flights.

The consulting market has the dual characteristic of being very important - over $250 billion - and highly fragmented, as no firm represents more than 3 to 4% of market share. In such a context, the game changer is one that imposes the themes of the transformation agenda or imposes on its direct competitors its style of operation and prices. In other words, it shapes the market through its influence and business model.

After 18 years of existence and with 950 highly talented people, Sia Partners ambition is to enter the top echelon of global players by successfully becoming a game changer in consulting and accompanying its clients to become game changers themselves!