It’s Strategic Management That Makes it Happen! But Game Changers are the Cause!
Greg "GW" Weismantel
Mentoring a portfolio of 3,200 managers, we teach irrefutable hard-skill tenets of Strategic Management for the company; operational development for executives, departments and leaders through digital resources & courses
From GW’s Executive Manager Workbench….
I’m always amazed how a company’s executive team does not understand the difference between Organic and Strategic Growth, because each warrants a different management process and each achieves different successful results.
In determining whether your company should scale up or scale down for a fiscal year is all determined by the strategic plan that includes the game changer events.
From the “Vocabulary For Success” book,
Scaling Up. An operational scaling process which is an organic growth technique of single-digit growth from fiscal year to fiscal year.
This is a typical growth path for operationally managed companies, where the capacity of current products is increased in production, or new products and services are launched during a fiscal year.
Scaling Down. An operational scaling process, which is an organic growth technique when you should stop spending valuable resources on aging products, or projecting your initial plans if they don’t lead to the impact you want during a fiscal year.
Scaling down usually occurs when a company has game changer events being implemented in Year 2 of the strategic plan, which will replace aging or obsolete products or services that show a diminishing return of profits.?
Growth, Organic. The achieving of single-digit revenue growth on a fiscal year basis, with pauses caused by external factors.
Organic growth occurs in companies that implement operational management on a fiscal year basis without utilizing the function of strategy as an augmenting tool of operations.
All companies implement organic growth on a fiscal year basis, but that also explains why our studies show that only about 10% of companies have a strategic plan. These CEOs are satisfied with achieving single-digit growth every year, so they plan and execute an operational plan for the current fiscal year the same as in the following years, with very little scaling.
However, this exposes operational managed companies to external forces each year that can severely affect the profits of the company, and usually do. These can be everything external, from competitive reaction to recessions or other external causes, and they usually reduce profitability for at least one fiscal year.?
When this occurs, there is just not enough lead time to adjust to the external impact on the company, and profits for at least 1-2 years are affected.
For operationally managed companies, that describes why organic growth always remains in single-digits over the long term. Your company might be lucky one year to have double-digit growth, like when you introduce an additional revenue stream, but it is always the most difficult to maintain double-digit growth.
Strategic growth is noteworthy in high-growth companies which combine strategic management with operational management using a 3-year strategic plan.
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Growth, Strategic. The achieving of double-digit revenue growth on an ongoing basis, with minimal pauses in the velocity year-to-year; achieved by having a clear focus on a target customer for a longer period.
We recognized early-on that companies that reflect annual double-digit growth, year in and year out, seldom are affected by external factors or competition, because the strategic years bring ongoing game changer events into the company.
When an operational managed company is planning for the next fiscal year, such as 2025, that fiscal year has already been planned by a strategic managed company in 2023, but it still becomes the operational plan of 2025 for both management categories.?
A strategic managed company has a 3-year strategic plan which is like being on a clothesline, always having 3 years, with the first year being the organic growth year, the operational year just like most companies.
The 2nd and 3rd years are strategic, and include all the strategic initiatives that the company has planned ongoing, including game changer events and internal analysis. This is the strategic growth that focuses on the customer, so that when planning for next year, the 2nd year’s strategic growth combines with the previous year’s organic growth to always show double-digit growth for the company.
Which has the advantage? Companies managing FY to FY, or those companies managed strategically over a 3-year basis?
Seems like magic, doesn’t it? But it’s not! Most CEOs and executives don’t understand how it works, but those who do have a more vibrant and successful organization, because scaling forces ongoing changes in your business model.
Suivez-Moi!
GW
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