Understanding business growth options and how to navigate the ‘ambiguity gap’ effectively

Executive teams in most organisations face a broad range of potential growth options, ranging from driving enhanced customer retention to redefining the business model through organic and inorganic strategies.

In this article, Richard Coates, Whitecap’s Managing Director, considers the options available, the challenges facing executive teams and how to navigate the mix of growth options and trade-offs.

Through our work with predominately mid-sized organisations, typically established SMEs and divisions of corporates, we help executives analyse, develop, and implement growth strategies. One of the best illustrations I like to represent these growth options is the ‘growth staircase’ by Stuart Cross in The CEO’s Strategy Handbook , as shown below.

Whilst there is a degree of ‘linear logic’ and a potential progression over time as the business develops and matures, it is also the case that the executive team in an organisation may be addressing and/or considering a number of these ‘steps’ at any one time. Some of these will be treated as business as usual, such as customer retention and acquisition, led by the relevant function; typically marketing. However, some, such as new channels, products, sector, and geographies may be addressed through an innovation or strategy project with in-house and/or external support. And of course, these are not likely to be mutually exclusive

From our work and observations, determining the ‘preferred’ growth option(s) is fundamentally a trade-off between the growth opportunity in terms of financial and other benefits, the degree of fit / synergy with the organisation and its customers, the risk appetite of the executive team, and the impact on the current business model.

These trade-offs, in turn, are influenced by several critical factors:

• Organisation ownership and shareholder objectives, driving and shaping the growth agenda
• Degree of ambition and risk appetite within the executive team
• The nature and maturity of the business and market within which the organisation operates
• The current customer, channel, product and sector mix
• Recent financial performance: whether this is in growth, has plateaued or potentially stalled
• Data, insights and intuition about growth opportunities
• The head space, time and resources available to undertake the options analysis and implications assessment

Of these, one of the most important factors is the attitude and approach demonstrated by the executive team. We often work with CEOs and teams that are comfortable with the uncertainty and ambiguity of considering future growth options with imperfect information. Sometimes, we work with leaders and teams that are more comfortable with tangible operating details, known facts and nearer planning horizons.

In both situations, we seek to capture and assess market, customer, and competitor information to provide data and insight to help bridge the ‘ambiguity gap’, i.e. the gap between the known current position and the envisioned future state. However, there will never be enough data to mitigate all growth risks and provide perfect information between today and a future state and the strategy options available over the period. Hopefully we help executive teams make decisions and move forward with growth planning.

Reflecting on an earlier point, in practice businesses rarely have the luxury of treating growth initiatives as totally separate from their day-to-day operations, imperatives and performance, and, in order to minimise up front expenditure they often want to ‘dip a toe into the water’ rather than jump into a brand new market, however defined, with wild abandon.

In a world that we are incessantly told is increasingly uncertain and prone to change, it’s also worth considering the ‘option value’ of any path down which the organisation may wish to consider, i.e. could the step the business intends taking today, open or close down other opportunities should things not turn out as expected?

We find that in order to avoid being either, on the one hand, paralysed by over analysis and indecision, or on the other hand, feeling as though growth strategy selection is something of a lucky dip, a process of high-level opportunity identification and evaluation followed by incremental testing ?– with very clearly defined go / no go criteria defined at each stage – works well in allowing businesses to make meaningful progress with their growth journey and to acquire valuable market insight as they do so.

If you’d like to discuss this blog post or share your own perspective on the issues covered,?please get in touch or comment.

Established in 2012, Whitecap Consulting is a regional strategy consultancy headquartered in Leeds, with offices in Manchester, Milton Keynes, Birmingham, Bristol and Newcastle. We typically work with boards, executives and investors of predominantly mid-sized organisations with a turnover of c￡10m-￡300m, helping clients analyse, develop and implement growth strategies. Also, we work with clients across a range of sectors including Financial Services, Technology, FinTech, LegalTech, Consumer and Retail, Higher Education, Health, Manufacturing, Logistics, Professional Services and PE.