Depending on the industry and the leadership of your company within that industry, the company may be going through accelerated growth, slow growth, or reduction. During the last year in Panama, we have seen how delivery and web entertainment companies have had exponential growth, while restaurants and movie theaters went into crisis. The Covid pandemic has generated so much change, it seems like taking the time to think, looking at the big picture, and questioning the reason for the company’s existence is the only sensible thing to do, This will allow us look for new growth opportunities and generate financial sustainability.
I suggest the following 6 perspectives to identify growth opportunities that revolve around clients.
- Reevaluate the purpose of the company. Companies often define themselves based on their products or services. The typical example are the railroads, and industry so successful that at some point it was impossible for some to think of its decline. If railroads had defined themselves in terms of transportation instead of rails and wagons, maybe they could have brough massive solutions before Henry Ford. Airbnb adjusted its model to when it saw sales plumet as a result of the pandemic, not only ofering vacation rentals, but also giving clients health and safety, and transactional peace of mind. On the other hand, we have the case of Disney. Disney could have focused solely on animated pictures, but it had the vision to understand its market as entertainment, which allowed it to diversify into many other areas such as parks, TV, Marvel and sports. The purpose is not a function of what the company does, but of that problem it solves for its clients.
- Find your clients’ needs. Everyone hopes to be like Apple and figure out what users need before they know they need it. Apple itself was at the brink of bankrupcy, but thanks to the return of Steve Jobs and his profound knowledge of their clients and their needs, the company resurrected. Clients’ consumption behaviour may have shifted radically during the last year. But understanding the changes well is not necessarily easy. However, with data collected with each purchase, through surveys with adequate sample size, or asking key client companies directly, it is possible to understand your clients better. The search for information typically revolves around current product evaluation, but the important thing is to look for problems. Going back to Airbnb, they understood client concerns and changed their cancellations and money back policy, and introduced enhanced cleaning to mitigate fears of covid transmission. Ask questions that uncover sources of dissatisfaction, worry and frustration. The bigger the problem, the bigger the potential of the product or service that solves it.
- Improve current products and services. You can always improve products and services. When your offering has clear differentiators, and these are evident for customers, there is a clear incentive to purchase your product. But these differentiators can be copied, so its better to continue improving. It is especially important to discuss digitalization. Banking has endless examples, its easy to see how Banco General continiously improves its online banking and its Yappy service. In multiple industries, user experience is better with digital interphases. Many prefer to make orders, payments, listen to music or play something on their cell phones. There is a myriad of opportunities to improve our offer. If it makes financial sense, it is probably worth it.
- Develop new products and services. Markets change and business as usual is not necessarily sustainable. Whether to fulfill new needs, or to fulfill old needs in a better way, it is a good practice to evaluate new products. In some cases, there may be creative destruction, cannibalizing current sales. But understanding the lifecycle of products and hoping on a new demand curve, allows you to ride the wave for it is too lake, something Kodak and Blockbuster failed to do. Facebook provides a good example. The social media giant was initially used on laptops and PCs, but it cannibalized it’s own product by providing a cell phone platform before it was too late.
- Enter new markets. If you have a successful business model, and the current market is saturated, the obvious move is to evaluate the possibility of expanding to other countries and serve new clientes. Copa, Dichter & Neira, and La Casa de las Baterías are some of the local companies that made this change successfully. This, of course, has difficulties particular to each country. But if there is unmet demand in other places, it is a great opportunity to grow. Expanding to other latitudes can be done from scratch, which requires a series of analysis, planning and more or less paperwork, depending on each country. You can also acquire companies participating in those markets, which makes sense if you can generate more value than the selling price. The size of the potential market is the key to making this decision.
- Expand into similar industries. Another growth possibility is choosing a new playing field. Amazon is probably one of the best examples. Starting with online books sales, it moved on to selling all types of products directly to consumers, including groceries. But this was not enough. With their kindle, the expanded into digital books, then onto audiobooks with Audible. The have Amazon Music, Amazon Prime Video, AWS. In short, for them the sky is the limit. The lesson is they knew how to take advantage of their capabilities to go into markets they did not initially contemplate. Where there is creativity, mental barriers fall apart.
These are just some ways to figure out growth opportunities. There are more. Obviously, some of these measures require important funding. Therefore, we also need to take care of the costs and financing side too. But that is a topic for a future blog post.
For now, let us not keep our arms crossed and what for opportunities to pass us by. Even though it may be difficult to change perspectives and identify new opportunities, it is possibly a crucial exercise at this moment. There are alternatives out there that may now always be evident, but if we start analyzing, growth opportunities that have the right fit with our company and that add value to our customers will emerge, generating a win-win situation.