As businesses grow, they often reach a point where they need to change the way they operate if they want to continue to be successful. Things that worked well for an organisation in the past when it was smaller may not always be effective in the future. Effective business leaders recognise this and adapt.
Leaders who invest their time in developing a clear and comprehensive strategy for growth are more likely to be successful in the long run and the value of the organisations they lead are more likely to increase.
Strategic priorities vary at different lifecycle stages of a growth company:
However, developing a great strategy is not enough to guarantee success – leaders also need to be able to deliver their strategy. In this article, we offer some advice on how to develop and implement strategy in a growth company.
Challenges in a growing business
As an organisation grows from a small to a mid-sized organisation, it is likely to encounter new challenges which it did not have before. Some of the typical challenges companies face at this stage of their lifecycle include:
- Teams struggling to keep pace with increasing volumes and business complexity as a result of manual processes
- Weaknesses in the governance processes and controls which are not being enhanced as risks increase
- A lack of alignment of priorities across different parts of the business
- An organisation structure which hasn’t evolved and is missing important capabilities
- New regulatory and legal requirements which are placing increasing demands on the business
Senior leaders who have not been in this situation before may struggle to understand know how to deal with these issues effectively. These challenges are complex and require a strategic approach. The first step in implementing a strategic approach is to ensure that you have a clear strategy for your business.
Developing a clear strategy
When the leaders of an organisation are developing a new strategy or updating their existing one, they need to go further than defining the vision for the organisation and setting aspirational goals. They also need to develop key elements of the strategy in more detail. For example, an organisation may have set ambitious targets around revenue growth. However, the leaders of the organisation also need to work out how they plan to achieve the desired revenue growth. This could include key initiatives such as the launch of a new product.
To develop an effective strategy, an organisation most likely needs to involve people from multiple areas of the business. For example, to develop a new product, a business may need to analyse customer and market data, determine its product strategy, assess the technological changes needed and understand new legal and regulatory requirements. Undertaking this type of analysis is an important step in developing a clear strategy and it will reduce the risk that major issues are discovered during the implementation.
Another important step the leadership team will need to take as it is developing its strategy is to define the areas it wants the business to focus on in the near term and in the longer term. This means setting a clear set of business objectives and priorities which will be used to make decisions on the implementation priorities and plans.
Implementing the strategy
Once the leadership team has a clear view on its strategy, objectives and priorities, it can focus on execution. In a mid-sized or large organisation, the execution will require a systematic approach as teams will need to be reorganised, work re-prioritised and issues resolved. Individual teams will not be able to do this themselves without management support and leaders will need to put in place an effective structure to help them do this in a consistent way. The starting point for this process is to set up an enterprise level governance board (a 'Strategy Execution Committee') to oversee the implementation of the strategy and remove barriers to delivery. The Strategy Execution Committee should be comprised of members of the senior leadership team. The responsibilities of the committee would include:
- Clear communication of the strategy, objectives and priorities across the organisation
- Set up of an enterprise architecture team and process to work on the design of the target operating model
- Prioritisation of investment across the organisation including approval of business cases for specific initiatives
- Development of plans and metrics to monitor progress towards strategic goals
This kind of structure will enable the organisation to deal with the aforementioned challenges. This includes making key decisions such as:
- Stopping or slowing down investment in areas which are not a strategic priority
- Diverting investment to improve the level of automation in areas which are constraining planned growth
- Funding the build out of new capabilities
- Monitoring metrics and other control indicators to see if risks are increasing
When the Strategy Execution Committee meets, it is important to provide it with a rich set of management information (MI) to understand the plans and monitor progress. Senior leaders who attend these meetings should be able to see the link between their vision, strategy, objectives and specific initiatives. The committee should also be able to measure progress through metrics and understand how individual initiatives are contributing to the metrics. To do this effectively, the organisation needs to be able to identify the most important metrics – the ones which really drive value for the organisation.
The establishment of a strategy governance forum and MI to monitor progress will provide management with the confidence that they will be able to achieve their long-term goals. If leaders are confident that they are making progress on their strategy, they can then start to look at ways to accelerate the delivery.
The information which the leadership team are using to monitor progress on the strategy can also be used to communicate progress to other stakeholders. This includes people at all levels within the organisation as well as external stakeholders.
Most companies at this stage of their lifecycle will have a range of investors. These may include private investors as well as institutional investors such as Private Equity companies. Naturally, investors will want to know how their investment is progressing. Being able to explain progress through a clear strategy, plans and metrics will raise the quality of the dialogue with investors and increase the credibility of senior management. If you are on the leadership team of a mid-sized company with ambitious growth plans, this is likely to be one of your most important priorities.
How NextWave can help
NextWave’s consultants use their extensive industry experience and deep expertise in data and technology to develop and execute strategies which deliver sustainable operational improvements for businesses which are planning to grow.
These operational improvements enable companies to improve their financial performance and accelerate the delivery of value from the investments they make. NextWave can also help you navigate specific challenges including assessing your ESG strategy to assess borrowers' green credentials, devising a strategy for operations integration capabilities for each merger phase in the lifecycle and hiring an experienced Product Owner for successful project delivery.
NextWave uses its unique delivery methodology, The Nexus playbook, which contains the process steps and deliverables to develop and execute a successful strategy for your business.