Most small businesses will struggle to meet their strategic goals. Why? They fall into "growth traps." Sometimes they try to mimic their competitors to ignoring the lessons of failed companies.
Here are five traps to avoid staying ahead of the pack...
Not only will avoiding the traps lead your company away from the brink of disaster but prepar you for the traps.
Trap 1: Playing your competitor's game:
The goal is not to win at someone else's game, but to change the game to one that you can win.
- Don't get drawn into competing at the margin for incremental share. Even if you appear to win for a while, fringe customers can go as fast as they came.
- Don't do something just because your competitors are doing it. Only take action if it will strengthen your business.
- Focus on customers, not competitors. Identify what customers value most from among all the factors your industry sees value in, then deliver it.
Trap 2: Denying reality and missing an industry shift:
Competition comes in many forms. The Internet always adds a wildcard to the deck, making competition harder to predict. It means that competition can come from organizations you had never thought of as competitors – including companies from outside your industry. Newcomers like this need especially careful watching. As a rule, they have no history, no legacy systems, and no intention of doing business the way you do.
Trap 3: Creeping, not leaping, and failing to innovate:
Slow growth will fail to attract capital and talent, as well as fail to deliver shareholder value. The antidote is innovation, although not necessarily in the technology area. It may be innovation in terms of product, service, or delivery, but it must offer value to the customer.
Trap 4: Neglecting the lessons of the dot-com era and economic downturns:
It is not just about placing some ads anywhere anymore. It is about the business of business, and about taking advantage of new tools that must either work for you or against you. Business owners have seen plenty of changes in the last few years with the economy, pandemics, fads, new social media platforms, and so forth.
- Relationships between businesses, partners, consumers, and suppliers have been revolutionized, and open dialogue is not only possible but expected.
- Technologies developed to outflank traditional companies are now being used to capitalize on new channels, improve productivity, and drive down costs.
Trap 5: Taking on the world single-handedly, without allies:
In a static business environment, self-sufficiency might be an option. In today's world, it is a major growth trap, setting dangerously inflexible limits on what the company can do and when it can do it.
Competitive pressures are forcing businesses to reconfigure their products, services, information systems, and processes to differentiate themselves from their rivals and satisfy their customers. These changes need to be made so fast that it is no longer feasible to rely on a company's core competencies, or to bank on being able to buy them at short notice. Increased complexity and the need for continual change are making partnerships essential.
Here are a few recommendations to help avoid those traps:
- Deliver value innovation in leaps. Avoid the trap of tiptoeing to disaster.
- Re-examine assumptions, check facts, and do not discount evidence that contradicts your opinions. Identify the cliches and received wisdom-of-the-day and challenge them.
- Set revenue goals at twice the average for your industry, and set profit goals even higher, to spur innovative thinking. Shock your employees out of complacency. To reach both targets at once is difficult, but stretch goals are not meant to be easy.
- Harness social media platforms and other opportunities as more than just another sales channel. Look for nonlinear and disruptive forces that will redefine the way your business operates. Simply web-enabling a business is not enough.
- Exploit strong alliances and shift the focus from competing on your core competencies to utilizing those of the alliance.
What are you doing in your business to avoid these traps?