With the economy faltering, geopolitical crises on the rise and a protracted cost-of-living crisis, 2024 is fraught with difficulties. When faced with uncertainty, people’s natural reaction is often to hunker down and weather the storm. But for businesses, this response can bring greater challenges further down the line.
Rebecca Homkes, director of the consultancy the Strategic Management Centre and author of Survive Reset Thrive, claims this mindset drives organisations to lurch between recession proofing and business as normal, meaning they never build the discipline or capability to be great at either.
“To really lead a high-growth journey, you’re constantly going through these three hoops of survive, reset and thrive,” she says. “You’re stabilising when the market throws a shock at you, you’re resetting and changing as needed, and then you can grow into a thriving organisation.”
The secret weapon of high-growth businesses
The mistake that many businesses make when creating their strategy is fooling themselves into believing they can predict the future. Forecasts, modelling and past achievements are often used as indicators of future performance. But if the past few years of Brexit, Covid-19 and inflation have taught us anything, it’s that the world is far from predictable.
“The reality is the world is constantly going to change, so being able to build adaptability into your strategy from the onset is what differentiates successful organisations from others,” Homkes says. “If you start with the premise that you can’t predict the future, it then comes down to your ability to make great decisions.”
The “secret weapon” of high-growth companies, which Homkes defines as businesses that double in size every strategy cycle, is not down to the genius of the CEO or their marketing acumen. Rather, it’s a result of their ability to survive.
“This means good cash flow, strong runway, low fixed costs and robust decision-making. That means when there is a shock, they have less to do than everyone else,” Homkes says. While she is keen to stress that this is not an argument for running too lean, she adds: “If you do this model correctly, your business will never be affected by downturns because you’ll be growing through any market condition.”
How to set the strategic direction
But it’s not enough to simply survive. Every organisation should look to reset its strategy every two to three years or when there is a big change in the external situation, for example if there is a surprising result an election.
This reset should give companies the opportunity to identify new opportunities and challenges, and to align on the ultimate goal for the next three-year cycle.
Many businesses will turn to the strategy off-site to set the new direction, gathering around a flip board and brainstorming new ideas. The problem with this method, according to Homkes, is that it’s particularly prone to recency and historical biases. Instead, she recommends business leaders ask themselves five key questions.
5 steps to a successful growth strategy for 2024
What do you believe in?
The first step for any organisation is defining its beliefs. These should be the top trends shaping the industry where it operates, the market and the business and can include anything from geopolitical uncertainty to consumer trends or inflation. Businesses want to aim for alignment on these, but not necessarily agreement. You’re rarely going to find a leadership team who perfectly agrees on all beliefs and actually, if you see that, it’s likely a sign of groupthink.
Identify your ‘right to win’
This is your company’s competitive advantage. This tactic of strategy is rarely talked about with the level of seriousness that it needs. Many businesses think their point of differentiation is a great culture or loyal customers, but the same could be said for any company. What do you have that others don’t and what can your business do that others can’t? If you really force yourself to answer those questions, it should be a short list.
Where are you going to play?
Based on your beliefs and your right to win, you can then start to identify your ideal customers. A proper understanding of them is needed for you to work out the right value proposition and where you’re going to market your product in order to reach them.
Find the strategic finish line
Where do you want your organisation to be at the end of this strategic cycle in two to three years’ time? This can be the final destination or simply the direction you want the business to move in – either is OK, as long as your team knows where they are going.
Work out your top priorities
Once you have a set of beliefs and have identified your right to win, where you’re going to play and the end goal, you can finally work out the priorities that will allow you to get there. You need to be able to define what each of these priorities is going to deliver for the business, what the result you’re trying to achieve is and how you’re going to get there. But remember, no business strategy should be set in stone; building adaptability into your strategy from the onset is what differentiates successful organisations from the rest.
Once the strategy has been reset, business leaders should feel confident that their organisation is on the right footing, Homkes claims. “Thrive organisations are those that execute with agility and learning – and that’s the differentiator,” she adds. “If you are successful at this, you can be one of these consistent high performers.”
