Six Ways You Can Grow a Company
The term “innovation” is often associated with geniuses turning startups into gold mines — the next Google, Apple, or Amazon, with products no one even knew they needed. Private equity firms place hundreds of little bets on these startups, hoping one produces a windfall that covers the rest. These bets on the next growth engine often depend on luck more than insight.
Meanwhile, every company aspires to be as innovative as these startups. Many companies invest in or buy them, unsure what they’ll yield other than the halo effect they may overpay for, made worse by the fact that most don’t align with the company strategy or meet a market insight. The same is true of ideas: Knowing which to fund without making random bets is key. But according to a series of three surveys conducted over six years by Maddock Douglas, the consulting firm where I work, while 80% of executives know that their companies’ success depends on introducing new products and services, more than half agreed that their companies dedicate insufficient resources to support innovation. (For more, see Brand New: Solving the Innovation Paradox, by G. Michael Maddock, Luisa C. Uriarte, and Paul B. Brown.)
Innovation is a word that’s been attached to finding new ways to grow, and every corporation needs to grow year over year. But the first step to generating real growth is to understand where it comes from. We believe growth has been made unnecessarily complicated, so we’ve boiled it down to six simple categories with corresponding examples from Apple:
- New processes. Sell the same stuff at higher margins: Cut production and delivery costs, automate for efficiencies, cut fat in the supply chain or manufacturing, and utilize robots.
- New experiences. Sell more of the same stuff to the same people: Increase retention and share by powerfully connecting with customers. An example is the Apple Store experience, which many would argue is as compelling as the company’s products.
- New features. Sell enhanced stuff to the same people: Add improvements that drive incremental purchases. An example of this is every new phone Apple releases, with better cameras and so on.
- New customers. Sell more of the same stuff to new people: Introduce the product to new markets with needs similar to your core, or to markets where it might address a different need. For Apple, this goes back to reaching the mainstream rather than the design community.
- New offerings. Make new stuff to sell: Develop a new product — not just enhancements. Find new needs to solve within existing markets, or invest in a new category. Think HomePod or the iPod.
- New models. Sell stuff in a new way: Reimagine how to go to market by creating new revenue streams, channels, and ways of creating value. This can be as simple as moving to a subscription model, or as transformative as Apple’s creating iTunes.