Why Chasing Growth Without Strategy Can Sink Your Business

Introduction

In 2019, I started working for a company in Saudi Arabia as a project manager and quickly found my seat at the table as an executive director with annual revenues of more than $50M. I went through a storming period, fighting against the old culture until I built a new one after a successful change management journey.   

In today's business landscape, the need to expand is urgent. Investors, stakeholders and market competitors often emphasise the need for expansion and increased market share. However, growing just for the sake of growth can lead to major strategic mistakes.   

Of course, investors are eager to see good results within their organisation. They desire higher profits, increased market share, and constantly rising curves. However, these ambitions can sometimes drive companies to make wrong moves, often causing a waste of resources and missed opportunities.   

The key to sustainable growth lies in aligning it with your strategic objectives. Understanding how growth complements your overall strategy is crucial. This alignment ensures that every step taken towards expansion is purposeful and beneficial.   

Here, I will quote the American academic Michael Porter, who once said, "The essence of strategy is choosing what not to do."  This quote shows the importance of being very selective and strategic about growth opportunities, ensuring those opportunities align with the company's strategy.

Clarify Your Strategy

Before diving in a growth journey, you better have a clear understanding of your organisation's strategy deeply. Taking in consideration what your long-term goals are and what markets you are targeting. 

Also, how to distinguish yourself from your competitors is a good question to ask your team. If your long-term goal, for example, is to become a leader in sustainable products, entering markets that do not value sustainability could dilute your brand and confuse your customers. Rather, focus on markets and products that better align with your core values and long-term goals. This approach not only strengthens your brand but also assures that your growth activities are consistent and connected together.  

Carefully Study Growth Opportunities

Not all growth opportunities are the same. Assess potential paths for expansion against your strategic goals. Will entering a new market support your overall mission? Does scaling a particular product line enhance your competitive advantage? Consider a technology company looking to expand its product offerings. It might be reasonable to follow the latest tech trends, but without a clear alignment with their existing strengths and market position, such ventures could fail. So, the company should evaluate how new products will assist in their existing portfolio and whether they can elevate their current capabilities and customer base.   

Ensure the Growth is Sustainable

Target growth that can be sustainable in the long term. Rushed, unchecked expansion can exhaust your resources and dilute your brand. Sustainable growth, on the other hand, strengthens your foundation and builds resilience. Sustainable growth involves considering factors such as market demand, resource availability, and operational capacity. It needs a wise approach, where growth initiatives are scaled appropriately to match the company's capacity to come up with quality products and maintain customer satisfaction. A company like Unilever has successfully demonstrated sustainable growth by integrating environmental and social considerations into its business models, ensuring long-term validity and brand loyalty.   

Check and Act

Constantly measure the impact of your growth initiatives and make sure they deliver the expected outcomes, then you can use the available data and feedback to take a data driven decision and apply informed adjustments, ensuring your growth strategy is going as planned.   

What Peter Drucker highlighted in his famous quote, "Management is doing things right, and leadership is doing the right things," is the importance of executing growth initiatives efficiently and also ensuring they are the right strategic moves for long-term success. Regular performance reviews and metrics tracking are essential for using key performance indicators (KPIs) that align with your strategic goals, and you have to monitor them closely.  

Let us assume that your company is looking to increase its market share. The KPIs could look like customer acquisition cost, lifetime value, and such metrics. By continuously analysing those metrics, you can find room for improvement and adjust your company's strategies as needed.   

Real-World Examples of Strategic Growth

We see in the news and the live annual announcements companies have successfully navigated the growth journey by aligning their expansion efforts with their strategic goals, and all of us eyewitness the tech giant Apple taking the decision to enter the wearable technology market with the Apple Watch and that was not just about following a trend. It was a strategic move to integrate their ecosystem and enhance customer loyalty. This Apple product - apple watch - complements other Apple products, offering seamless connectivity and additional features that enrich the user experience. 

We also had a look at Amazon's expansion into cloud computing with Amazon Web Services (AWS). This move was strategically aligned with their core competencies in technology and infrastructure, allowing them to leverage their existing capabilities to dominate a new market. AWS has become a significant revenue stream for Amazon, illustrating how strategic growth can lead to substantial long-term benefits, which - in the Amazon case - made Jeff Bezos the richest person in the world.  

Common Pitfalls of Unstrategic Growth

On the other side of the equation, many companies have struggled and suffered from unstrategic growth. One notable example is the rapid expansion of WeWork. The shared space company grew aggressively without a clear path to profitability, leading to financial instability and a dramatic fall from grace. Their focus on growth at all costs, without considering sustainable business practices, serves as a cautionary tale for other businesses. 

Integrating Technology and Innovation

No one has more than 24 HRS a day, but technological advancements could give you more than that daily if you consider incorporating technology and innovation into your growth strategy.  

That can also play a crucial role in achieving sustainable success, especially knowing that we live in the era of digital transformation, and this can lead to brand new ways for growth by increasing operational efficiency, improving customer experience, and enabling data-driven decision-making and this led to the rise of companies like Netflix that have successfully harnessed technology to drive growth. By leveraging data analytics, Netflix offers personalised content recommendations, enhancing user engagement and retention. This strategic use of technology has given Netflix a huge advantage in expanding globally, leading the queue.  

The Growth Culture is the King

I faced that challenge, as I mentioned above. Some people would die to keep the same flow unchanged for no reasonable reason, so creating a culture that supports strategic growth is equally important. In order to tackle this, it involves adopting an environment and management behaviour where employees are encouraged and trained to innovate, prepared to take calculated risks and contribute to the company's strategic goals. This is the leadership's crucial role to play in setting the tone and leading the way of the organisation towards sustainable growth.  

All the stories of a good work environment must mention organisations like Google and 3M, which have cultivated cultures that prioritise innovation and strategic growth. Google's famous "20% time" policy allows employees to spend some of their workweek on projects they are personally passionate about, leading to innovative products like Gmail and Google News.  

3 M's commitment to innovation is no exception, resulting in iconic products like Post-it Notes and Scotch Tape.

Conclusion

By thoughtfully integrating growth with a well-defined strategy, organisations can navigate the complexities of expansion while maintaining their core vision and values. This approach maximises potential and acts as a goalkeeper against the pitfalls of reckless and uncalculated growth, which should be a strategic choice, not a knee-jerk reaction to external pressures.   

The level of understanding where and how to grow defines whether the businesses can achieve meaningful, sustainable success or not.  

Strategic growth needs a committed and measured approach, focusing on long-term value rather than short-term wins and by clarifying your strategy, evaluating growth opportunities, focusing on sustainable growth, measuring progress, and adopting a growth-oriented culture, your organisation can achieve durable success in a competitive market.