Analyst Outlook: Harnessing good ideas

The search for growth, and finding better ways of doing things in general, is a fact of life for all successful businesses. After all, that is what their competition is up to. The alternative — staying the same and instead focusing on cost cutting and efficiency — may help during a downturn but in the end will lead to trouble.

Today’s raw material of successful growth is good ideas, put to work as new services, products and business processes. But creating sustainable business growth is hard; staying ahead of the competition, even more difficult still. Once an idea is proven, easy access to market information means that competitors can copy that idea quickly, wherever they are.

Creating a superior customer value proposition is at the core of every successful growth strategy. The challenge is to create a value proposition that’s hard for competitors to copy and that has high switching costs if a customer does decide to move on.

Creating superior value has two parts. The first is to clearly identify both your and your customers’ competencies, and to create a service that eliminates cost and risk for your customer so they can focus on what they are good at.

The second part of creating superior value is to make use of things that aren’t available on the open market, such as relationships and scale — so-called ‘non-tradable assets’.

The challenge of growth strategies is that there are a lot of unknowns. So the enterprise needs a way to quickly test and develop a growth strategy that’s low in risk and cost. That’s where strategic experiments come in.

Experiment your way to growth

As naturalist Charles Darwin pointed out, fitting with your environment is key to survival. And one way of ensuring that you fit is to change as your business conditions change.

The way to make these changes is through a series of iterative experiments — short-term, time-bound projects with a clear set of success criteria and a process that prevents them from becoming runaways.

These iterative experiments act as an engine of growth in various ways. They allow business and IS managers to work closely together. They enable ideas to be gathered from a wide range of sources. They balance growth strategies (for example, a portfolio of different types of growth-oriented strategic experiments is needed to spread risk). And they bring in innovative ideas from outside the enterprise.

Most managers often have ideas for growth strategies. The problem is that there’s no process to gather these ideas. This can be fixed in two ways: informally through face-to-face discussion or suggestion boxes, or formally through structured events such as brainstorming sessions. A mix of the two is best to get a wider range of suggestions.

Customers can be a good source of new ideas. Suppliers can be useful, too, not only for their insights but also for their potential as partners. Gain insights from people outside the industry too, to see what new ideas are shaking up other companies.

Identifying what ideas to pursue

With luck, your enterprise will generate dozens of growth ideas. Clearly, the next step is to identify those worth pursuing. They will fall into one of three categories. The first consists of definite winners that demand immediate investment. The second comprises those ideas that can be eliminated quickly. However, it’s the third category, the ‘maybes’, that are the most important.

The two main factors that decide whether or not a strategic experiment should be run on the idea are a clear link with the business strategy and a business sponsor.

Experiment to learn about and develop the strategy. If a growth idea passes screening, it is set up as a strategic experiment. Only a small percentage of strategic experiments will be successful, so a high closure rate is to be expected. Once a strategic experiment shows real promise, it can be transferred to the rest of the enterprise.

Business growth will always be on the agenda, and the enterprises that focus on it will be around for the long term. This focus and building a repeatable growth process are the keys to success.

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–Andrew Rowsell-Jones is vice president and research director for Gartner’s CIO Executive Programs.

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