Maturity is a difficult stage given the propensity to assume past success brings future success. The mature business is a time for consideration of the redevelopment of the core business model, the asset value in the group, re-branding, or refreshing the consumer value proposition. Constant innovation in the mature phase of a business is exemplified by a number of businesses: McDonald’s and Boost used the introduction of new menu and food lines; Forty Winks used a re-brand and product diversification; Adidas repositioned its product and brand; Michael Hill Jeweller moved away from price to value and quality position. Whatever the challenge, the existence of complacency or the thought that size is a defence to change has been, and will continue to be, the undoing of many successful businesses.
International, exit, diversification
This stage of the business lifecycle is the least documented and understood. Exit or succession planning is something that should be at the forefront of the planning at the outset of the business. Years of emotional attachment however can blur the perspective of the actual business needs. What is the strategy?
The maturity of many sectors in Australia is driving an increase in the prevalence of a diversification strategy. Operating a multi-brand group either within one sector or across multiple sectors, offers the opportunity to leverage the core competency and resource base of the group. Luxottica Group (OPSM, Laubman & Pank, Sunglass Hut, Watch Station, Budget Eyewear, Bright Eyes Sunglasses), Flight Centre (Escape Travel, Flight Centre, Student Flights), and Boost Juice (Boost Juice, Salsa) demonstrate the growth potential. It is however an area that is littered with groups that have aggregated businesses on ill-conceived grounds.
This is often driven by insincere advisors, private equity or financers that are more focused on growth by number or self interest than the concept of understanding how to manage multiple businesses. Managing a multi-brand strategy confronts similar issues associated with any growth–infrastructure, resource, focus to name a few–but there are critical structural changes that are often overlooked.
Boost is a mature business in Australia yet the domestic focus is continuing growth in existing stores using a range of strategies and the wholesale distribution of bottled product. Boost has also diversified to run multiple brands domestically whilst maintaining its commitment overseas to operate in more than 20 countries as a leading international food retail brand.
Managing Serious Growth
In considering the phases of growth above it is important any management team recognises the current phase of the business as the challenges of managing serious growth differ significantly. Above all, the challenges, lessons and ideas to share on managing serious growth, the three that stand out are priorities, people, and execution. It may seem like an oversimplification but I cannot possibly write the thesis of examples where these three issues alone account for 80 percent of the reasons a business is failing to achieve the opportunity it possesses.
In any business that is experiencing serious growth the key issue is the complexity and number of issues that arise on a daily basis. No business has the resources to execute on everything well and as the business landscape throws curve balls and variety there are limits to business planning. How then do the best businesses manage the growth? Priority management. I liken this discussion to that age old analogy of managing the process of spinning multiple plates on multiple poles.
Think about these facts…
? Given a finite set of resources, the success of any decision is often predetermined by the ability to make it a priority that will consequently draw sufficient resource to achieve the intended outcome
? We all spend insufficient time working on the business rather than in the business
? Priorities differ from daily to monthly and perhaps yearly
? Priority management can counterbalance a lack of people, dollars or time
In small business, the inability to prioritise irrespective of the quality or number of people, access to capital or time available, is a massive issue. This is often hampered by the lack of a board of management or similar structure that provides an opportunity for considered decision-making. No matter the perceived quality or strength of the founder or senior management, the requirement for a functional decision-making body in the business at a board level, is a critical piece of the puzzle of how to prioritise.