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					Growth Strategy
This is a comprehensive document on Growth Strategy, including
instructional slides and templates covering the following areas:
  Growth challenges
  Traditional strategy thinking (e.g. Porter’s Five Forces)
  Modern strategy thinking (e.g. Blue Ocean Strategy)
  A growth strategy project initiative (project approach, design,
   frameworks & analytics, deliverables)
  Case examples

 • Growth Challenge                3
 • Traditional Strategy Thinking   9
    - Porter‘s Five Forces
 • Modern Strategy Thinking        14
    - Blue Ocean Strategy
    - Blue Ocean Examples
 • Growth Strategy Project         25
    - Project Approach
    - Project Design
    - Analytics & Frameworks
    - Deliverables


 • Growth Challenge
 • Traditional Strategy Thinking
    - Porter‘s Five Forces
 • Modern Strategy Thinking
    - Blue Ocean Strategy
    - Blue Ocean Examples
 • Growth Strategy Project
    - Project Approach
    - Project Design
    - Analytics & Frameworks
    - Deliverables

     All companies are faced with the challenge of achieving sustainable
 The Challenge – Sustainable Growth

                                                                   • Fortune 500 median revenue growth rate between 1963 and 2003 is
            Not many companies                                       6.3% in real terms and 10.2% in nominal terms
            achieve significant
                                                                   • Real revenue growth fluctuates more than Return on Invested
                                                                     Capital (ROIC) ranging from 1 to 11%

                                                                   • Large companies struggle to grow
                                                                      –Excluding the first year, companies entering the Fortune 50 grow
            Most difficult for                                          at an average of 1% above inflation over a 15 year timeframe
            large companies
                                                                   • Only 1/3 of the Fortune 500 are able to sustain top-line growth
                                                                     above GDP and generate returns above the S&P500
                                                                      –90% of them concentrated in 4 sectors (FSI, HC, Tech, Retail)

                                                                   • High-growth rates decay very rapidly
            Those that do, find it
            difficult to sustain                                   • Companies above 20% sales growth typically slide down to 8%
                                                                     within 5 years, and down to 5% by the 10 year marker

Source: ―The do-or-die struggle for growth‖, McKinsey Quarterly, 2005 November 3

 Growth is commonly inhibited by a lack of breakthrough ideas,
 balancing cost-out and margin trade-offs, and execution challenges
Growth Challenges

                                                                                Lack of execution follow-
    Current     Few breakthrough growth          Growth at the expense of
                                                                                   through for growth
    Situation      offerings identified                profitability

                Focus is on existing markets     Benefit trade-offs are not
                                                                                Lack of committed financial
                  and demand (e.g., line        made (e.g., the right mix of
                  extensions, substitutes)               attributes)

                Consumers are increasingly
    Strategic                                    Pricing and cost structure     Metrics and rewards based
                 sophisticated and hard to
     Issues                                      are driven by competition        on current operations

                Opportunities are defined by                                     Structure and processes to
                                                 Organizational structure is
                   internal/operational                                         develop and manage growth
                                                not in line with new business
                       capabilities                                                      do not exist

      The         Create customer value           Align value proposition          Effectively execute
   Resolution       (Value Innovation)         with operations/organization             strategy

   Successful companies balance the competing demands of optimizing
   existing core businesses while building new ones
Framing the Growth Challenge
                                                                                                          Horizon 3
                                                                      Horizon 2

                                    Horizon 1                                                          Create viable options
      Profit                                                                                           for future growth
                                                                      Build emerging
                                    Extend and defend                 businesses
                                    the core business
                     • Core business of the company             • Build new business and streams        • Seeds of the future businesses
                     • Critical to near-term performance,         of revenue                              that will transform the industry
                       cashflow and profits                     • Extend current business or move       • New ideas backed by investments
Description          • Some growth potential, but                 in new directions                     • Could take form of research,
                       typically will flatten over time         • After a few years, these                alliances, pilots, minority stakes
                     • Lay foundation for future growth           businesses should be accelerated      • Eventually take hold (10 year
                                                                  to replicate success like the core      horizon)

                           Manage for profitability
   Stage                                                         Drive ventures to take root                 Seed growth options
                           Continuing innovation
 Objectives                                                      Replicate the business model                Test business model
                           Efficiency optimization

for Growth             Strong Operational Managers /                   Business Builders /                        Visionaries /
requires…                        Leaders                                Entrepreneurial                      Unconventional Thinkers
                                                                         Value Creators
Source: The Alchemy of Growth, Baghai, Coley and White, 1999.

   However, many companies are inconsistent in managing short and long-
   term thinking and investment to create growth-enabled organizations
Barriers to Growth

                Horizons                   1               2    3   Common Barriers

   Under siege                                                      • Core business underperforming, lack ideas in the pipeline
                                                                    • Need to earn the right to grow by putting the core business
                                                                      back on track

   Losing the right to                                              • Obsessive focus on new business without developing the
   grow                                                             core, spreading the organization and management thin
                                                                    • Basic performance improvement in core required
   Running out of                                                   • Strong focus on core business, but no focus on next big idea;
   steam                                                             businesses could mature, position could be threatened
                                                                    • Start journey toward growth
   Inventing a new
                                                                   • Due to external triggers (regulatory change, technology),
                                                                     company must transition out of core business to new space

   Generating ideas
   but not new
                                                                  • Good core business with a lot of new ideas, but lack
                                                                      initiatives to translating ideas into real businesses (Dot.com)

   Failing to seed for
                                                                    • Have strong core and new businesses to drive returns
   the future                                                       for several years, but lack institutional capabilities for

Source: The Alchemy of Growth, Baghai, Coley and White, 1999.

 Faced with challenges to grow profitably, we work clients to identify
 their path to value creation and innovation
Paths to Growth

                                Expand Into New Segments / Categories

                                Develop New Products/Brands
                     Scope      Develop New Formats/ Channels

                                Expand Geographically

                                                        Build, Buy, Ally
                                Improve/Change Value Proposition

                                Solidify Customer Relationships
                   Value from   Improve Pricing
                                Penetrate markets with existing products

                                Optimize Product Mix


 • Growth Challenge
 • Traditional Strategy Thinking
    - Porter‘s Five Forces
 • Modern Strategy Thinking
    - Blue Ocean Strategy
    - Blue Ocean Examples
 • Growth Strategy Project
    - Project Approach
    - Project Design
    - Analytics & Frameworks
    - Deliverables

 Traditional concepts of growth strategy are based on internal analysis
 and interpretation of the marketplace
Common Growth Concepts
                                      Protect                                                                               Differentiation
                                                    Build       Protect                                          Low Cost
                      Strong            and
                                                 selectively    Position
                                      refocus                                                 Broad
Competitive                                                                                   Target            Cost
 Position                                                                                                    Leadership Differentiation
                 Manage                              Manage
           Medium for                                   for
                                                                 to Build      Competitive
                                                                                                                                                    • Focus on current
                                      earnings       earnings
                                                                                 Scope                                                                business and
                      Weak             Divest    Harvest                                     Narrow                     Focus
                                                                selectively                  Target
                                                                                                                                                    • Define
                                        Low Medium High
  McKinsey, General Electric, Shell       Attractiveness                       M. Porter, Competitive Strategy
                                                                                                                                                      opportunities by
                                                                                                                                                      relative competitor
                                           Natural          Harvest                                + 50 %
                                       Development                                                                                                  • Look internally and
                                                                                                                                Question              to competitors, as
 Competitive                                                                                                          Stars      Marks
  Position             Favorable                           Selective                                                                                  opposed to
                                                          Development          Growth
                                                                                                     +5%                                              customers, for
                      Unfavorable                    Reorientation                                                    Cash                            growth options
                                                                                                                      Cows           Dogs
                        Marginal                                                                    - 10 %
                                                                                                                 10              1            0.1
                                       Infancy   Growth    Maturity   Ageing
                                                                                                                    Relative Market Share
   Arthur D. Little                              Maturity                      Boston Consulting Group

  Traditional approach to growth strategy is based on the teachings of
  Michael Porter—namely Porter’s Five Forces framework
Traditional Strategy Thinking – Porter’s Five Forces

                                      1. Potential new

                                       Threat by new

                4. Suppliers          2. Competitors in     5. Customers
                                         the industry
                 Suppliers             Rivalry among      Buyers‘ negotiation
              negotiation power      existing companies         power

                                       3. Substitution

                                          Threat by

  Porter’s Five Forces assesses the attractiveness of an industry along
  each competitive force to determine the correct competitive strategy
Porter’s Five Forces
                                                          Threat of New Entrants

                                                          Barriers to entry:                                                           Competitive Advantage
                                                           Economies of scale (including shared resources)
                                                           Product differentiation (proprietary)                                     Lower Cost    Differentiation
                                                           Capital requirements
                                                           Switching costs                                                                        Differentiation
                                                                                                                             Broad    Leadership
                                                           Access to distribution channels                    Competitive
                                                           Cost disadvantages independent of scale              Scope
                                                           Government policy                                                            Cost      Differentiation
                                                                                                                             Narrow     Focus          Focus
                                                           Expected reaction of incumbent

  Bargaining Power of Suppliers                           Intensity of Rivalry                                    Bargaining Power of Buyers

  A supplier group is powerful when:                      Intense rivalry results from:                           A buyer group is powerful when:
   It is dominated by a few companies and is more         Numerous or equally balanced competitors               It is concentrated or purchases large volumes relative
    concentrated than the industry it sells to.                                                                     to seller sales.
                                                           Slow industry growth                                   The products represent a significant fraction of the
   There are no substitute products.                      High fixed or storage costs                             buyers‘ costs or purchases.
   The industry is not an important customer.             Lack of differentiation or switching costs             The products are standard or undifferentiated.
   Its products are important to the industry.            Capacity augmented in large increments                 It faces few switching costs.
   Products are differentiated or suppliers have built                                                            It earns low profits.
                                                           Diverse competitors                                    It poses a credible threat of backward integration.
    up switching costs.                                    High strategic stakes                                  The bought product is unimportant.
   It poses a credible threat of forward integration.     High exit barriers                                     It has full information.

                                                          Pressure from Substitute Products
                                 Exit Barriers
                                                           Search for products that can perform the same         Take offensive or defensive actions to create a
                             L                   H          function.                                              defensible position against the forces:
                                                           Assess buyers‘ propensity to substitute.                  Positioning the firm so its capabilities provide the
                             Low,                                                                                      best defence
                                          Low, risky      Focus on those that:
                   L                       returns         Are improving their price performance trade-off           Influencing the balance of forces through strategic
       Entry               returns
      Barriers                                              compared with the industries products.                     moves
                   H        stable
                                          High, risky      Require low switching costs.                              Anticipating shifts in the factors underlying the
                                           returns                                                                     forces and responding to them
                           returns                         Are produced by industries earning high profits.

  Headline message
Porter’s Five Forces – Template


                          New Entrants
                      •   Bullet point 1
                      •   Bullet point 2
                      •   Bullet point 3
                      •   Bullet point 4
                                                                                         Competitive Advantage

                                                                                       Lower Cost   Differentiation

       Suppliers      Internal Rivalry            Buyers                                  Cost

 •   Bullet point 1   •   Bullet point 1   •   Bullet point 1                  Broad   Leadership

 •   Bullet point 2   •   Bullet point 2   •   Bullet point 2
 •   Bullet point 3   •   Bullet point 3   •   Bullet point 3
 •   Bullet point 4   •   Bullet point 4   •   Bullet point 4                 Narrow      Cost      Differentiation
                                                                                         Focus          Focus

                      •   Bullet point 1
                      •   Bullet point 2
                      •   Bullet point 3
                      •   Bullet point 4


 • Growth Challenge
 • Traditional Strategy Thinking
    - Porter‘s Five Forces
 • Modern Strategy Thinking
    - Blue Ocean Strategy
    - Blue Ocean Examples
 • Growth Strategy Project
    - Project Approach
    - Project Design
    - Analytics & Frameworks
    - Deliverables

   The modern strategy thinking of Blue Ocean Strategy focuses on
   enabling innovation, value creation, and effective execution
Modern Strategy Thinking

           Growth Focus
     • Start with customer needs
     • Look beyond traditional
       markets, industries and                           Value Identification
     • Create multi-horizon                         • Understand what the
       portfolio                                      customer values
     • Develop growth platforms                     • Prioritize initiatives               Value Creation
       for ―market mining‖                                                             • Select and develop
          Consumer         Market                                                        growth option

            Need           Trends                                                      • Align operating model to    Effective Execution
                                                                                         deliver value and fair
                                                                                         value                      Concept Execution
              Growth Platform                      Eliminate Reduce   Raise   Create
                                                                                                                     • Venture Launch
                                                                                                                     • Organizational alignment
                                                                                                                     • Funding / Resource
                                                                                                                     • Measurements
                                                                                          Value                      • Accountability
                                                                                                                    Sustainable Growth
                                                                                                                     •   Infrastructure
                                                                                                                     •   Culture
                                                                                                                     •   Alliance Management
                                                                                                                     •   M&A
Source: C. Kim, R. Mauborgne, Harvard Business Review (1997).

 Modern thinking moves away from a traditional focus on competition to
 “blue oceans” of opportunity
Shift to “Make Competition Irrelevant”
                                                     Traditional Thinking                   Modern Thinking
    Industry                          Industry conditions are given –           Industry conditions can be shaped –
                                      compete in existing market space          create uncontested market space

    Strategy                          Companies must build competitive          Make competition irrelevant
                                      advantages to beat competition

    Market                            Exploit existing demand                   Create and capture new demand

    Resources                         Make the value-cost trade-off             Break the value-cost trade-off

    Organization                      Align the whole system of a firm‘s        Align the whole system of a firm‘s
                                      activities with its strategic choice of   activities in pursuit of differentiation and
                                      differentiation or low cost               low cost
    Offerings                         Maximizing the offering‘s value within    Offering buyers the total solution that
                                      industry boundaries                       transcends the industry

 Source: C. Kim, R. Mauborgne, Harvard Business Review (1997)

   Value is created from more than just “meeting customer needs”
Portfolio Positioning

             (Need beyond buyers                                                       14% of launches
             cognition)                                                                38% of sales
                                                                                       61% of profits

             (Need known but not
             articulated by the

                                                                                       86% of launches
                                                                                       62% of sales
             Settlers                                                                  39% of profits
             (Need identified)
                                                                                       (Company sampling)

                                                       Deliver   Product    Service
                                                      Platform   Platform   Platform

Source: C. Kim, R. Mauborgne, Harvard Business Review (1997)

 Growth platforms look beyond current industry and company
 definitions to identify innovative offerings that change the industry
Growth Platform Development

             Capabilities                                                    Path

Newness to
                                                          Horizon 3:
                                                      Change the Industry                 Breakthrough Market offerings
             Must Be
                                             Horizon 2:
                                       Build New Businesses

                                 Horizon 1:
                            Build Fundamentals

               Today, H0
                                  Satisfied            Unmet            Unrecognized
                                                 Consumer Needs

 A variety of creative techniques are used to gain customer insight
Insight Generation Analytics

  • Journaling—diary of observations, mental
    connections made between ideas, interesting areas to
    explore further                                                                          Anthropological
  • Delphi Interviews—business leaders from non-
    competing organizations provide insight into a
    Company‘s top issues, potential solutions and
                                                                                 Lead User
  • Ethnographic Research—observations of the                                     Research
    Company‘s customers in their normal                      Journaling
                                                                             TL Idea
    purchasing/using habitat                                                Exchange
  • Anthropological Immersion / Mystery Shopping—
    project resources ‗become‘ the customer by mirroring              Delphi
    their behavior
  • Thought Leader Idea Exchange—web-based tools
    used to share ideas within the Company and               Ethnographic
    potentially with external thought leaders                 Research

  • Lead Consumer Research—observations of how
    early-adopters or experts might be adapting a product   Current            Emerging            New
    to fit specific needs
                                                              Industry Trends Discovery

    Building a new value curve is at the heart of Blue Ocean Strategy
Blue Ocean – Value Identification
                                                               Evolution of Value Curves

    +                                        Traditionals



               Eliminate                                   Reduce                      Raise                   Create

            Which of the attributes                 Which attributes           Which attributes should    Which attributes should
            that our industry takes                 should be reduced          be raised well above the   be created that the
            for granted should be                   well below the             industry‘s standards?      industry has never
            eliminated?                             industry‘s standards?                                 offered?

Source: C. Kim, R. Mauborgne, Harvard Business Review (1997)

   Cirque Du Soleil achieved breakthrough growth in a declining industry
   and revolutionized the venue-driven entertainment market
Blue Ocean Example – Cirque Du Soleil

                                                                                        Ringling Bros.
                                                                                     and Barmum & Bailey

                                                 Buyer Value

                                                                                    Smaller Regional


                                                               Price                Animal                 Fun &               Unique             Refined              Artistic Music
                                                                                    Shows                  Humor               Venue            Environment               & Dance
                                                                          Star                  Aisle              Thrills &            Theme                   Multiple
                                                                       Performers            Concessions           danger                                     Productions

                                   Result: Productions seen by 40M people in 90 cities around the world, and in less
                                    than 10 years achieved revenues that took the incumbents 100 years to attain.

Source: C. Kim, R. Mauborgne, Blue Ocean Strategy 2005.

   [yellow tail] wines created a “blue ocean“ by creating three new selling
   propositions and de-emphasizing traditional attributes
Blue Ocean Example – [yellow tail]

                                  Result: Casella sells more bottles in the US than all French and Italian
                                  imports combined, and also more than all Californian wines together

Source: C. Kim, R. Mauborgne, Blue Ocean Strategy 2005.

   Nintendo transformed its position in the console gaming industry by
   offering a unique value proposition toward games and service
Blue Ocean Example – Nintendo Wii


                                                     Buyer Value


                                                                                      Intellect. challenge


                                                                                                                             Graphic quality

                                                                                                                                                       Number of games

                                                                                                                                                                         Game price
                                                                                      Product / Games                                                                                   Service

                     Result: 14 competitors pulled out of the gaming market during the 1980s/90s
                (including Atari) and Nintendo recently innovated the console gaming market with Wii.

Source: C. Kim, R. Mauborgne, Blue Ocean Strategy 2005.

  Headline message
Blue Ocean – Value Curve Template


        Competition                             Company


           Eliminate        Reduce   Raise   Create


 • Growth Challenge
 • Traditional Strategy Thinking
    - Porter‘s Five Forces
 • Modern Strategy Thinking
    - Blue Ocean Strategy
    - Blue Ocean Examples
 • Growth Strategy Project
    - Project Approach
    - Project Design
    - Analytics & Frameworks
    - Deliverables

 Our approach helps clients think creatively about opportunities and
 grounds them in formulating strategies they can act upon
Strategy Development Approach
              Analysis and                   Growth Options &                          Growth Strategy
           Insights Generation             Strategy Development                        Execution Design

   • Project Start-
     Up                                                                       • Strategy
                                   • Visioning                                  Refinement
   • External
     Assessment                    • Option                                   • Transformation
                                     Generation                                 Roadmap
   • Internal                        & Evaluation
     Assessment                                                                 Development
                                   • Strategy                                 • Business Case
   • Insights &                      Formulation

   • Posing the right questions.    • Visioning compelling future             • Defining activities
                                      states.                                   supporting targeted
   • Making sense of incomplete                                                 changes.
     facts.                         • Identifying alternative options.
                                                                              • Creating the business case.
   • Seeing beyond the facts,       • Inventing new solutions.
     trends, etc.                                                             • Preparing the organization
                                    • Assessing options.                        for change.
   • Understanding the critical
     issues.                        • Driving decision making.                • Mobilizing the organization
   • Generating unconventional      • Formulating strategy.                     for successful execution.

                                   Collaboration / Acceleration / Execution

  A typical Growth Strategy project has 3 stages
Growth Strategy Project Design
                        Analysis and                      Growth Options &                    Growth Strategy
                     Insights Generation                Strategy Development                  Execution Design

              • Determine need for growth         • Identify and prioritize growth   • Evaluate and recommend
                                                    alternatives and platforms         strategic growth options
              • Perform external assessment
                - Market/industry trends          • Validate growth platforms        • Detail growth platforms and
                - Customer insights                 through executive review           design realization program
                - Insights about future                                                - Market attractiveness
                - Competitive dynamics            • Select growth alternatives for     - Competitive position
                                                    further evaluation (~6-8)          - Ability to execute
              • Perform internal assessment                                            - Company attractiveness
   Key          - Capabilities/ barriers                                               - Economics / Business Case
 Activities     - Growth concepts
                - Company insights                                                   • Develop implementation plan
                                                                                       - Financial and human resource
              • Develop baseline value curve                                             commitments
                                                                                       - Action plan (including barrier
              • Generate ideas/New attributes                                            removal plan)

              • Finalize criteria for selecting
                growth options

 A host of tools, analytics, and frameworks could be leveraged creatively
 during a Growth Strategy project
Growth Strategy Project – Analytics & Frameworks
                                       Analysis and               Growth Options &              Growth Strategy
                                    Insights Generation         Strategy Development            Execution Design

                                   External Assessment
            Project                     Customer Analysis                                         Strategy Refinement
           Definition &                   and Profiling
                                          Market Analysis                                            Strategic Definition
          Formulation                   Competitive Analysis                                        Organizational Design
                                                                                                    Performance measures
                                          Leading Practices     Strategy Formulation               (e.g. Balanced Scorecard)
                                           Economic Value                                             Initiatives Definition
                                               Drivers            Visioning and Scenario

                                                                                                                               Final Presentation
                                          Key Success Factors
   Project Start

                                                                   Future State (Target)
                                                                         Definition            Transformation Roadmap
                          Insights, Hypothesis                         Gap Analysis                Roadmap Development
                              Generation &
                          Strategic Guidelines                      Option Generation,              Risk & Risk Mitigation
                                                                 Evaluation & Prioritization              Definition
                                   Internal Assessment                                              Change Management &
                                                                   Strategy Formulation                Communications
           Resource                      Core Competencies,
          Mobilization                  Strengths, Weaknesses     Business Case Target
                                          Portfolio Analysis             Setting               Business Case
                                        Value Chain Analysis
                                                                                                     Benefits Definition
                                         Revenue / Cost /                                           Business & Financials
                                          Profit Drivers                                                Development
                                         Performance &

 Some project deliverables could include…
Growth Strategy Project – Deliverables

        • Growth Mission: Articulation of the direction that Client will pursue to reach
          growth objectives
        • Growth Platforms: Outline of areas or categories that will provide the focus
          for growth initiatives
        • Breakthrough Offerings: Identification of at least one new breakthrough
          product/service that fits within identified platforms
        • Go-to-Market / Product and Market Strategy: Description of service
          offerings, pricing, channel and sales model
        • Financial and Human Investment Decisions: Outline of investments that
          will be made to support growth initiatives
        • Growth Goals/Value Proposition: Articulation of the bold goals that Client
          expects based on the expected value proposition from growth initiatives
        • Barrier Removal Plan: Outline of necessary changes to existing
          organization processes that would serve to ―incubate‖ overall growth
        • Opportunity scans for M&A and pre-deal strategy formulation


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