By Bob Dean
Growth may seem elusive—especially in a mature market. Companies that aggressively embrace Operational Excellence execute better. They are better positioned for growth because they have greater flexibility and therefore can be more responsive to customer needs. The companies we see that are most successful in growing their business and sustaining that growth do so both organically and inorganically. The organic approach, or growing from within, involves leveraging Operational Excellence through embracing Lean methodologies and new technologies that drive speed, efficiency and employee engagement. It also involves listening closely to your customers.
The inorganic approach, or growing from outside, involves acquisitions: purchasing innovative tools, technologies or talent and gaining access to new markets. Inorganic growth requires the ability to rapidly transfer your company’s knowledge, capabilities and business processes into the newly acquired business so that you can quickly realize gains.
If you want to grow your business organically you first need to ask, What can I do to improve my new product development process? Your objective is to introduce high-demand, profitable products faster, better or cheaper so you can get to market more quickly while still delivering quality and value to the customer. Second, you need to understand why your customers choose your business. Understanding why your customers prefer buying your products and identifying your customer expectations for new products will allow you to align your product development processes to meet those expectations. It will also give your company a competitive advantage.
Hubbell, which sells power and lighting supplies and products globally, is one company that exceeded their expectations of what they could achieve. Using Lean and continuous improvement techniques—and listening to what their customers wanted—Hubbell developed a new product, the iFrame, within 11 months. Typically, their product development cycle took 18-20 months. They now use what they learned while developing the iFrame to tackle new project and schedule challenges.
Taking the gains you made with more disciplined engineering principles and processes, you can look at inorganic ways to increase your company’s growth. It’s not enough simply to scoop up new companies. You have to find a way to rapidly transfer all the operational knowledge, capabilities and improved business processes from your enterprise into the acquired business. This will enable you to realize gains from the acquisition sooner.
The companies that are most successful in acquisitions are able to quickly integrate all of their business systems while minimizing waste, optimizing new talent, and acclimating the acquired company to their improved operational mode. Inorganic growth doesn’t only come from acquisitions.
Another way to achieve inorganic growth is to launch new products to new markets, existing products to new markets, or by introducing new products to existing markets. Take Milbank Manufacturing Company, which supplies electrical distributors and home centers with electrical products. Milbank is an industry leader that successfully implemented lean manufacturing to improve its operating effectiveness. This freed up cash they could then leverage to fund further growth. Milbank thought they knew why their customers bought from them. But the results of a customer survey told a different story. Once Milbank knew the real reasons behind their competitive advantage, they knew how to leverage the results of their lean manufacturing processes and heavily promote those selling points to gain new business.
At TBM Consulting, we occasionally hear clients voice three perceived obstacles to growth.
If you want growth, you need to think both organically and inorganically. Get closer to your customers and embrace Lean methodologies and new technologies that drive speed, efficiency, and employee engagement. If you can make something faster, better or cheaper, you’ve got a competitive advantage. Finally, get aligned:
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