OPENING SHOTS
So, Nick started thinking along these
dimensions. He started looking into employing new people. He came across very good resumés but, every time things were getting close to a new hire, the same question kept bothering him: do we need this person now? He considered additional financing and jumpstarted a round of discussions with all the banks in his area. All of them commended him for the financial health of his company and offered really attractive options. However, every time he came close to accepting a new financial product, the discussions with his senior team ended up questioning the increase in the financial exposure of his company. He even sought advice via a boutique consulting company regarding his company’s processes. While helpful, this ended up with recommendations that seemed overly tactical and with small gains for the business. Growth seemed to be a riddle with no solution. Addressing the ‘funding, talent, management’ list for his company didn’t seem to be offering a way forward and certainly not growth. Nick’s case is not unique. It manifests an
important mistake that often haunts SME leaders. Focusing on growth recipes before deciding on a growth direction is like trying to deliver a generic answer without knowing or understanding the specific question. Instead, growth should start with the uncomfortable questions and the
tough choices that any new strategic move requires. Unfortunately, even SME leaders who have achieved success through their previous strategic choices tend, over time, to succumb to compromises that lead to a blurred version of their strategic position. Unless they reconnect with their strategy, they cannot reconnect with the boldness required for growth. Therefore, before even thinking about
new talent, or financing products, or even the standardisation of the current operations, SME leaders need to decide who their customers should be and why these customers should prefer them over competitors. They need to decide what type of services or products would enable them to differentiate from the competition; and how they can deliver the right products or services to the right customers profitably. These questions, albeit simple, entail significant choices given the constraints in terms of talent, management and financing that all companies face on the one hand and the company’s capabilities on the other. So, it makes little sense to start any growth journey by addressing the execution constraints before one clarifies the strategic objectives. Moreover, the avoidance of clear
strategic choices cannot be easily remedied. Often observed responses to lack of strategic decision-making
drive strategic failure. These include the uncontrollable broadening of the company’s product or service portfolio, in the spirit of “let a thousand flowers blossom”, or, the decision paralysis of the senior management team confronted by an array of possible growth paths. The former leads, with mathematical accuracy, to an organisation that spreads itself too thin through the overstretching of the existing resources, whereas the latter achieves no progress against competition as time is wasted in over-analysis. Stimulating growth is a serious
leadership task that cannot be automated through lists of standardised recipes. Following standardised recipes can end up putting the details’ “carriage” before the direction “horse,” jeopardising the growth potential of their companies. Instead, SME leaders should focus on the right “horse” and start their growth by reconnecting to their strategy.
This article was written by Professor Stelios Kavadias, Margaret Thatcher Professor of Enterprise Studies in Innovation & Growth and Director of the Cambridge Judge Entrepreneurship Centre, and Konstantinos Ladas, Associate of the Cambridge Judge Entrepreneurship Centre
jbs.cam.ac.uk/sme
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www.smeweb.com
STIMULATING GROWTH IS A SERIOUS LEADERSHIP TASK THAT CANNOT BE AUTOMATED THROUGH LISTS OF STANDARDISED RECIPES
SME 15
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