The Four Methods of Fast Business Growth

I'm currently reading a very fascinating book. It's "Fast Growth" by Laurence Weinzimmer.

Weinzimmer is a professor of Strategic Management at Bradley University, who is a specialist in growth companies. What is it that makes growth companies stand out from the rest? This book summarizes more than 10 years of his research into the topic.

One part of the book is how growth companies identify opportunities. Weinzimmer identifies four main sources of opportunity often used by fast growth companies.

These are:

1. Changes in what people value. That is, consumer trends. Precisely what people want is always evolving, and it pays to know what's happening with consumer wants in your area. This can be a source of growth opportunity.

An example is Compaq. About 10 years ago, Compaq identified that people wanted less expensive "no frills" computers. Compaq wasn't structured to deliver that, so they restructured the whole company so they could deliver what they perceived was a change in what consumers wanted. The result: rapid growth, so that Compaq is the number 1 computer manufacturer today. This shows that it pays to find out the details of the trends of current consumer wants.

2. Tapping into underutilized skills which you and your business already have, but which you are not using. An example is Caterpillar, the heavy equipment company. For its own internal operations, Caterpillar had developed an expertise in logistics, but they were only applying this knowhow to their own business. However, Caterpillar then created a new division, Caterpillar Logistics, so that they could provide this service to other businesses too. What skills or resources do you have which are currently not being utilized to their greatest capacity?

3. Many companies also grow rapidly by using market segmentation. Some call this targeting a niche, or even a sub-niche of a niche. What it means is not targeting the market broadly, but dividing it, and then targeting a smaller portion of that market more accurately. By targeting a market more narrowly, you can satisfy the needs of the group of people you are targeting better than anyone else, and win their business.

An example of a company which has done this is Southwest Airlines. They took a "mature" industry, the airline industry, and carved out a very profitable section of it. They targeted the passengers who wanted an inexpensive, "no frills" airline, and focused on serving the needs of that niche better than anyone else

Midwest Express has also targeted airline travel, but a different segment. They have targeted those passengers who want to be treated like first-class customers, without paying first-class fares. This is a different segment of the market, but by serving their needs better than anyone else, Midwest Express has created a fast growth company as well.

4. The final way that growth companies find opportunities is through "discontinuities." This is what most people think of when they think of growth companies. These are sudden changes in the market place. These changes could have many different causes - some examples are:

Technological advances: DVDs, MP3s, the internet, etc.

Demographic shifts: changing ethnicity of the population (like the growing Hispanic market in the USA), evolution of the baby boomer market (and the upcoming baby boom echo market)....

Regulation/Deregulation: changes in how industries are regulated can also create instant opportunities.

Globalization: expanding an already successful business to overseas markets.

How does this apply to the small business-person? When I think of successful small business-people I know or have read about, many of them use more than one of these growth strategies. As well as targeting a niche, or even a sub-niche of a niche, they also keep track of consumer trends, and also those "discontinuities" or sudden changes in the market place too. So it's good to know about all of these methods, and keep an eye on what you need to know!

- Dien Rice