Transformational Growth – Is It An Elusive Myth Or An Achievable Goal?
Big changes that require higher resources and change the company’s portfolio and business activities is transformational growth. Product expansion, getting into new markets, introducing new product categories, and following new segments are some prime examples of transformational growth in a business.
Globalization and technological advancement have pushed many companies in the economy to grow increasingly rapidly in the past few years. If you do not keep up with the competition, you will get left behind. Unlike entrepreneurs of the past, where you could stick with that one good idea for the rest of your life without further developing it, current business owners need to innovate continually and bring about positive changes in the organization to survive.
There are different ways a business can grow. On one end of the spectrum, there is optimization, where small tactical changes collectively add up to a significant change. This is something any efficient business constantly does to keep the firm afloat. Incremental changes are always going on in a company to keep up with the dynamic market. The company achieves growth through continuous improvements and little changes.
On the other end is transformational growth.
Big changes that require higher resources and change the company’s portfolio and business activities is transformational growth. Product expansion, getting into new markets, introducing new product categories, and following new segments are some prime examples of transformational changes in a business. According to research by Fortune, “the best companies tilt their innovation portfolios away from incremental initiatives and toward breakthrough and transformational projects.”
Don LeBlanc is the Chief Marketing Officer of Vistaprint, a multinational e-commerce printing company with over $1 billion in revenue. They have over 15 million micro business customers around the world of which a large portion is from the United States.
In a recent interview, LeBlanc was asked how he would define transformational growth in his company. He said, “We only started with one product that was a business card, which is still our number one seller. But how we got to be over a billion dollars is by taking that and launching new products around it. If you need a business card, you might need something that is a comparable product, matching website, matching postcards, and so forth. So there’s product expansion. We went from the market we are in, to over 20 countries. We went through the channels that we were initially just promoting online to now we promote offline. So we’ve added in new channels, both distribution and for marketing. So every time we’ve turned on new countries, new channels, new product lines, to me they would be examples of transformational growth.”
Role of brand in driving growth
In a direct-order company like Vistaprint, it is a common misconception that brand doesn’t matter in driving revenue. In every company a perception of a brand does exist but investing and managing that brand is considered ‘not worth it.’ They would much rather spend the resources of investing in a brand into something else which generates immediate revenue like giving out a new offer.
Investing in your brand means losing out on immediate money producing activities and no quick visible results. However, in the long term the message and philosophy transmitted by the brand you’ve developed will be the very reason your customers choose to come to you instead of your competitors.
Planting seeds for the future
Companies typically are so caught up in the present that when they do future planning, they envision only the next 3-5 years. To be ready for the future, you need to envision where you want your company to be in next 20 years and start working towards it. Plant seeds for the future by starting operations in product categories or locations that have potential in the future. For Vistaprint, it saw India as an emerging tech market, and they have set up shop in the country anticipating large returns in the future.
LeBlanc believes that change should be balanced. To follow a strategy only because of the location or only for a particular product can be dangerous. Transformational changes that stretch your resources and energy can also be harmful. Companies need to maintain a balanced approach between not doing too much nor too little.
“It’s this tension between trying not to do too much, because you could get overextended very easily, to picking your spots in each of those vectors,” said LeBlanc on a balanced growth strategy. “I’m saying, well if we’re going to launch one big product this year, what’s the product? If we’re going to enter one market, what’s the market? Make sure you get those right so that you’re continuing to grow on each of those different pieces but not trying to do so much that you end up failing on any of them.”