Post on 12-Jul-2015
Growth Strategies for SMEs
Q.Aspen | Consulting & Venture Development 2
Michael Olorunninwo currently does operations strategy and planning at Seven
Energy Nigeria. He previously worked as Management Consultant at KPMG and as
Aviation Risk Underwriter at NICON Insurance Plc. His experience cuts across
Business Development, Corporate Strategy, Financial Management, Human
Resources and Operations (Business Process) Improvement. He has consulted for
companies in Consumer Markets, Energy, Financial Services, and Hi-Tech.
Michael is also co-founder/project lead at Q.Aspen, a consulting and venture
development social enterprise focused on developing hi-potential SME opportunities.
Q.Aspen’s mission is to build successful indigenous African businesses of the next
century.
Speaker Bio
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Welcome…
…now that you’re no longer a start-up;
What next!?!
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You Need a Growth Strategy!
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What is…?
The process of
increasing in size
Growth
What is a Growth Strategy?
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Growth Dimensions/Parameters
Increase in Employees?
More Capital Investment?
More Office Locations?
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Growth is all about…
An advantage that a business has over its competitors
which allows it to generate greater sales or margins and
retain more customers than its competition
…Competitive Advantage!
Cost Structure Product Offerings Distribution Network
Locked-In Customers
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Sources of Competitive Advantage
Product-Features
Procedures
Quality
Employees
Customer-Experience
Customer Incentives
Goodwill Value-Add
Alliances
Low Price
Branding
Location
Differentiation
Low Cost Distribution Network Strategic-Assets
Exclusive Rights Barriers to Entry Cash-Flow
Access to Funding Strong-Management Data-Management
Speed High Volume Production Innovation
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Cost Ability to produce goods and services at a lower opportunity
cost than competitors
Type of Competitive Advantage
Ability of products and services of unique features, benefits,
characteristics and better quality than competitors
Think Value Proposition!
Differentiation
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Understand Yourself & Your Business
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What You Need? Resources & Capabilities
Company specific assets useful for
creating advantage
Ability to utilise resources
effectively
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What You Need? Resources and Capabilities
Ability to run successful larger scale operations. Helps to
build efficiency and economies of scale
Assets held by company to achieve competitive advantage
e.g. Patents, Branding, Customer Base, Human Resources
Skills required to lead and manage growth
e.g. new product development, finance, M&A, local expertise
Operational Skills
Privileged Assets
Growth Skills
Relationships not available to competitors
e.g. Trade Union, Government, Foreign Alliance, Franchise Special Relationships
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Understand Your Industry
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Understand Economic Trends (Nigeria)
High economic growth rate
– Nigeria’s economic growth has averaged about 7.4% annually over the past decade
– Growth remained robust in 2011 at 6.9%, driven by the non-oil sector; average of 7% to 2015
Exponential population growth
– Population about 158 million, represents large consumer market (72% of population < 30 years)
– Excellent regional distribution of eight “anchor” cities, each with populations exceeding one million
Urbanization and the rise of the middle income earner
– About 74.2 million Nigerians currently live in urban areas, with urbanization progressing at ~3.5%
– By 2020 more than 70% of Nigerians are projected to live in cities
– Growth of emerging middle income earners/consumers with higher disposable income
Encouraging environment for foreign investment
– High recipient of FDI in Africa
– Ranked 170th on “Ease of Doing Business Index,” strategic moves by government encourage FDI
– New industries can obtain pioneer status granting tax exemptions for first 3-5 years
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Understand Your Target Market
Pick sub-set of entire marketplace that you can organize
your sales efforts around
Market Segmentation
Whom are you better off selling to or avoiding?
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Understand Your Target Market
You can segment by:
• Geographical Location
• Income Bracket
• Age Group
• Occupation
• Social Interest
• Preference
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Understand Your Target Market
Loyalty to Brand
Perceived quality
of products
Perceived value
relative to price
Not necessarily
drawn to a
manufacturer
Religious
90% of Nigerians
confess to a form
of religion
Consumers are
influenced by
religious practices
Point of mass
convergence
Price Sensitive
Mostly price sensitive
New innovations revolve around
small packaging of consumables
Discount retail stores moving
demand from informal retail
Luxury product market also
booming (middle class growth?)
Consumer Retail Spending Patterns, 2015 estimates
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Understand & Reinvent Your Product
Customer Pains
Your products should be a Pain Reliever or Gain Creator or both
Customer Gains
Customer Jobs
Product Traits
Pain Relievers
Gain Creators
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Understand & Reinvent Your Business Model
How Does
Your
Business
Create,
Deliver
and
Extract
value?
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Understand & Reinvent Your Business Model
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What Do You Want to Do?
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Strategy is all-encompassing
Production
Marketing
Human Resources
Customer Service
Finance & Accounts
Procurement
Logistics
Info Technology
R&D
Legal
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Generic Growth Strategies
To move from insurgent to incumbent,
you need to create a repeatable model that shuns
‘best-practices,’ and delivers scalability
Repeatable Business Model
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Generic Growth Strategies
Inbound
Logistics
Savvy Partnerships
Identify your comparative advantage
Outsource? Insource? Create Alliances?
Production Outbound
Logistics
Marketing &
Sales
Customer
Service
Focus more energy on building
longer term competitive advantage!
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Generic Growth Strategies
“If this business were split up, I
would give you the land and bricks
and mortar, and I would take the
brands and trademarks, and I would
fare better than you.”
- John Stuart, former CEO of Quaker Oats
Effective Branding
Ch
ap
man
N100 N2,000
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Brand Message A phrase that makes your customers believe you are the only
one with a solution to their unique problem
Short phrase that emotionally connects with your target market
and communicates the most important benefits of your product
If you need to be one thing in your customers’ mind,
what would it be?
Think different! Ultimate Driving
Machine
Always Low
Prices!
Generic Growth Strategies
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Generic Growth Strategies
Gillette continually creates new, improved razors better
than competition: from coated stainless blades, to
revolutionary Sensor, and now Sensor Excel. Gillette also built
on its razor brand to add grooming products - aftershave,
deodorant, and shaving creams.
Continuous Innovation
Think Brand Leveraging
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Generic Growth Strategies
Before 1995, Indian domestic denim (jeans) sales was limited as jeans were unavailable
and expensive at $20 to $40 a pair, beyond the reach of mass market and existing
distribution systems reached too few towns and villages.
Arvind introduced Ruf and Tuf—a ready-to-stitch kit of jeans components (denim, zip,
rivets, leather brand patch) priced at about $6. It distributed them through 4,000 tailors,
whose self-interest motivated them to market the kits to create demand for sewing
services. Ruf and Tuf are now the largest- selling jeans in India by far, driving sales in
Arvind's main product, denim, and netting the company a potentially powerful consumer
brand.
Improved Delivery Channels
Build new ways to serve customers more efficiently & effectively?
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Generic Growth Strategies
Yes! Build checklists for every job within your business
Build Processes
Your customers will love your efficient service –
key to repeat purchases and referrals
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Generic Growth Strategies
New Geography
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What to Expect…
Hiccups!
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Set Goals
…and measure your progress periodically.
Celebrate performance!
Key Initiatives/Actions Key Implementation Steps
Implementation
Key Enablers KPIs Responsibility Due Date
Human Resources
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Loss of personal focus on cost and risk management, leading to rising
costs and unnecessary risks
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What to Avoid Becoming…
Founder unable to adapt his or her behavior as company evolves,
founder issues disrupt leadership agenda
Focus shifts towards internal issues, voice of customer fades from
decision making and frontline employee is forgotten
Being The Un-scalable
Founder
Loosing Voices of the
Front Line
Unaccountability
Company drifts towards flawed systems, institutionalizing core
capabilities backfires, resulting in bureaucracy and exodus of talent
Revenue Grows Faster
Than Talent
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Final Words
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Strategy is about making choices,
and trade-offs; it’s about deliberately
choosing to be different Michael Porter
A satisfied customer is the best business
strategy of all. Michael LeBoeuf
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Michael Olorunninwo | @inspiregr8tness | +234 808 718 5748 | michael.phurtune@gmail.com