Working for Both Hyperbolic and Incremental Growth

About half way through most strategic planning processes, when you’ve come to the spot where you’ve identified what is working and what’s not, most people look up and say, “Yep, we’ve got it!” and take their to-do list and bury it under a pile of file folders somewhere.

That’s a pity because these two lists, what’s working and what’s not working, represent the smartest, fastest way to increase operational effectiveness and it gives you possibilities for areas in which truly transformational growth is possible as well. In his book Mission Possible, Ken Blanchard describes a present curve and a future curve.  On an X/Y axis, the present curve is a gentle slope pointing, one hopes, upward.  That upward tic is the gain represented by incremental growth due to increased operational effectiveness. Of course, it’s the transformational initiatives that give your company that hyperbolic or hockey stick growth, so you want to have people working on both efforts.

What’s the difference between a candidate initiative that increases operational effectiveness versus another one that can trigger hyperbolic growth? Using the area of financial management as an example, a company might realize that it needs to upgrade the accounting and financial systems. It realizes it has a need for an integrated customer management system that has all the components of human resources, payroll, accounts payable, accounts receivable, and cost accounting built into it.

A second candidate initiative might be to recapitalize the company because its line of credit is currently too restrictive in a new market segment it is attacking. What’s the difference? Upgrading the accounting and finance systems is going to take a lot of hard work. It will make the enterprise run more smoothly, but it’s a foundational item as opposed to a transformational process. Recapitalizing the company, by contrast, is a big deal because recapitalizing might allow the company to expand into a whole new business area, hire a new sales staff, or do something else that will create the kind of growth that gets everybody—from management to stakeholders, Wall Street analysts to potential buyers—excited and enthused. It triggers huge growth as opposed to incremental growth.

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