Double your profitability and your top line rate of growth

By: Mickey Granot

When reading the title of this article one may think “ridiculous”, or “impossible”, or “possible, but not for me”. But what if it is possible, for you? Would int not justify the tiny investment in entertaining this opportunity?


Why is it that the immediate reaction is so commonly “impossible”? It is probably because we extrapolate from our past experience. Bur if anything possible will be an extrapolation of past experience the world would have been held back and no progress and innovation would ever happen. Therefore, your journey to realizing these exceptional performance indicators starts with you letting go of your past experience and instead acknowledge that the only relevant conditions that must be true to indicate that you can double your sales growth rate are:


  1. You operate in a market in which your share is relatively low, and
  2. You operate in a growing market (as opposed to markets that are diminishing due to introduction of new technologies).


(If these conditions do not exist in your reality, you can still double your sales growth rate and profitability, however differently than detailed in this article. As for a very large number of companies these conditions are valid, this article focuses on them).


If these two conditions exist, what needs to be done is made of clear building blocks, clearly the details of these blocks depend on the specifics of each and every company, but still they should always contain the following ones:

  • Exploiting the existing business potential
  • Developing capabilities to deliver unique value to the customers
  • Building the capabilities of selling this value, and
  • Ensuring alignment between all functions of the value chain.


Exploiting the existing business potential – almost every company has, right now, sufficient business opportunities to meaningfully improve business performance. These opportunities can be in form of excess demand (The company has demand it cannot effectively satisfy) or excess capacity (the company has the capacity to deliver more but does not have the demand). If the company has excess demand than improving flow throughout the value chain will increase productivity. This is because it is more common than not, that companies do have significant capacities that are being misused due to obsolete procedures. If the company has excess capacity, it is quite common to find that at the same time the winning rate of new business (how many customer orders are received in comparison to how many proposals are made) is appalling, focusing attention on winning more of the more appropriate business opportunities results with increase both in sales as well as contribution from sales. In both cases the increase in revenues is realized with the same cost infrastructure and therefore the effect on profitability is high and impressive.


Developing capabilities to deliver unique value to the customers – It is not rare to find that companies are highly focused on cost and product to improve the competitiveness of their market offerings. However, it is quite often to also find that companies effect their customers in additional manners, not only the product and its price. Unfortunately, the daily “battle” often times results with companies being blind to these “other manners”. Identifying how the business performance of the next link in the value chain is impacted by the performance of the supplying link (and sometimes, if needed, even the link further down the value chain – our customers’ customer) opens the opportunity to add to the product and its cost a unique service feature that provides the customers with extreme value that not only improves the attractiveness of the offering, but also reduces the sensitivity to cost. Building the organizational capabilities to deliver this value enables the company to make innovative and highly valuable market offerings. Such offerings enable long term competitive advantage resulting with the ability to double (or more) the rate of top line growth and as prices sensitivity is reduced it also contributes significantly to doubling profitability (and sustaining both).


Building the capabilities of selling this value – Value offerings are not easy to market and sell, as instead of focus on cost and product, the focus shifts to business value. It requires a different approach to marketing the offering and more importantly a different approach to selling. It is imperative that the company builds this capabilities and the combined results of having the capabilities to deliver the value together with the capabilities of selling them, leads to a new reality. A reality in which the top line rate of growth is a result of a choice and profitability rockets.


Ensuring alignment between all functions of the value chain – Sustaining the results achieved is the next big challenge. As the company experiences accelerated growth weaknesses will start emerging. Some will be related to internal functions being misaligned and some to external ones. At this stage the company needs to start using improved internal measurements and innovative business models to better align all players as well as a great change management process, as changes will be continually required to sustain (and even improve) the performance.


It may seem difficult, however, the real challenge is not so much in the content but more so in the ability of top management to focus. To identify what needs to be done and not to allow themselves to be distracted by noise. Unfortunately, it is very easy to get distracted as often times loud noise results in diverting attention. If you identify in each of the above mentioned building blocks what to focus on, now and keep your attention focused in spite of the noise, than doubling the rate of sales growth and your company’s profitability is just the beginning.

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