Secret 1 – compounding small improvements leads to big wins.
If you are a similar age to me and from the UK, you may recall NatWest’s “Pigaro” piggy bank series in the early 80s (link). Save enough money (with NatWest bank rather than your piggy bank) and you got a series of delightful ceramic piggy banks. The more you saved the more you got.
I made it to pig number 2, despite having many interesting things to buy like the latest Madness album or a Swiss Army Penknife. But I left my money in the bank. I benefitted from the compound effect of interest – I was paid interest on my interest.
How is this relevant to business growth? Well, compounding is the first of the secret ingredients of business growth.
Many of the things that drive business growth exist in “chains”. When several items in a chain are compounded together, the results can be staggering. Think interest on your interest on your interest on your interest (deep breath) on your interest on your interest…
A number of business coaches and gurus have commented on this. Some stress that compounding multiple, small improvements of say 10% can be transformational. And it is often much more achievable (and certainly less overwhelming) than focusing on one big change, like trying to double your customers.
One guru, Pete Williams, a guest on the excellent The Next 100 Days podcast (listen here) describes a chain of seven levers for business growth. In his very readable book, Cadence – A Tale of Fast Business Growth, he parables a struggling bike shop, which turns its fortunes around, by making a series of 10% improvements across seven levers. And seven 10% improvements compounded together is? About 195%, or in other words a doubling of profit!
Secret 2 – your business is a system. You need to think about it that way.
It is important to think about your business as a whole. Just as your body, is an interconnected system of organs, bones, blood, nerves and so on, so too is your business.
A variety of things will interact to either enable growth or hold it back.
Consider this. If you improve your marketing and generate more leads, do you have a defined sales process to convert those leads to customers? And if your sales process works well on paper, are your people capable to work with it in practice? And if your people are capable, is your CRM system helping them? And if your CRM system works well, do you use the data, to help you generate new opportunities and retain your customers? You get the point.
When you are making improvements, think whether you are fixing a problem, only to move it to another part of your business. Look out for the interactions. Beware unintended consequences!
Secret 3 – use a small set of balanced measures to manage your business.
When you make changes to grow and improve your business it is important to have some “leading measures” that help you understand if you are making progress towards your goals, as well as some “outcome measures” that show that you have been successful.
How often and how far you run, is a leading measure, of the outcomes: fitness and weight. How satisfied your customers are, is a leading measure of how often they will repeat purchase or recommend your company, both outcome measures.
However, there are so many things that you could measure. In fact, you could spend all day measuring and never actually doing the work of growing your business! So be sparing and find a way to identify the “critical few” things that you should measure to manage progress and track results. Avoid vanity measures, that don’t connect with positive business outcomes. Example. The number of followers you have on social media is a vanity measure unless you engage with those followers and generate interest in your products/services.
Next time you are looking at an opportunity to drive growth in your business, do these 3 things:
1) Ask, “Where could I use small improvements, compounded together to get a big result?”
2) Check, how any change or improvement you have planned is either supported (or blocked) by the rest of your business system.
3) Measure, the things that actually help you to manage growth – both leading measures and outcomes.
What do you think?
I’d love to know what you think. What are the other “secret ingredients” for business growth? And if you were with NatWest as a kid growing up in the ’80s did you manage to get to Pigaro 2, 3 or 4? Or were you busy buying trick nuts for your BMX? Or maybe a Sony Walkman?
Ready? Plan. Grow! Is a 3-step approach to Future Proof Your Business. It looks at the strengths and gaps in your whole business system, making chains of improvements that can transform your business, and helping you measure the right things. Take the next step on your growth journey. Get in touch!