The vanishing monkey’s backsideApril 27, 2016 | Markus Schwarzer

 “The higher a monkey climbs the more you see of its backside.”
 Attributed to US General J Stilwell
monkey-butt

I am sick and tired of seeing the vanishing monkey’s backside. Not that a monkey’s hindside bears a particular appeal.

It’s a good metaphor – companies continue to watch their growth potential disappearing.

It’s tough out there in the market. Business owners fighting on multiple fronts: cash flow, demanding customers, social media marketing, innovation. Any military commander will tell us fighting multiple fronts is not a good option if one wants to succeed.

 

Yet business growth remains the measure of for most companies. Apple Inc just announced the first drop in revenue since 2003. It appears, not even the mightiest are prone against a drop in growth.

I want to highlight 3 points that are fundamental to business growth – in fact they are very obvious:

1 Growth for self-preservation
Companies exist to make a profit. A profit ensures existence tomorrow. This means to compete better than their competitors. Be better, faster, smarter.

Like any living being, companies have a self-preservation instinct – it must grow and adapt to survive.

2 Growth driving increased profitability
In principle, jumping on the growth wagon means applying economies of scale.

Again, Apple Inc designed this to perfection. Higher iPhone revenue meant lower manufacturing costs on a massive scale and thus delivered increased net profit.  Now iPhone revenue has dropped by 10 million units (compared to last year). Reverberations on the stock market are afoot.

3 Growth – a tough ask for many
Whilst we most of the time hear and read the success stories in the business world, there are a lot businesses out there that are doing it tough, real tough.

However, there is light on the horizon:

Changing the source of Growth

Growth 2009 to 2015

Companies seem to invest more (% to revenue) into R&D (including buying technical knowledge or information abroad) nowadays and focus less on broad-brush marketing.

Six years ago, companies R&D share was 37%, last year it was 52% – it appears that more work is being done to produce high quality products.

In sum: Most businesses have to fight ‘tooth and nail’ to keep growing. I generally advise my clients to grow slowly, use the learning curve to get better at what they already doing. Consolidate the core value proposition, and then expand. Doing the homework via R&D.

Need help with growing your business
PDF24    Send article as PDF   
« Go back