Many companies in the past decade or more have moved from a past characterized by strong growth into a future state of low or no growth. Very few companies have figured out how to break this cycle and move beyond this no-growth zone.
One approach to this situation is to begin seeing your customers’ needs through an economic lens rather than through a product lens. In other words, how can your company provide new value to customers by solving their most difficult challenges?
Most companies have relied on traditional product-centered strategies for growth. This approach requires that you develop innovative products, expand the market for them as widely as possible, and maybe acquire competitors to gain market share and create efficiencies of scale. The problem is that today most markets are saturated with minimally differentiated products. (Think about how distinctive your products really are compared to your competition.)
Hidden Assets and Liabilities
Recognize that after years of running your business, you have accumulated a number of valuable hidden assets that you may never have used to generate revenue. Hidden assets are not intangible assets. They are simple and easy to understand and they can be leveraged to find new ways to add value for customers.
According to Adrian Slywotzky, a consultant and the author of books on growth and economic management, including the bestselling The Profit Zone, the following are some of the hidden assets you may possess:
- Unique access to your customers
- Technical know-how
- Your installed base of equipment
- Insights on an existing or new market
- Your network of relationships
- Information that is a byproduct of doing business
- Your loyal customer base
However, in addition to hidden assets, you must also take a hard look at your business and acknowledge your hidden liabilities, the liabilities that historically have gotten in the way of growth initiatives. These are typically unrecognized aspects of your company’s mindset and internal systems that hamper new-growth efforts. They include the following:
- Cultural liabilities: Mindset, culture, and history, leadership and commitment
- Structural liabilities: Organizational structure, skills, incentives, budgeting process, information technology
- External liabilities: Brand/authority, customer readiness, investor resistance, channels
Together, hidden assets and liabilities represent the hidden balance sheet for your business, and it is critical to determine how to neutralize your hidden liabilities and leverage your hidden assets to make progress with any new growth initiative.
One place to start is with your best and most profitable customers, or your MVCs (most valuable customers). Start with the existing products and services they buy and find out the issues and hassles that surround these. This is what demand innovation (Slywotzky’s term) is all about.
For example, General Motors’ OnStar in-vehicle security, communications, and diagnostics system generates more than $1 billion annually in high-margin subscription revenue. It is currently one of the more valuable pieces of GM at the moment. It was developed as a platform for new growth in the 1990s and served an unmet need of GM’s most established customers. Many other companies have successfully used this type of demand innovation to find sustainable new growth in areas such as installation, maintenance, financing, training, and even outsourcing.
The following are the first steps to take to explore how demand innovation can work for your company:
- Find out how to anticipate the changing next-generation demands of your MVCs. The best way to do this is to form a small cross-functional team that will visit your MVCs. Try to “swim upstream” as far as you can inside your customers’ operations to find out the issues, challenges, or problems that surround the products or services they buy from you.
- Think about your company’s hidden assets or hidden opportunities for growth and how you can use them to solve the nagging problems of these customers.
- After your visit, debrief with the team. Then return and begin a new dialogue about providing economic solutions rather than product solutions.