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Demistify Organic Growth
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usiness is full of mysteries, but none more pronounced than this: What really works? For as long as I can remember, one of the greatest puzzles of business life has been the question of why a few companies thrive in the worst of times, contradicting whatever afflicts industry peers. Even the best of us may not fully know what we are doing right in good times, much less how to keep a company booming in bad times. Surely, this cannot be true you say. Thriving companies must know things that others do not. And so, given our abiding faith in experts and how-to-books, leaders savor every word of wisdom from global legendary executives, whose writing rivets businesspeople everywhere. But such answers do not translate well. They derive from local conditions and unique situations. They are not universal. Nevertheless, I find the call to focus on strategy, structure, execution, innovation, performance culture, leadership and building a winning team to be universally relevant. Today I am going to focus on a smaller scope – strategy– to understand what drives growth for Indonesia’s fast-moving consumer goods (FMCG) companies.
So, where does growth come from? For FMCG companies everywhere, there are only two sources of growth that can always be counted on. The first is through distribution and/or rate of sales or sales per point distribution. The wider and the deeper your weighted distribution the more likely your sales will go up, and the higher your rate of sales per point distribution is, the larger the revenue will become, and often in a more cost-effective manner. Now, how do we help leaders in their respective responsibilities maximize those sources of growth. For me, I use what is known as the As quadrants, which can be a useful, effective and powerful tool to reduce or even eliminate the barriers to market penetration and development. Those barriers are relevancy, visibility and cost/value among your target consumers based on segmentation, targeting and positioning.
To be able to fill in the boxes and keep them updated we will need strong, current data and a relevant shared vision of where we want to be in the future. Addressing the issues however requires more than just numbers. We will need able, committed, motivated and creative people to come up with plans and execute them well. The right people doing the right things with a constant sense of urgency is the mantra here.
Awareness is easy but you want the right kind of awareness, the kind that sticks and the kind that people share with others. Mass awareness and targeted awareness may be derived from various means of communication. The key is for your communication to cut through the all the noise through uniqueness, authenticity and relatability.
Availability is simply to be where your peers are available, and to be seen. I have always preferred using weighted distribution over numeric distribution. The numbers help when you need to widen your segment or if your current segment is saturated, but if your availability is still increasing with numeric distribution, costs also increase as a diminishing rate of returns sets in. Being available alone is never enough. You need to be seen - prominently seen. Remember, out of sight, out of mind.
Acceptance is a bit trickier. Acceptance not only requires your products to be of a quality that exceeds the minimum threshold required and desired by the consumers, but you must also strike a chord with their emotional needs to belong, feel secure and to be a part of something fun, joyful and meaningful.
Affordability is often misunderstood as simply offering a lower price vis-à-vis your peers. While such a concept may work for a time in a commoditized segment and to swim around at the bottom of the pyramid, it is, in my opinion, not a good way to build a lasting brand in a developing country like Indonesia, which has a growing middle class that aspires to feel and be seen as successful through the purchase and consumption of affordable luxuries, notably branded FMCG products.
In conclusion, want to say that while the formula above is essential to achieving growth, it does not tell you how to be successful in your business endeavors. My mission here is only to identify some simple tools and to identify the areas you need to focus on, and, by extension, those that require less attention. The rest is up to you.
I wish you abundant success in the year of the dragon! Let the dragon in you roar this lunar new year.
