Growing by creating new business

Kicking off a new business from the ground up? Brace yourself, it’s no walk in the park. If you buy into what the stats say, launching a new business is incredibly tough. Your chances of success? A measly 1%. You’re looking at a requirement of ten failures for every success. No progress without a few major stumbles. It’s tough, it takes forever, and you’re guaranteed to wind up somewhere different from where you initially aimed. And if you’re trying to pull this off within a corporate setting, it might seem like you’re setting yourself up for failure. You’re up against organizational barriers, short-term objectives, and cultural clashes that just pile onto the existing challenges. Does that mean you should throw in the towel? Absolutely not!

New business growth is a must

Virtually every company and their strategic plans are in dire need of fresh business growth. When you’re playing in a mature market where your market share is already maxed out, expansion options are limited. That’s why making a leap from the so-called ‘red ocean’ – the cutthroat existing competitive arena – to the uncharted ‘blue ocean’ makes perfect sense. To stick with the color theme: the grass really is greener on the other side. But the million-dollar question remains: how do you nail success in that elusive blue ocean?

Three essential breakthroughs for success

1. Identifying a promising new growth market

Finding a market that’s not just rapidly expanding but also supported by significant megatrends is key. This market should stand out by its demand for innovative solutions that address unmet customer needs, setting it apart from the rush of competitors.

2. Crafting a winning strategy

Success in a new market is not predetermined; it requires a deep understanding of what victory entails. This involves comprehensively analyzing the market’s value chain to identify where your organization’s core competencies and unique capabilities align with market demands. The challenge lies in ensuring a genuine fit between the market’s needs and your organizational strengths – a task that demands more than mere theoretical alignment. 

3. Executing with precision and innovation

Implementation demands a blend of perseverance, strategic focus, agility, and creativity. It begins with setting ambitious yet attainable goals and securing unwavering support from top-level leadership. A dedicated team, equipped with the appropriate skills and resources, must spearhead the venture. Create a team which consists of both internal and external talent, insulated from the day-to-day operations of the existing business to foster an environment conducive to innovation. Despite the inevitable challenges and setbacks, the key to success lies in the team’s resilience, its ability to adapt swiftly to new developments, and the rigorous management of resources to navigate through the obstacles.

Dynamic approach

These breakthroughs require a dynamic approach to strategy development and execution. The journey from a nascent business idea to a thriving enterprise in a new market domain is far from straightforward. It demands strategic foresight, operational agility, and a steadfast commitment to innovation.

Navigating new markets: A personal blueprint

My own experience has taught me the importance of versatility and strategic planning when navigating new markets. Here’s my suggestions:

• Broad market exploration: Starting with a broad definition helps in the initial phase, allowing for a more refined focus as you progress. This flexibility is crucial in pinpointing the exact market that aligns with your vision.
• Multiple market evaluation: Considering three to five potential markets initially provides a comparative perspective. Use the early efforts to prioritize these markets based on potential and strategic fit, guiding where to concentrate subsequent efforts.
• Openness to adjacent opportunities: While zeroing in on a primary market, it’s beneficial to remain open to adjacent markets. This adaptability can unveil more viable or profitable paths that were not initially apparent.

The takeaway here is clear: don’t put all your resources into a single, narrowly defined market from the get-go. Experience shows that startups rarely hit the bullseye on their first attempt. Corporate ventures, in particular, need a diversified strategy – a pipeline of options – to navigate around risk aversion.

Crafting the winning proposition

Achieving success requires a delicate balance between leveraging existing strengths and developing new capabilities. Diving into a market without the need for your current core competencies poses a higher risk and necessitates a longer timeline. Conversely, relying solely on existing capabilities might indicate a lack of deep market understanding. Early engagement with key players across the value chain – including potential customers, suppliers, and even future competitors – can validate your strategic direction and refine your value proposition.

Strategic implementation: Beyond the magic bullet

There is no silver bullet to implementing a new business strategy. It demands sustained leadership focus and a commitment to innovation. Embracing ‘impossible challenges’ can shift teams away from conventional thinking, fostering a culture of creativity and problem-solving. However, it’s crucial to balance the pressure for rapid milestones with the need for the strategy to mature organically.

The business development team should have autonomy over its direction and resources. Progress reviews must emphasize overall achievements rather than the process. This approach necessitates agility, not just in strategic direction but also in team dynamics, allowing for rapid shifts in team composition as the venture evolves.

From initiation to scale-up

As the venture transitions from a new business idea to a scale-up phase, the introduction of new capabilities becomes essential. The three steps outlined – market identification, strategy formulation, and execution – are not linear but highly interactive, requiring continuous iteration and refinement.

Ready to grow a new business?

For those embarking on or navigating through this complex process, I’m open for discussions and insights sharing. Feel free to reach out at Peter.gommers@peter4strategy.com or +31-6-53361249 and let’s explore how we can turn your innovative ideas into market successes together.

Inspired, but not facing a concrete challenge right now? Let’s connect on LinkedIn to stay in touch and share valuable insights.