How can a business grow its revenue?
In one form or other this question is posed and answered many times – be it in management consulting interviews, in popular business books by self-proclaimed gurus, or in real-life in businesses small and large.
An MBA student looking for summer internship with any of the big names, McKinsey, Bain, BCG etc. will use one of the common recipes (“framework”) to explore ways to help a hypothetical business struggling to increase it revenues. One tried and tested framework is the Ansoff Matrix – a 2X2 matrix representation of the business world.
The options are sell more of the same or new products to existing customers, acquire new customers, sell something completely new to you to new customers. All nicely fit in 2X2.
The popular business books rely on popular successful examples that are already well published in the news media. They look at how GE, Microsoft, Apple, Amazon, Zappos, etc grew their revenue from $0 to billions. Then they distill a causation out of it. The solutions they recommend are simple and far reaching with universal applicability.
It could be searching for excellence, seeking customer loyalty, customer engagement, co-creation, Word of Mouth Marketing, employee engagement, delighting customers, delivering them happiness, telling stories to customers, etc. When you do all these, revenue will grow, trust them.
Real businesses do not answer them any different. After all they have the same MBAs working for them either directly or through a consulting firm. Businesses that cannot afford to hire MBAs (or despise them like startups do) rely on the wisdom of popular Gurus and their pet theories. They succumb to the lure of snake-oil salesman selling social media marketing, social commerce etc. Since there are thousands of businesses, each trying a different growth recipe, just by sheer randomness some of these businesses will succeed.
The biggest of these successes get written about and causation attributed to the recipe they tried. We get Harvard Business School case study, Management consulting case question, yet another book by Seth Godin or someone else — and the cycle continues.
In the interest of intellectual honesty, it would help if all of us stood up and accepted that we really do not know for sure. There is considerable uncertainty and other variables in what we prescribe, we ignored macro-economic factors in studying growth of businesses and frankly we (especially Gurus) are making things up as we go along.
Unfortunately uncertainty, self-doubt and measured approach do not sell. MBAs are repeatedly taught at school and told by their consulting mentors to, “take a stand, don’t waffle”. Gunslinging entrepreneurs believe ounce of any action is better than taking the time to think through the scenarios. Gurus, lacking real skills and critical thinking, cannot afford to state anything less than certain. Try selling a book titled, “A few complex procedures that are 60% likely to grow your business by 15% if the macroeconomic conditions do not change and may still cost you lot more to achieve that”
But businesses (or the people who run them) want 80% growth from just 5% change in a simple metric. We want easy solutions, like telling stories to our customers or making them Like our facebook page. No one wants uncertainty or understand uncertainty.
So that is what we will get – Certain, simple and elegant (can you spell say 2X2) but mostly wrong solutions to a very complex problem in an increasingly complex world.
Iterative Path 