Laurent Bouty

View Original

Growth in a Digital World

If you are reading this article, you might probably be interested in growing your business. While the question is easy to ask (I remember financial controllers asking me to find extra 3% revenue growth while my corporate building had been attacked by 2000 people and we suffered 50M$ damage), the answer is certainly not so obvious these days!

What growth means?

Before defining the solution, we need to understand the problem. If you want more revenue, you need to play with the following parameters of your revenue equation:

  • More paid users than today with same number of transactions: you should have more clients on a yearly basis buying your product and services than last year. It can come from the market (population is growing, available market is important) and/or from your commercial actions (acquisition and retention).
  • More transactions than today with same number of users: these clients should spend more on average for each commercial transactions they do with you. This can come from either (1) more products purchased during the transaction (e.g. menu versus separated items) and/or (2) an higher price paid for these products (discounted brand versus premium brand). Usually it comes from your commercial activity (stimulation).
  • A positive mix of users and/or transactions: Usually the reality sits in a positive mix between users and transactions (we called it elasticity).

At the end, the combination between users and transactions should generate an higher revenue. This is the only way for generating growth. The last 20 years, we were palying with these combination by IMPROVING our commercial processes (doing better) or EXTENDING it (doing more). It did work primarily because population was growing, people economic power was growing and products were not fully available everywhere. Those days are unfortunately gone.

The thesis I am submitting to you is that for the next decade, it is not sufficient and we can only survive as a company if we CHANGE our commercial processes (new business model). Let's find out if my thesis is right.

Insight 1 - Consumers are Changing

People are changing and I am quite optimistic wth this trend. We can see this as a DES-INDUSTRIALISATION of their consumption habits.

They want abundance but they care about waste. They want you to be genuinely true. They want you to be closer. They want all options. And finally, they want you to positvely contribute to their life and world.

Insight 2 - Your World is Changing

In these days, the old habit of looking at what happened last year and extrapolating commercial figures from these data might not work because we are living in a turbulent period. If you are still doubting that we are living in a turbulent period, I really invite you to read Jeremy Rifkin on the Third Industrial Revolution.

The last century, 12,5% of economical growth can only explained by labour performance and machine capital. The rest (87.5%) was a mystery and commonly referred as "the mesure of our ignorance". After 25 years of investigations, a number of analysts concluded that economic growth could be explained by 3 factors: labour performance, machine capital and energy use. During the last 100 years, we have created economic growth thanks to the combination of electricity grid, telecommunications network, road system and fossil fuel energies. Maybe a little bit simplistic, but I would say: WE CREATED GROWTH BY BURNING THE PLANET.

The fantastic news is that we are entering in a third industrial revolution. This revolution is driven by free energy, automated transportation, internet and dematerialisation.

Insight 3 - You have new competitors

 

Insight 4 - How will you play the game?

5 Attitudes for creating Growth in a Digital World

If you are not taking this digital revolution seriously (dematerialisation, collaboration, distributed capitalism), you will be most probably a digital prey in the coming years.

As the attention of people is shrinking (we are in an Attention Economy), it is fundamental that you are clear about why people would buy and stay with you (What is your purpose? What job to be done are you in? How do you monetise your activities?).

People and companies are expecting you to be generous because we are in the OUTCOME ECONOMY era where you should help people save time and effort in their daily lives.

Peter Drucker rightly said: "Culture eats strategy at breakfast". It means that even if you have the smartest strategy, you will only be successful if you have the right people and culture for delivering it.

Remember the S-Curve! What you do today, will only generate real results in 2 to 3 years. Start early when you still have time to do it because it is much more difficult when you are running out of cash or profit.