How to achieve breakthrough growth
7 takeaway points on breakthrough growth from our first think ahead event
Every day, new ideas and ventures crop up. Some will succeed but many won’t. Is there a magic secret to the next big thing or successful business? We recently had a detailed discussion about this here at LBS for our first think ahead event. Colleagues and experts discussed breakthrough growth, and what it takes to achieve it. Julian Birkinshaw, Professor of Strategy and Entrepreneurship and Vice Dean at London Business School, Helen Edwards, Adjunct Associate Professor of Marketing, Linda Yueh, Adjunct Professor of Economics at LBS were joined by Chris McCarthy of Johnson & Johnson Medtech EMEA and moderated by James Hurley, Assistant Business Editor of The Times. Here are some of the key points we took away from this enlightening session.
Taking risks is necessary
The term “breakthrough growth” can make people a bit nervous. It means you must really take some risks, to create new products, offerings and business models that are untried and unproven. Breakthrough growth brings new people to a category, maybe even reshapes that category or serves consumers in new ways. It can often be driven by consumers themselves, such as in the example of veganism, which has since 2017 taken off and become a £23 billion industry.
Take the long term view
A major reason ventures often fail is because they aren’t given long enough to succeed. Often, senior executives overseeing a new product or venture get impatient and expect to see some profits immediately. They expect the first idea that came out to be the big success. Usually, the first two or three are actually failures. If you're going to do something big and new, give it five or six years. Make sure you don't evaluate progress until you have at least 10 to 20 examples of what you do. That long term view at least gives it a chance. Once you’ve done this, you can show that you have an operating profit model that works, and then the investment will continue to flow.
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Companies who create movements for business to help people live their lives in a certain way are the ones who will find breakthrough growth
Micro-inventions often follow successful growth
Look at many traditional industries -- eyewear, footwear, luggage companies and others -- and see where the innovation is in the disintermediation, the cutting out the middleman, the speed of delivery, the customisation, the tailoring to customers, and doing it more sustainably. That's all micro-invention. Sometimes we have platform innovations on which additional micro-inventions can be built. The genius of the iPhone was not the touch screen. It was that it was a phone on which applications could be built. The app store exploded as soon as the iPhone and Android platforms were launched. ChatGPT is another platform on which artificial intelligence will be accessible to everybody. We are at the beginning of a fascinating period where over the next couple of years we will see hundreds, if not thousands, of artificial intelligence products built on that platform.
Unmet needs are where growth is found
If you look at consumers and how they want to live their lives, this is where opportunity exists. Nike started the exercise revolution, at that time people weren’t exercising for the sake of it. Companies who create movements for business to help people live their lives in a certain way are the ones who will find breakthrough growth. Consumers in their millions change habits and adopt new ways of going about their lives, and that can propel new markets, new categories, new companies and fuel growth.
Technology massively enables breakthrough growth
Technological developments have made certain things possible that weren't before. Technology has created a perfect collision of factors that make a person or company achieve this growth. The measuring of health and fitness, for example, has created a sweet spot for companies tapping into such markets, particularly in places where health systems are struggling. Similarly, look at how Uber and AirBnB didn’t create a new product or place to sleep, but they made the market work much more effectively. This is an example of a breakthrough growth opportunity without inventing a new category.
People want to consume better, and often less, particularly younger generations who have grown up with ESG as a must not a luxury
Don’t always be first to market
Big companies often want to be the first to introduce a product or service that will lead to breakthrough growth, but they should really be setting their sights on seeing where the markets are going, watching the start-ups (who often fail), and then mobilising. Rushing a product to market can backfire. Consumers are unforgiving, so doing something too quickly and getting it wrong is worse than doing it slowly. Take a staged approach, either in a limited market or in a limited rollout, that allows you to test your hypothesis before you scale it up.
Grow more slowly, and thoughtfully
People want to consume better, and often less, particularly younger generations who have grown up with ESG as a must not a luxury. Given our absolute necessity to be more sustainable at every level, consumers are looking for consumption that serves the planet and the people better. BP, for example, is now going for value instead of growth. Whilst there's only so much they can do in terms of growing, they can absolutely point their ship in the direction of sustainability and renewable fuel and doing more with the resources that they have. If the global economy is only growing at 2-4% a year, then it’s unreasonable for companies to try and go for more than that.
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