Management

The '4Gs' of Smart Growth

The slow economy doesn't have to mean the end of growth for your credit union.

July 28, 2010
KEYWORDS growth
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The slow economy doesn’t have to mean the end of growth for your credit union.

According to “Smart Growth: Building an Enduring Business by Managing the Risks of Growth,” organizations can continue to grow by expanding their value to customers.
Author Ed Hess, professor at the University of Virginia’s Darden Graduate School of Business, advises organizations to pursue growth strategies based on what he calls the “4Gs”:

1. Growth through improvements. Becoming better at what you do is the “bread and butter” of authentic growth, Hess says. This includes not only making products and services better, but improving the customer value proposition and improving everyday business processes.

“Being better, faster, and cheaper results from pushing responsibility out to the entire organization,” he says. “By enlisting everyone—from the highest-paid executive to the newest employee just joining the company—in searching for better ways to do things, companies can dramatically increase the pace and impact of process improvements.”

2. Growth through scaling. Do more of what made you great. Once a company gets into a groove with its customer value proposition, and once it reaches a point where its business processes are standardized, it can replicate those processes across a larger footprint.

Successful scaling requires excellent execution, and it means scaling of both production and distribution, which can be costly. Service companies might need to change their marketing strategies, leverage the Internet more, or embrace digital or mobile advertising.

“Replicating business processes across a larger footprint is just part of the challenge in scaling a business,” notes Hess. “The other part is figuring out the new business and operating models that might be required.”

3. Growth through innovation. Bring something new to the marketplace. Hess calls innovation, “improvement on steroids”—not just doing something better, but doing something new.

Few companies are innovative because innovation is risky, Hess says. “When pursuing innovation, companies need to remember they have limited resources in terms of people, capital, and time. Growth pursued through improvements or scaling up is less risky than growth through innovation.

“Innovation is sexy, but it’s not for everyone, and not for every stage in a business cycle.”

4. Growth through acquisition. Inorganic expansion via mergers or acquisitions is another obvious path to growth. But it can be risky, especially for small companies.
“Even large, experienced companies find it difficult to get a timely and adequate return on an acquisition because of the specialized skills required—experience with due diligence and post-merger integration,” says Hess. “For smaller companies, acquisitions should be approached with extreme caution.

“A key part of your success with the 4Gs—no matter how good or bad the economy—lies in knowing how to choose the right path for your business,” Hess continues. “For many companies, a likely path to pursue would be to focus on a product or service niche with a specific customer segment, and then to grow the business by improvements and scaling.”

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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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