The Secrets of Success: Managed Expansion

It may seem counterintuitive to be thinking about expansion while the global economy is still trying to figure out which direction it will go and how fast it will get there. It's not. In fact, this is the best time to be thinking about all things growth.

That way, you can build your success before you begin using what I call Managed Expansion.

The easiest way to understand it is by understanding what it isn't - and that's its opposite: Reactive Expansion. So we'll start there.

Reactive Expansion is when...suddenly there's lots of money. Suddenly there's lots of opportunity. Everybody is buying. Everything it's growing. It's an up-cycle! It's time to expand!

Well, yes and no - and that's where Managed Expansion comes in.

It's time to expand - but only if you've got robust and well-thought out plans in place for exactly how, when, how fast, in what ways and into which markets you want to expand. Specifically, plans that you've been working on throughout the down-cycle to be ready for just this moment.

Sure, there'll be adjustments in the plans as the landscape becomes more clear. But if you've been consistently working on your expansion plans as a regular part of your job (which it is), then you'll have already seen those opportunities and be ready to move.

In contrast - and what we see far too often - is the Reactive Expansion that companies take on...and then have to reverse.

Think Starbucks. You'll recall that they are one of my examples of "Cheerful Ruthlessness." Well, they're also a perfect example of Reactive Expansion - which they may be repeating but in a different way.

Here's how it works:

A number of years ago, someone in the executive ranks decided that there should be a Starbucks coffee shop on every corner - or nearly. Rather than following what had been lauded as one of the finest location determination systems in the world, they just grew. And grew. And grew.

It just so happened that they were opening all those locations during an up-cycle. Everybody wanted coffee - and, according to this logic, they wanted it absolutely everyplace they went, every day, all the time.

That was all well and good until the down-cycle started and people weren't sure they wanted to shell out a few bucks a cup every time they needed a caffeine fix.

Change of management, change of plan. Now it was time to shut down all those excess locations and for the company and its shareholders to take the hit financially - as well as hitting all their employees with unemployment simply because management made bad decisions.

It was sort of a coffee version of the dot-com boom and bust - all in one company.

Interestingly, Starbucks may be running the same risks but in a different segment of its market: the Keurig/Nespresso world.

Individual, made-to-order, customized coffee-makers for the home are just the thing in the market. Especially as a holiday gift...or so the advertising would lead you to believe.

Only, in this case, Starbucks is venturing into a market that has ongoing high costs - from manufacturing and inventory to shelf-space in its shops - and, contrary to what the thinking may be in the company, does not guarantee a captive, returning audience.

That's because - unlike equipment ranging from inkjet or laser printers and their cartridges to the Amazon Kindle and its in-bred ecosystem of sales - customers don't have to go back to Starbucks for the ongoing, high-profit coffee tubs. They can buy other brands - because everybody's already on this particular wagon - or they can purchase a reusable, washable 'k-cup' from a cheap and cheerful television advertisement.

Starbucks isn't being a leader. It's being a follower - but on a very big scale - which is a Reactive Expansion strategy that is particularly dangerous.

It will be interesting to see whether the company wins, takes a hit on this or keeps its product in play as an also-ran in the individualized coffee field. But that's on them.

For you, the lessons are there to be learned.

Opportunities are always presenting themselves. Some of them make sense for you. Others don't. It's your responsibility - and should be your passion - to consistently be looking for the windows that have yet to open and figure out how you and your organization will be the ones to open them.

The best opportunities are the ones you identify where you will be the go-to resource - product or service - for that particular offering. And that's what you're planning for: a Managed Expansion that builds on what you do best and expands upon it in such a way that existing and new customers are happy to find you doing what you do.

Just don't do it faster than you can manage or put too much time, energy and cash into a high-risk venture that may or may not work out.

Take risks using a Managed Expansion plan by:
  1. Building on what your organization does best
  2. Expanding that definition by bringing even more and better of what you do to the market
  3. Focusing on innovation in existing products and services as well as new ones
  4. Studying what best of breed organizations in other industries are doing
  5. Identifying how those product and service innovations can be adapted to bring further success to your enterprise
  6. Managing your expansion so that you're ready for "+1"...ensuring exquisite, seamless execution.
By taking these steps, you've designed your expansion to succeed - long before it has even begun.
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The Secrets to Success: Cheerful Ruthlessness (ctg)
The Secrets to Success: +1 (ctg)