Simon Hathaway is Group Managing Director, EMEA, at Outform—the award-winning global innovation agency.
Specialisms can be a powerful engine for growth and give a business and its employees a clear sense of direction. That’s certainly the case in the agency and retail worlds I inhabit. Over the past decade and more, the wider business trend to divest non-core brands or services is one that I’m finding has been fully embraced by multinationals and agencies alike.
In today’s fast-changing business landscape, however, there is the risk that the positives of a siloed specialism fail to materialize. An over-reliance on one niche could limit growth potential, especially if your revenue stream is dependent on a sector starting to stagnate or on a mature market where economic growth is stalling.
That’s when getting a little too comfortable can start to backfire. It’s tempting to depend on your most reliable revenue streams, but you might be missing out on new opportunities.
Danger Signs To Watch
For any business wanting sustained growth, it’s important to recognize when your business is stuck.
Has your business reached its “peak category,” perhaps? No matter how you look at it, future growth in your specialist category is going to prove increasingly elusive. Staying on your current trajectory will only result in maintaining your levels of revenue, rather than expanding them. Another sign is when your addressable market has reached capacity.
Additionally, there might be factors outside of your control, such as a change in the investment dynamic in your specialist sector or changes in consumer-buying habits.
To maintain and sustain future growth, businesses must step out of their comfort zone to unlock new growth opportunities, such as a move into new verticals or diversified offerings. But how do business leaders navigate this journey?
Branching Out For Success
The starting point is to develop a clear plan for growth and manage teams to drive progress in new areas. The question of staffing arises quickly. Should you move existing employees into new areas or recruit new talent from outside? Each approach has its merits, and while the accepted norm might be to plan for a three- to five-year horizon, change is inevitable, so being ready and agile is just as important.
In some cases, the most obvious step is to add new services or product offerings that complement your existing expertise. For a physical retail store looking to become more digital, for example, this might mean adding content management and delivery services. This option is a quick way to bolt on services and can work in multiple sectors.
But from my perspective, moving into adjacent categories is arguably from where the greatest growth is going to come. In-house skills developed in one category are transferable to others for our next phase of growth, so it’s industry knowledge and language that need to be built here. Not having the right techspeak can be the quickest way to undermine confidence with a new customer in a new category.
Acquiring a company or its talent is another route out of a silo, as is establishing strategic partnerships. The right collaboration can strengthen your offering to combine different services and execute new strategies. Furthermore, businesses should consider where their focus on research and development lies and ensure it is feeding back into innovation that helps the business branch out.
Reframing Internal Perception
Any change of direction in a business requires existing staff to come along on the journey. Existing teams are at risk of becoming demotivated if they are working in the original core business and see investment and focus shift into new high-priority areas. Leaders must ensure everyone feels valued, motivated and has opportunities.
In my view, the best approach is to align the organization around a common purpose and cascade objectives down, so every individual understands how their role is driving change. Let’s not forget that it is often the core specialism that is providing the financial means for the business to invest in new areas.
Embrace Your Inner ‘Jack Of All Trades’
For a business where a specialism has successfully driven growth, there is a temptation to see further growth as a relatively straightforward win. Why become a “jack of all trades” when you are already a master of one?
But during tough economic times, growth becomes possible when businesses self-define and understand where they need to excel and where being “good enough” is good enough. It speaks to an emerging business trend where clients are on the search for longer-term business partnerships where there is a shared agenda. Your willingness to adapt is essential to becoming the partner of choice.
Breaking out of a silo can be a transformative journey. Specialization has its place. but if it’s hampering expansion and innovation, it is time to reassess. The route out of a silo is a challenging one. By ensuring your internal teams remain on board, however, leaders can navigate the company to a better place, especially as the business landscape continues to change.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Read the full article here
