Several factors make for business success. Market demand and customer behavior lead to successful sales when supported by a product portfolio. Growth is sustained when a virtuous cycle of product portfolio, market demand, and customer behavior is created. This cycle leads to business growth. Business growth is supported by innovation. The growth cycle loop is sustained if all these factors operate optimally.
Businesses do not grow by themselves. Entrepreneurs and leaders toward success and growth drive them. In the initial stages, growth is primarily driven by the drive and personality of the founders. The founders, though, are a significant factor throughout the growth cycle.
In the initial stages, founders test ideas and concepts. It is a period of struggle where failure is common while success is rare. These are trying times with a high degree of volatility. The mettle of leadership is tested the most during this period. The entrepreneurs who are successful in finding their way out of these initial volatile times set their enterprises on a growth path.
Business growth is a function of the business lifecycle, industry growth trends, and the company’s desire for value creation. There is no single metric used to measure growth. Several data points have been highlighted in business literature. These include revenue, sales, company value, profits, number of employees, and customers. Companies may grow in some of the above-listed metrics but not in others.
Employee numbers may not grow exponentially with growth when companies are aggressively automating their business processes. But on the other hand, there are technology companies that show an exponential rise in valuation while continuing to be loss-making. It makes it, therefore, difficult to define business growth in companies. Growth measures in these companies will have to be measured on a different set of metrics.
The pace of revenue growth in the early phases may continue to be small. Still, customer additions may take place at a breakneck speed. The type of growth will depend on the stage of development of a business. Startups may need to acquire customers rapidly to cement their position in the market. Once they grow to a large enough size to bring in enough revenues to cover costs, they generate profits.
Mature companies may not grow quite as fast. Still, they may want to ensure their metrics are going in the correct direction. These companies may deploy digital transformation strategies to stay on a high-growth path.
Business success and growth are sustained when a virtuous cycle of product portfolio, market demand, and customer behavior is created. This cycle leads to business growth. Business growth is supported by innovation. The growth cycle loop is sustained if all these factors operate optimally.
Successful companies seek to make the selling experience of their products and services easy and delightful. When customers enjoy the buying experience, they become brand promoters spreading the brand’s message to others. Customer-centricity leads to sustained growth and development of enterprises.
Market demand for products and services is helped through product awareness. Companies resort to disseminating information on the new product using social media and traditional media options like interviews, articles, blogs, white papers, and press releases. However, satisfied customers help generate a network effort for brands, products, and services. Walmart, Airbnb, and Alibaba are excellent examples of satisfied customers generating a network effect. It is the network of customers that helped these enterprises in achieving sustained exponential growth.
Successful entrepreneur works on building products and services appropriate to the demand of their targeted audiences. The biggest brands have assessed demand for a product, often based on their general assessment in a community. Like Sam Walton and Brian Chesky of Airbnb, others studied community requirements by observing and understanding their needs. Elon Musk is a visionary and has determined that will be a demand for satellite-based internet services much before others. Successful entrepreneurs, in the end, succeed by assessing market demand by studying the demographics, pain points, challenges, problems, and individual motivations of potential customers. Business success is driven when some of these factors are integrated into company plans.
Let us look at some distinctive features of successful companies.
TATA group;
I have worked in one of the group companies and closely interacted with many others. These businesses are strong on ethics, customer-centric, low-key approach, modest, process-driven, and relentless.
Airbnb:
I have studied five companies of which, one of which was Airbnb. It is customer-focused, huge on innovation, and technology-driven. Airbnb’s evolution to date can be broadly divided into three phases. The initial phase could be described as the couch-surfing phase. In the early stages of the company, hosts offered an air mattress to sleep on. The host was welcoming and did everything to make the stay comfortable.
The second phase began soon after the concept acquired popularity. Hosts with unique stays like boats, tree houses, and castles were listed as unique properties on the Airbnb platform.
The third phase began with celebrities opting to stay in Airbnb rental properties. These were often luxury properties with per night rates of several thousand dollars per night. The most sophisticated travelers and the choicest properties got listed for rent in this phase.
Today in 2021, Airbnb offers shared rooms, private rooms, and an entire place. While booking, some properties are listed with an instant book feature. A guest can book a host’s property without an approval process.
Walmart:
It is a company with an agile strategy that has enabled it to survive and thrive as the world’s leading retailer. At the core of its success lies its customer centricity and relentless pursuit of its strategy of everyday low prices.
Tesla:
It is a company with an agile business model and operations. Its focus is on innovation, pre-empting the future.
Tesla is a relentless startup constantly innovating and staying ahead in technology and innovation.
You can form your judgment on what drives business success.
Credentials:
Certified business strategy professional from Wharton
Certified in business model innovation from DelftX