Beyond Start UP - Growth Strategies for SMEs

Q.Aspen | Consulting & Venture Development
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Michael Olorunninwo currently does operations strategy and planning at Seven Energy Nigeria. He previously worked as Management Consultant at KPMG and as Aviation Risk Underwriter at NICON Insurance Plc. His experience cuts across Business Development, Corporate Strategy, Financial Management, Human Resources and Operations (Business Process) Improvement. He has consulted for companies in Consumer Markets, Energy, Financial Services, and Hi-Tech. Michael is also co-founder/project lead at Q.Aspen, a consulting and venture development social enterprise focused on developing hi-potential SME opportunities. Q.Aspen’s mission is to build successful indigenous African businesses of the next century.
Speaker Bio

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Welcome…
…now that you’re no longer a start-up;
What next!?!

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You Need a Growth Strategy!

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What is…?
The process of increasing in size
Growth
What is a Growth Strategy?

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Growth Dimensions/Parameters
Increase in Employees?
More Capital Investment?
More Office Locations?

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Growth is all about…
An advantage that a business has over its competitors which allows it to generate greater sales or margins and retain more customers than its competition
…Competitive Advantage!
Cost Structure Product Offerings Distribution Network Locked-In Customers

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Sources of Competitive Advantage
Product-Features
Procedures
Quality
Employees
Customer-Experience
Customer Incentives
Goodwill
Value-Add
Alliances
Low Price
Branding
Location
Differentiation
Low Cost
Distribution Network
Strategic-Assets
Exclusive Rights
Barriers to Entry
Cash-Flow
Access to Funding
Strong-Management
Data-Management
Speed
High Volume Production
Innovation

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Cost
Ability to produce goods and services at a lower opportunity cost than competitors
Type of Competitive Advantage
Ability of products and services of unique features, benefits, characteristics and better quality than competitors
Think Value Proposition!
Differentiation

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Understand Yourself & Your Business

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What You Need? Resources & Capabilities
Company specific assets useful for creating advantage
Ability to utilise resources effectively

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What You Need? Resources and Capabilities
Ability to run successful larger scale operations. Helps to build efficiency and economies of scale
Assets held by company to achieve competitive advantage e.g. Patents, Branding, Customer Base, Human Resources
Skills required to lead and manage growth
e.g. new product development, finance, M&A, local expertise
Operational Skills
Privileged Assets
Growth Skills
Relationships not available to competitors e.g. Trade Union, Government, Foreign Alliance, Franchise
Special Relationships

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Understand Your Industry

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Understand Economic Trends (Nigeria)
High economic growth rate
–Nigeria’s economic growth has averaged about 7.4% annually over the past decade
–Growth remained robust in 2011 at 6.9%, driven by the non-oil sector; average of 7% to 2015
Exponential population growth
–Population about 158 million, represents large consumer market (72% of population < 30 years)
–Excellent regional distribution of eight “anchor” cities, each with populations exceeding one million
Urbanization and the rise of the middle income earner
–About 74.2 million Nigerians currently live in urban areas, with urbanization progressing at ~3.5%
–By 2020 more than 70% of Nigerians are projected to live in cities
–Growth of emerging middle income earners/consumers with higher disposable income
Encouraging environment for foreign investment
–High recipient of FDI in Africa
–Ranked 170th on “Ease of Doing Business Index,” strategic moves by government encourage FDI
–New industries can obtain pioneer status granting tax exemptions for first 3-5 years

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Understand Your Target Market
Pick sub-set of entire marketplace that you can organize your sales efforts around
Market Segmentation
Whom are you better off selling to or avoiding?

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You can segment by:
•Geographical Location
•Income Bracket
•Age Group
•Occupation
•Social Interest
•Preference

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Loyalty to Brand
Perceived quality of products
Perceived value relative to price
Not necessarily drawn to a manufacturer
Religious
90% of Nigerians confess to a form of religion
Consumers are influenced by religious practices
Point of mass convergence
Price Sensitive
Mostly price sensitive
New innovations revolve around small packaging of consumables
Discount retail stores moving demand from informal retail
Luxury product market also booming (middle class growth?)
Consumer Retail Spending Patterns, 2015 estimates

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Understand & Reinvent Your Product
Customer Pains
Your products should be a Pain Reliever or Gain Creator or both
Customer Gains
Customer Jobs
Product Traits
Pain Relievers
Gain Creators

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Understand & Reinvent Your Business Model
How Does Your Business Create, Deliver and Extract value?

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Understand & Reinvent Your Business Model

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What Do You Want to Do?

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Strategy is all-encompassing
Production
Marketing
Human Resources
Customer Service
Finance & Accounts
Procurement
Logistics
Info Technology
R&D
Legal

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Generic Growth Strategies
To move from insurgent to incumbent,
you need to create a repeatable model that shuns
‘best-practices,’ and delivers scalability
Repeatable Business Model

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Inbound Logistics
Savvy Partnerships
Identify your comparative advantage Outsource? Insource? Create Alliances?
Production
Outbound Logistics
Marketing & Sales
Customer Service
Focus more energy on building longer term competitive advantage!

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“If this business were split up, I would give you the land and bricks and mortar, and I would take the brands and trademarks, and I would fare better than you.”
- John Stuart, former CEO of Quaker Oats
Effective Branding
Chapman
N100
N2,000

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Brand Message
A phrase that makes your customers believe you are the only one with a solution to their unique problem
Short phrase that emotionally connects with your target market and communicates the most important benefits of your product
If you need to be one thing in your customers’ mind,
what would it be?
Think different!
Ultimate Driving Machine
Always Low
Prices!

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Gillette continually creates new, improved razors better than competition: from coated stainless blades, to revolutionary Sensor, and now Sensor Excel. Gillette also built on its razor brand to add grooming products - aftershave, deodorant, and shaving creams.
Continuous Innovation
Think Brand Leveraging

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Before 1995, Indian domestic denim (jeans) sales was limited as jeans were unavailable and expensive at $20 to $40 a pair, beyond the reach of mass market and existing distribution systems reached too few towns and villages.
Arvind introduced Ruf and Tuf—a ready-to-stitch kit of jeans components (denim, zip, rivets, leather brand patch) priced at about $6. It distributed them through 4,000 tailors, whose self-interest motivated them to market the kits to create demand for sewing services. Ruf and Tuf are now the largest- selling jeans in India by far, driving sales in Arvind's main product, denim, and netting the company a potentially powerful consumer brand.
Improved Delivery Channels
Build new ways to serve customers more efficiently & effectively?

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Yes! Build checklists for every job within your business
Build Processes
Your customers will love your efficient service –
key to repeat purchases and referrals

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New Geography

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What to Expect…
Hiccups!

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Set Goals
…and measure your progress periodically.
Celebrate performance!
Key Initiatives/Actions
Key Implementation Steps
Implementation
Key Enablers
KPIs
Responsibility
Due Date
Human Resources

Loss of personal focus on cost and risk management, leading to rising costs and unnecessary risks
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What to Avoid Becoming…
Founder unable to adapt his or her behavior as company evolves, founder issues disrupt leadership agenda
Focus shifts towards internal issues, voice of customer fades from decision making and frontline employee is forgotten
Being The Un-scalable Founder
Loosing Voices of the Front Line
Unaccountability
Company drifts towards flawed systems, institutionalizing core capabilities backfires, resulting in bureaucracy and exodus of talent
Revenue Grows Faster Than Talent

Final Words
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Strategy is about making choices, and trade-offs; it’s about deliberately choosing to be different Michael Porter A satisfied customer is the best business strategy of all. Michael LeBoeuf

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Michael Olorunninwo | @inspiregr8tness | +234 808 718 5748 | michael.phurtune@gmail.com

Beyond Start UP - Growth Strategies for SMEs

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