We have spent years studying the best ways to drive growth in businesses, non-profits, and movements. Here is an overview of what we have learned.
Over the last two decades, the startup world has rapidly evolved the concepts behind high-growth methodology. Often, it is mistakenly called growth hacking and refers to optimizing user onboarding and increasing retention through designing habit-forming products. High-growth methodology, however, is not about hacking the user experience to drive profit. Underneath all the noise is a scientific way of approaching product design and company growth. When you distill these high-growth practices down to their first principles, you find a series of core competencies that set high-growth businesses apart from the average. These core competencies are backed by research in many fields.
Below is a concise overview of the foundational core competencies behind high-growth businesses.
Every successful business needs a purpose that pulls people out of the service of self-interest and towards a shared larger meaning in the world around them. When the people in a business work solely for a paycheck, then the performance potential of that organization is capped.
Innovation increases the productivity of resources. This is easy to see in technology where new products are more efficient, faster, and simpler. Innovation does not only apply to technology, it is also about technique. Companies regularly increase the wealth-producing ability of existing resources through the innovative techniques they develop.
“Entrepreneurs, by definition, shift resources from areas of low productivity and yield, to areas of higher productivity and yield.” – Peter Drucker, Innovation and Entrepreneurship.
In performance psychology, there are two contradicting mindsets that determine how successful you can be, the growth mindset and the fixed mindset. These two mindsets address our motivation and perspective. Someone with a growth mindset believes that they can grow and improve; they see failure as a learning opportunity and look for where they need to grow. People with a fixed mindset don't believe they can grow and improve their performance, so failure is final and must be avoided at all costs. These people cannot be high performers because they will not push themselves out of their comfort zone.
As we looked deeper into the research and case studies of successful businesses of all kinds, we saw these core competencies repeated in every type of successful organization with meaningful growth. This was true across industries, company sizes, and business models. We began asking questions like, what led a small business in the Pacific Northwest to unconsciously adopt the same core competencies as a Silicon Valley venture-backed startup? We came to one simple and exciting conclusion. Many of the companies that shared these core competencies also shared a deep obsession with listening to people and consistently working to serve them better. This was true for customers as well as employees, suppliers, service providers, and stakeholders.
We began to understand that there was a causal relationship between a people-focused business and its ability to embody the high-growth core competencies listed above. If a company was obsessed with serving people, it tended to naturally foster the core competencies almost unintentionally.
That left us with a significant question: could an obsession with serving people be the most efficient way to increase the performance potential of a business and drive sustainable long-term growth?
To keep things simple we now call businesses that are obsessed with serving people value-driven businesses. Value-driven businesses are always looking for ways to deliver more value to customers, employees, and stakeholders. We found that the term value was most effective because many businesses believe they are people obsessed but are not actually delivering to people what they really find valuable. The causal relationship between a value-driven business and its natural ability to foster high-growth core competencies only works when the business is focused on uncovering and delivering what people actually want. In short, if you're just giving people what you think they want, then it's pointless.
Psychology research shows us that when we focus on other people it expands our awareness, increases our sense of personal meaning, and changes our mindset. Instead of focusing on protecting our self-interest, we begin looking for ways to better care for others. When we step out of a posture of self-protection, our field of vision literally widens. We stop producing as much cortisol (stress response hormone), and we start becoming more present to the people and situations around us.
When an organization adopts value-driven growth as its top strategic priority, its leaders begin to step out of the risk and rewards motivation model. Employees become less afraid of making mistakes because they feel valued and empowered. A risk and reward motivation structure kills a growth mindset which means people's potential is capped. When people feel safe, valued, and empowered, then they start to believe that they are capable of improving and unconsciously begin to adopt a growth mindset. They know that if they make mistakes, they aren't going to get in trouble, but instead, their effort will be valued as a healthy part of helping the company work towards achieving its performance potential.
Innovation is actually quite simple, and it starts with looking for and noticing ways to improve a product or process. When people feel empowered and safe to try new things in their job, they begin practicing innovation. When employees are told that their primary job is to deliver as much value as possible to customers with the resources they have available, it sets the stage for innovative thinking. Innovation is the result of practicing innovative thinking. Contrary to what Hollywood would lead you to believe, innovation rarely works on the first try. It is especially important to note that oftentimes the most impactful innovations are not found in the c-suite; they happen closer to the product and the customers.
Focusing on value-driven growth empowers employees on every level to look for ways to improve the productivity of existing resources. Chick-fil-a, for example, credits frontline employees with many of its best innovations, like chicken nuggets and its holiday peppermint milkshake.
A grand global purpose is inspiring, but the simple purpose of serving the people around you is all the purpose a business needs. Most importantly it is clear and simple which makes it actionable and measurable. Shifting a company's priority to value-driven growth instills a clear daily purpose in every department and creates meaning in the lives of employees.
"I argue that beyond competitive salaries and benefits, what makes a company a great place to work is when it puts workers in a position to do great things for customers, again building lives of meaning and purpose.” - Fred Reichheld, “Winning on Purpose.”
When an organization's leaders put delivering as much value to people as possible as their top strategic priority people feel cared for and empowered to do the same. The byproduct is a cultural shift, a more purpose-driven workforce that practices growth mindset thinking and looks for innovative solutions in their area of responsibility.
In hindsight, we had it backwards; the reason high-growth core competencies drive growth is because they improve the value-producing ability of a business. But If that is the case, then why isn't every company solely focused on being a value-driven business? It turns out that there are mountains of evidence backing this up. Why is value not the central theme of every MBA program, startup incubator, and business book?
The answer we found is that it is and it isn't. There is a lot of confusion around the term “value”. As a result, it is often incorporated into strategic thinking, but it rarely forms the entire foundation of our strategic thinking. We define value as “what people want and need.” As a feature, focusing on this kind of value is effective; as the foundation of your strategy, it is transformational.
The work of Harvard Business School professor Felix Oberholzer-Gee has been critical in helping us understand the importance and impact of using value as the primary strategic objective. He explains in depth in his book "Better Simpler Strategy" that businesses should think about value, not profit, and focus on two simple objectives. 1. Consistently increasing customer willingness to pay by improving how much value a company delivers to its customers. 2. Consistently decreasing employee and stakeholder willingness to sell (their desire to leave your company) by improving how much value the company creates for its people. If a firm can do these two things effectively, then it will drive growth and get the performance it needs out of its people.
"…surprising, perhaps, but true nevertheless: the companies that perform best do not think about themselves first and foremost. They dream up ever better ways to create value for others. Think value, not profit, and profit will follow." - Felix Oberholzer-Gee, “Better Simpler Strategy.”
We have found that when companies talk about creating value for customers, employees, or stakeholders, it is usually too limited in scope. It often focuses too much on the financial picture and not enough on a deep understanding of their customers and people and what matters to them. Research shows that past a certain point, money becomes a debilitating motivator of people. Yet, if you ask companies how they create value for their employees, they usually talk about compensation, benefits, and sometimes generous vacation days. These are all great, but they completely miss the most important psychosocial drives of trust, relationships, and motivation.
In order to improve the performance potential of a business, the leadership team must be deeply aware of how they can continually create more value for their customers, employees, and stakeholders. Then they have to purpose their organization to be effective at delivering that value.
StacDek, is a growth consultancy that focuses exclusively on value-driven growth. We help companies build and execute growth strategies around improving how effectively they create, deliver and capture value. Our goal is to help companies change the way they think about driving growth and to help them recognize the importance of prioritizing value as their central strategic objective.
If you can give customers more value than they expected with each transaction, your business will start to grow naturally because they will come back and tell their friends to buy from you.
Businesses grow when they do three things well. First, they need to target the right customer with the right message. Second, they need to create and deliver meaningful value for their customers. Lastly, the first two only work if they are operating a repeatable and scalable business model. We have a tool called The Value Engine, and it helps us work with executive teams to map out how their business communicates, creates, delivers, and captures value. If there's a gap or inefficiency in their Value Engine, then that business will struggle to grow or possibly even stay afloat.
Our goal is to help clients design an efficient Value Engine and then build their growth strategy on top of it. Since the Value Engine addresses who the company needs to create value for and how to do it most effectively, it can clearly guide everything from marketing and product design to customer care and even company culture.
The answer to the question "How do I grow my business?" is radically different depending on which "guru" you follow and their particular area of expertise. Unfortunately, this creates cognitive overload and leads to chaotic leadership teams that spend too much time trying new and often unrelated strategies. Focusing on building an efficient Value Engine allows executives to simplify the core of their strategic priorities. When you have an efficient Value Engine, you can easily pursue parallel growth efforts and will get better results from them. The simplicity of the value-driven approach prevents the added cost of rotating strategies while also reducing chaos.
When a team focuses on having a positive impact on every life their business touches, they unlock their growth potential. What prevents many businesses from achieving high-performance growth is not an issue of heart, brain power and values but a lack of a strategic design and decision making process. Our framework and the value-driven approach to growth strategy can help owners and executive teams drive the success they want to see in their business.
Authors: John Walt, Heather Walt PhD & Scott Dohner
It is important to note that when we refer to high-growth businesses, we are precluding businesses that scale rapidly but cannot sustain their growth or valuation. For our purposes, we look at companies that generate impressive growth that can be sustained over long periods of time. We also recognize that many of the highest-performing businesses purposely choose to grow slower in order to maintain ownership, nurture culture, and protect people's lifestyles. That's why we measure growth in relation to each company's long-term vision and its ability to drive the necessary growth to get there. We work to learn equally from small giants, unicorn startups, and mega-corporations and avoid the flawed "bigger is always better" heuristic.
Sources & further reading:
Dweck, C. S. (2006). Mindset - The New Psychology of Success. Ballantine Books.
Frankl, V. E. (1959, 1962, 1984, 1992, 2006). Man’s Search for Meaning. Beacon Press.
Drucker, P. F. (1985). Innovation and Entrepreneurship. Harper.
Oberholzer-Gee, F. (2021). Better Simpler Strategy. Harvard Business Review Press.
Burlingham, B. (2005, 2016). Small Giants. Penguin/Portfolio.
Smith, E. E. (2017). The Power of Meaning. Broadway Books.
Blanchard, K. & Bowles, S. (1993). Raving Fans. Morrow.
Halvorson, H. D. (2010). Succeed. Plume.
Reichheld, F. (2021). Winning on Purpose. Harvard Business Review Press.
Grant, A. (2013). Give and Take. Penguin.
Collins, J. & Lazier, B. (1992, 2020). BE 2.0. Penguin/Portfolio.
Coyle, D. (2018). The Culture Code. Bantam
Blank, S. & Dorf, B. (2020). The Startup Owner's Manual. Wiley.
StacDek helps companies design strategies that drive growth.
