One of my mentees, let's call him Peter, is a co-founder of a successful start-up in the garbage collection market. Three years ago, they found a large customer segment whose demands were not covered by the available solutions. So they built up a prototype, pitched their idea to investors, got seed money, and launched a kind of "uber" for small and average organizations, helping them take out their garbage fast and easy. Since the market was close to empty then, the revenue was skyrocketing for some time, but later it froze. And he asked me for help.

The text below is not yet another one-size-fits-all approach since any situation is unique. But from my experience, these five reasons are responsible for hampering companies' growth in 80% of cases.

Every business earns money by satisfying clients' desires. Founders remember about it when a company is young but tend to forget when the firm grows big, and they turn from entrepreneurs to managers. They have so many things to care about apart from consumers, so the clients begin to fade into the background. As soon as a company starts facing difficulties with the revenue or profit, it almost always makes sense to begin with updating data on customers' needs. Even if the business was exceptionally good in fulfilling them some years ago, it doesn't mean that situation hasn't changed.

I asked Peter to arrange several face-to-face interviews with key clients, and they became a wake-up call to him. Clients told him that even though his company's services were still good, the firm was not as flexible and customer-oriented as it used to be. Their individual requests were rejected on the ground of being "non-standard". On the other hand, there were some additional services consumers would love to buy, but the company didn't provide them. As Peter admitted after the interviews, he felt overwhelmed and inspired at the same time. He regretted the missed opportunities but saw plenty of new ones.

So, if your business stopped growing – go see your customers.

Identifying customers' needs is only a part of the task. Another crucial component is customers' values a company creates to suit their wishes. For example, if clients want to save their time and effort (needs), they will appreciate a fast service and a comfortable purchasing procedure (values). When a business is small, founders get feedback from the customers daily, which helps them adjust and finetune the set of values the firm offers to the consumers. But the bigger the organization is, the longer the distance between founders and customers. And it begins to build up products and services more valuable for employees or shareholders than for clients.

When I conduct a values audit for a company, we make a list of products and services and compare it with the list of customers' needs. And we always find the values that don't match any need. When I ask questions about them, I get answers like "This product (service) is highly profitable". So the company creates a commodity in which the customers are not interested and depletes precious recourses pushing it through its distribution channels. Many companies make this mistake, and Peter's was not an exception. Several products were shut down after the audit so that the team could concentrate on the more value-delivering ones.

Step #2 – question all the products in services your business provides and discard all of those which don't create value for your customers by meeting their needs.

My approach to strategy design implies a clear and crisp cause-effect connection between customers' needs and business processes. The inner logic is following:

• The customers on the market have requirements which a company has to address
• The company fulfill those needs by creating unique customers' values
• The firm uses assets (both tangible and intangible) to build up those values
• Employees perform processes that create and develop the assets
• The organization hires, trains, develops, and motivates employees and provides a cooperative corporate culture to help them perform the processes.

Step #3 – take a look at your assets, processes, employee motivation and retention programs, and corporate culture. Are they all in line with your business's values to your clients? For example, Peter has found out that some resource-consuming projects had nothing to do with customers' value, so some of them were cancelled, and others were put on hold for a while.

While a business is relatively small, founders talk to the team members a lot, which keeps them informed of their moods and attitudes. Employees actively communicate with each other, which helps them stay on the same page, keep up with others, and maintain a friendly atmosphere in the office. But then the business grows, and yesterday's junior specialists become top executives. Now they need to devote more time to their subordinates than to same-level colleagues, and the intimate aura evaporates. Some of the team members who worked side by side with the founders in the very beginning leave the company, being replaced with people from the outside. Founders, rather entrepreneurs than people managers by nature, love to play with new projects and products and often lose sight of their subordinates.

If your business stopped growing, check your team – is it still a team? Peter signed a contract with a company providing HR services. They carried out a comprehensive audit of his firm's working environment, which revealed some minor and a couple of serious problems that, beyond doubt, influenced the firm's output.

I put external environment analysis to the last place, even though it is a start point in many books. I believe that business success depends on a company leadership's ability to identify customers' needs and create values much more than on their analytical skills. Of course, every firm needs to compete and to obey local regulations, but the best businesses try to change the reality rather than adapt to it. But scanning the external environment can bring some fresh ideas.

Peter and his team carried out this work using the PESTLE and competitive analysis frameworks and found out that the company's UVP, unique value proposition, was not unique anymore. Some of their ideas were successfully copied by competitors. But the excellent job Peter did at step #1 helped them find some new solutions.

Conclusion

Those five steps are only the beginning. A lot of work needs to be done to implement all the ideas collected during them. In some cases, there are additional problems to be treated. But I recommend always starting with them.

Svyatoslav Biryulin

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