Organic company growth is typically seen as something that is steady. Five to twenty-five percent a year growth is deemed reasonable and in many cases aggressive. Hockey stick growth, that which is 50, 75, 100+ percent growth in a single year and then sustained at high rates in a few subsequent years, is usually thought to only occur through acquisitions or mergers. This does not always have to be the case and a shift in planning processes may in fact make periods of rapid growth possible organically.
Frame of reference for planning makes a difference
Most planning processes are done annually and look at where a company is today as the basis for determining where things will be in the next year. Realistic growth targets are established based upon current performance. Forecasts are often done taking that growth out three to five years. With the current situation as the frame of reference, it is difficult to justify large changes in growth with out an acquisition or some other exogenous force.
Since some companies do experience hockey stick growth organically, we know that it is possible. What are rapidly growing companies doing that is different from those who experience modest growth and how to they plan for it?
Companies that experience rapid growth use the future as their frame of reference, not the present. Here is how it can be done:
- Pick a point in the future – The exact length is not as important as setting a time frame that is far enough into the future that your mind can move to the place of “Well, that far out, anything is possible.” Five to ten years is usually long enough.
- Create the vision – Articulate in as much detail as possible what the business would ideally look like that far into the future.
- Reverse engineer – Determine what it will take in order for that vision to become a reality. This is where resources are identified, skills are determined, etc.
- Plan back to the present – Figure out what would need to happen each year in order to reach the goal. Make adjustments to the timeline based upon the reality of moving from the current situation. Time may be needed to build capacity and acquire resources before the explosive growth can begin.
Planning in this manner may actually mean that there are some years of slow to no growth necessary to prepare for the high growth periods envisioned. By shifting the planning frame of reference from the present to the future, the necessary short-term focus and investment is much more likely to occur.