There’s two guys. Each is standing on a box and holding one end of the same rope. The rope is ten feet off the ground. Your mission, should you choose to accept it, is to get over the rope.

How do you do it? (You cannot tickle them to get them to lower the rope.)

Well, you could get a big step ladder, climb up and jump over. Or you could use a trampoline. Or, if you have the technique, you could pole vault. Or Fosbury Flop yourself over the rope.

Each of these approaches has their pros and cons. They will have their own relative success rates. Some need equipment – a trampoline, a pole. Some do not. But the point is they all work.

So far so good.

Now, the rope is one hundred feet in the air.  Don’t ask me how the guys did this, but they did.

How do you get over it? Trampoline? Step ladder? No. You need a new approach. Maybe a helicopter; or you could build a staircase; or fire yourself out of a cannon; or use a jet pack.

The point is the approaches that get you over the ten foot high rope don’t work with the one hundred foot high rope. They may work with a fifteen foot high rope, or maybe even a twenty foot high rope, but there will come a time when they are not up to the job. The current processes, technologies and approaches only get you so far. To hit the heights – the one hundred foot high rope –  you need new means.

It’s the same in business. Whatever it is you do now…your marketing; your strategising; your productivity; your product and service development; how you deliver your value; your logistics; your systems and processes; everything that makes up your business, or department:  each is either -

a) Inadequate

It can hardly get you over a one foot rope, never mind a ten foot rope. Your trampoline has lost its spring. Your Fosbury is more of a Fop than a Flop. Or,

b) Adequate

Adequate for your needs. Not over-engineered, or creaking at the seams. Sufficient. It does the job. It is reliable. Fit for purpose. Or,

c) Over-engineered.

It can get you over the one hundred foot rope. Even although you can see only the ten foot rope. This may be a good thing as you are prepared for the future. Or it may just be a cost, because helicopters are more expensive than trampolines.

You will probably have a mix of a, b and c in your business/organisation.

Here are some critical questions –

Q1 What do you do today to generate sales?

Q2 Can these activities generate a five-fold increase in sales?

Q3 If not, what changes do you have to make to these activities, or what new activities do you have to adopt to generate a five-fold increase in sales?

Q4 If you imagine increasing your sales five-fold over the next 2 to 5 years, what supporting systems and processes in your business will become inadequate and in what order?

Q5 How will you deal with the answer to Q4?

If you take the time to answer these five questions thoughtfully you will end up with the bones of a good growth strategy. You will be getting ready for the one hundred foot rope.

This week’s Pearl of Leadership Wisdom is on Growth.

Igor Ansoff was a Russian-American who is lauded as the father of Strategic Management.

His most famous contribution is his eponymous matrix, which helps firms decide what their product and market growth strategy will be.

It comes to my mind because I’ve spoken to a number of leaders recently who want to do very different things to what they are doing now. This may be right for them. But the grass is always greener on the other side of the fence. And the fence is often topped with razor wire. And the field beyond is a minefield.

The Ansoff Matrix looks at products and markets – both existing and potential new ones.

Stick to the knitting…Market Penetration

Growing by selling your existing products into your existing markets is called market penetration.

Market penetration can seem boring – the same old stuff. But wait – you know what you’re doing. You already make these products (or services). You already understand the markets. You’re already there. You can do more of what you’re already doing. You know you can. You can make things more difficult for your competitors. You can sell more, more often, to more people, for more money. Importantly, it’s low risk.

Some managers want to move away from market penetration because there are environmental issues looming that will make their existing market much tougher. But remember – markets don’t disappear, competitors do. Someone will win – you can make sure it’s you, in this lowest risk growth area.

Examples of market penetration? They are legion. Nokia, Ericsson etc – all the telecoms companies.

Risk rating – low. No bullets to dodge here.

Now with wings…Product Development

Growing by selling new products into your existing markets is called product development.

You’ve got some fabby new products and you want to sell them to your existing markets. The key issue here is how expensive is it to develop new products. If you can knock these out inexpensively, this is a great strategy and is not much riskier than market penetration. If your new products take time to develop, and money, and then fulfil some critical role in your customers business, like maybe a new aero engine, then there’s a real risk.

Example – most healthy companies most of the time. Supermarkets selling, eh, everything…insurance, banking. What does it look like when it goes wrong? – Toyota Prius.

Risk rating – low to medium. Death unlikely, but possible.

Just arrived from the UK…Market Development

Growing by selling your existing products into markets that are new for you is called market development.

OK, so you decide to sell your widgets into a new market. Lots and lots of lovely new customers. What could be better. The new market is huge. If we get 2% we’ll be rich. Yes, but that 2% already belongs to someone. And they want to keep it. You’ll have to fight. And they know the territory.

This is a higher risk strategy. It might be the right thing to do. But you better make sure you’ve done your market research, and you have a USP that’s watertight, airtight and extremely shiny.

Example – Lucozade – I remember my Gran drinking it when she was ill. Now it’s a sports drink!

Risk rating – low to medium. Death unlikely, but more likely that with market development.

All change…Diversification

And finally, growing by selling new products into markets that are new to you is called diversification.

I’ve got a great idea. I’ve spotted this great new market that’s growing like topsy. We can buy loads of new products and make a killing! We’ll all be rich. What could possibly go wrong? How difficult can it be to understand this new market? We’re smart guys.

This strategy has all the other risk factors combined, and some. To make it work you need to get an awful lot of stuff right. In order to speed the process of getting into new markets with new products,  companies often go on an acquisition spree…

Example – GEC/Marconi. Was in defence, diversified into telecoms. Total car crash. Value of £34 billion reduced to £66 million. Board members last seen skulking around the US, hoping nobody Googles their names).

Risk factor – running with scissors, with your shoe laces tied together. In the dark.

No risk, no reward…

It’s all about managing the risk in your growth strategy. Risks are not to be avoided. They are to be understood and managed.

But remember, the greatest risk is having no growth strategy.

Example – a lot of wee companies.

Risk rating – Russian Roulette.