Need for Speed: How an Accelerated Growth Mindset Can Help Your Manufacturing Firm Achieve Aggressive Growth Goals
By James Dorn, President
All manufacturing companies need to grow over time in order to remain competitive. But there’s growth and then there’s growth. Some firms — like PE-backed firms and emerging firms — have a mandate to figure out how to accelerate business growth more aggressively than the average manufacturing company.
Firms with aggressive growth goals not only face pressure in delivering above-market performance, but they also struggle to develop the right internal processes and scale their talent along the way. The truth is you can’t reach more ambitious growth goals with a “business as usual” approach. It’s critical for CEOs to think about how to adopt an accelerated growth mindset and develop the right processes, systems, and workflows to reach performance goals faster.
The 3 Types of Manufacturing Firms that Seek Accelerated Business Growth
Generally speaking, there are three types of firms that pursue faster-than-average growth goals. These are:
- PE-backed firms. In the case of private-equity backed firms, PE owners typically seek to drive up the enterprise value of a manufacturing company within a 3-5 year window before taking it to market. PE firms will always push for aggressive growth. After all, the more enterprise value that is added during their ownership interval, the greater the return when they make their exit. From the manufacturing company’s perspective, however, the PE firm’s aggressive stance often represents a drastic change of pace and may even feel a little like whiplash.
- Emerging firms. Startup-type emerging manufacturing firms are often backed by venture capital. These companies use speed to capture market share, scale quickly and exit to private equity or an IPO. Accelerated growth is baked into the DNA of these firms.
- Firms in transformational growth mode. More established manufacturing firms sometimes decide to shift toward more aggressive growth goals in response to favorable market conditions. These companies may see an opportunity to disrupt the market or get on the leading edge of a new trend like 3D printing. Firms in transformational growth mode set ambitious goals for growth, often going after a compound annual growth rate (CAGR) of 20% or more.
Each type of firm has unique strengths and challenges, but all of them must find ways to adopt an accelerated growth mindset in order to move the needle on their especially ambitious goals.
Going for Growth: How to Adopt an Accelerated Growth Mindset
So, how exactly do you go about adopting an accelerated growth mindset? Here’s what you need to move quickly and effectively toward your goals:
- A strong team built for speed. Accelerated growth requires sustained momentum. It’s one thing to have a week where your team is running fast and another thing entirely to operate that way for a year or more. Accelerated growth is a marathon-length sprint. If your team isn’t willing to operate at a faster clip as a baseline, then they don’t truly have an accelerated growth mindset. As you scale your team, you should strive to add people who are excited to work in a fast-paced environment. Those who have a more entrepreneurial mindset and like to make decisions tend to do well in this environment. Note that this piece of the puzzle can be more challenging for PE-backed firms with a staff that has been operating one way for decades and must now shift gears. In this case, adopting an accelerated growth mindset may mean educating and motivating your staff — and thinking closely about how best to approach change management.
- Collaboration between teams. Manufacturing companies going for aggressive growth won’t achieve their goals as long as there are entrenched silos within their organizations. When your firm is moving fast, you have to be able to quickly communicate what you are doing and what you are learning with the broader team. You must find ways to foster free and effective communication across teams. This may entail something as simple as how your office is set up. For example, you might consider reorganizing your facilities so that cross-functional teams are in close physical proximity, making it easier to engage.
- Agile processes and methodologies. If you want to grow more quickly, you need to be prepared to adjust rapidly to changing conditions. To do that, you need to build a more agile operating rhythm that allows your team to consistently evaluate what’s working and what isn’t and shift gears as needed. In addition, you should take care not to plan too far in advance or make bets that are too big. Both hamper your ability to pivot in a graceful way as market conditions change. A better approach may be to start with a minimum viable product and expand from there, testing and iterating as you go.
- Centralized access to data and integrated systems. In many manufacturing companies, cross-functional teams don’t have ready access to each other’s data. But you can’t make fast, informed decisions if you don’t have the right information to guide you. You need to develop a robust, centralized fact base that breaks down critical aspects of your business, including markets, financials, research, information about customers and product performance. In addition, all your internal systems should be integrated so that each team is up to speed on what’s happening in other areas of the business. For example, your product team should have ready access to technical information and customer service cases as they are registered. The more informed your whole organization is with good data, the faster they can iterate and run toward accelerated growth.
- Automated processes. Wherever possible, automate your internal systems to build speed and reduce loggerheads. For example, artificial intelligence is playing a big role in modernizing the digital infrastructure used by many firms to handle case management and other internal workflows. Identify areas where smarter systems can be deployed to replace manual entry of data. Doing this saves time and frees your staff up to use their energies in more productive ways.
- Faster, informed decision making. The mandate to move quickly must be supported at the highest levels of your organization. That means freeing your staff to make decisions with access to more data and less oversight. Take a step back and review your team’s workflows and approval processes around decision-making. Streamline the number of approvals to the minimum required. If you find that you’re not doing much more than rubber-stamping certain decisions, remove yourself from those workflows.
Ambitious growth goals are both daunting and exciting. But until you back them up with the right processes and approach, you’ll never turn them into reality. Adopting an accelerated growth mindset is the first and most important step you can take in that direction.