Ram Charan What Every Company Should Know

Are you personally growing, learning new skills at work? Are you working on a growth project, one that's going to keep your company ahead of the competition? Are you part of a growth company, one that's increasing both revenues and earnings?

If you answered no to any of the above, both you and your company could be in trouble. Why? Because if you're not working for a growth company, you're going to be supplanted by someone who is.

Every Business Is a Growth Business

One of the things that make a company truly great is its ability to grow, year in and year out, regardless of what's happening in the overall economy. I truly believe that every business is a growth business.

That's an easy idea for people who are in heath care, or energy, or who sell iPod accessories to understand. But the statement is often greeted with skepticism by everyone else, especially if they work in basic manufacturing, the automotive industry, commodity chemicals, or other places that aren't typically referred to as "hot."

People in those fields dismiss the premise out of hand. When asked why, they rattle off a long list of excuses to try and explain away the reason their firm isn't able to grow -- either today or in the immediate future. You know the litany:

• The market is flat. None of our competitors are growing.
  
• We're in a commodity business. Our product/service is the same as what everyone else offers. We can't differentiate what we sell.
  
• We're getting killed by imports.
  
• Forget about growth. In this economic environment, if we can just increase sales and earnings at the rate of inflation, we're doing great.
  
• Customers will buy only on price.

Relying on these excuses shows a remarkable lack of both imagination and determination. The reality is that every business really can be a growth business if you approach it in a different way -- you need to change your mindset.

Your Customers' Other Needs

One easy way to apply your imagination effectively is by employing an approach I call "expanding the pond." The underlying idea is simple: When you expand the pond, you try to fill additional needs your existing customers may have or are likely to have.

In other words, you sell more to the customers you already have by moving into related market segments, offering products and/or services that complement your current line. You literally expand the pond in which you fish for business by redefining what you do for a living to be more inclusive, while still remaining true to your core.

Some examples will show you how this works. Dell (DELL), long dominant in personal computers, has expanded its pond by moving into an adjacent market: It now sells printers -- and the high-margin accessories associated with it, such as ink.

Wal-Mart (WMT), the world's largest retailer, decided to add groceries to its offerings, in an attempt to get a greater share of its customers' wallets. Having done that successfully -- by adding food products to the mix of merchandise in its regular stores and opening "super centers," where it combines its traditional store with a supermarket -- it's expanding its pond again.

It's now adding products found in Staples and Home Depot to its mix. And there's more to come. Wal-Mart will be making a major push into appliances, long a Sears stronghold.

Starbucks (SBUX) has expanded its pond in many different directions. To give customers a reason to spend more time in its stores, it has added Wi-Fi (wireless high-speed Internet access). Like the music you hear playing while sipping your double espresso? You can buy it. And if you want to extend "the Starbucks experience" to your home, you can purchase Starbucks coffee at your local supermarket.

Staying Focused

One key danger in trying to expand your pond is that you'll go too far, adding a product or service that your customers don't see as a natural fit. A way to make sure you stay focused is to redefine your market in such a way that your current large share under the present market definition becomes much smaller under the new one.

That's exactly what the major soft drink companies have done -- they've redefined the areas in which they compete. It's no longer soft drinks. It includes beverages of all kinds.

The continuing battle between Coke (KO) and Pepsi (PEP) today involves not just carbonated beverages -- which comprise just 3 percent of the total liquids we consume each day -- but the other 97 percent as well. Each company has moved into nonalcoholic beverages such as bottled water, juice, and athletic drinks. Coca-Cola alone now offers more than 400 beverage brands worldwide.

Seek a Growth Company

The best leaders in growing companies understand that every business is a growth business. That's one of the things that make them the best. They figure out ways to grow -- especially internally -- by selling more products to customers they already have a relationship with, while their competitors continued to come up with excuses why they can't.

If you're not in a growth company and can't make it one, it's probably time for you to leave and join an organization that believes in growth.

In the next column, I'll share with you a growth-generating tool that's so simple it literally can be drawn on the back of a napkin.