Ram Charan What Every Company Should Know

We're often too busy at work trying to cross things off our "to do" list to think about the future. But don't let daily pressures make you forget that we need to keep finding ways to help our companies grow -- our employers need to thrive in the marketplace, and we need to be constantly learning new skills and have real opportunities for advancement.

To help you spot growth opportunities, try using this simple and effective tool. You can do it any time, any where. All you need is a piece of paper -- the back of a napkin will do in a pinch -- and something to write with.

Then, draw the following:

We talked about Box A (Existing Customers with Existing Needs) last time, when we discussed the concept of "expanding the pond" (see "Put Aside Your Excuses and Grow"). That's where -- in an attempt to increase sales -- 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.

This is what Wal-Mart did when the world's largest retailer, decided to add groceries to its offerings, in an attempt to get a greater share of its customers' wallets. In terms of our growth box, it tried to fulfill an existing need that its customers had, one that Wal-Mart had not been addressing. Thinking about Box A can help you a great deal in identifying an adjacent market you can serve with your core competencies.

Exploring Your Customers Needs

In Box B (Existing Customers with New Needs), you explore the needs your customers have that neither you nor your competition are satisfying. To find this out, you need to be observant, interacting constantly with your existing customers and examining what you see and hear from more than one perspective. You're acting as an anthropologist, observing the behavior of your customers (and potential customers) to determine their needs.

This is what Toyota did in creating Lexus. It saw that its traditional customers were moving upscale, so the auto maker created a car better than a Cadillac and one with more value than a Mercedes -- i.e. it cost less but was just as good -- to satisfy its customers' changing needs.

Avon is a great example of Box D (New Customers with Existing Needs.) It identified a new customer segment -- teenagers -- who had the same concerns ("how can we look our best?") as its traditional customer base (women in their 20s and older.) Avon then set out to serve this new segment through existing capabilities -- the traditional Avon ladies, its catalogs, and Web site. The initiative significantly improved the company's revenues and earnings.

No one has 100 percent of the market. The question you're asking as you study Box D is: How do we get the customers we don't already have. That's what Home Depot is doing with its decision to target professional contractors who need the same sort of products as the company's do-it-yourself base.

Entrepreneurial Direction

If you explore Box C (New Customers with New Needs), you're actually thinking about going into a new business. This may be the first place you turn when your current strategy is in trouble or if a sudden change in the marketplace has rendered your old strategy obsolete.

Box C requires you to be more entrepreneurial. But don't despair. Imaginative people who know how to manage their business reduce the risk by recruiting people who know the new area well. Joint venturing is also a possibility. GE went into a new business when it decided to add water and process technologies -- such as chemical, filtration, and separation -- to its product line.

As you see, the growth box is a great tool for trying to spot new opportunities. You only need to ask four questions:

• How can we fill an existing need our current customers have? (Box A)
  
• What new needs can we satisfy for our customers? (Box B)
  
• Should we go after new customers who have new needs? (Box C)
  
• How can we sell what we have to new customers? (Box D)

Challenge Yourself Regularly

You can do this exercise over lunch, or when you're having coffee with customers, people from other parts of the organization, or your suppliers. Not only does it help you generate countless growth opportunities quickly, it establishes a common language and frame of reference you can use when you meet with people outside your own department. Having the growth box in front of you makes it easy to share observations -- and diverse viewpoints will help trigger new ideas.

If you're a manager, you'll also want to examine the growth box with your direct reports. Take 10 minutes during every staff meeting to go over it. Challenge yourself with the growth box once a week, 50 weeks a year -- no one ever becomes a champion at anything without practice.

Looking at the box regularly will pay off in growth for your company and new opportunities for you personally. In this win-win relationship, top-line growth is everyone's business.