Finding the Right Formula
In my first article in this series, we explored how organisations can plan for sustainable growth. Building on that foundation, the next critical step is identifying new or untapped sources of expansion.
For most organisations—except the largest corporations—growth can be driven by three primary levers: product, industry, and geography. (In this context, “product” includes traditional products, SaaS, services, and processes, all of which contribute to an organisation’s value proposition.) By leveraging a combination of innovation, adjacency, and operational excellence, businesses can unlock new opportunities for growth.
Conventional wisdom—and data—suggest that organisations should focus on changing one lever at a time. As a counterexample, startups often attempt to disrupt all three simultaneously, which significantly lowers their probability of success.
- Expanding an Existing Product to New Customers in the Same Industry
This is the most straightforward growth strategy. It relies on a well-defined value proposition, combined with industry, functional, or technological expertise. Since the product has already demonstrated success with certain customers, it can often be extended to other customer segments facing similar challenges.
This approach serves as a foundational growth tactic, providing organisations with the credibility to expand further. However, over time, replication and commoditisation become risks, making it necessary to explore additional sources of growth.
- Introducing a New Product to Current Customers or Industry
Launching a new product can be an effective way to grow, particularly when organisations test value propositions with existing customers. With established domain expertise, deep functional knowledge, and an understanding of unmet needs, organisations are more likely to see strong adoption.
However, before expanding a new product to other industries or geographies, a comprehensive market analysis is essential. To successfully execute this strategy, organisations need:
- A profound understanding of customer challenges
- Trusted relationships with existing customers
- A well-developed innovation pipeline
- Expanding an Existing Product into a New Industry
The ideal new industry to enter is one that is adjacent to the organisation’s core market. Adjacency can be based on:
- Vertical integration
- Similar user needs
- Extensible platforms
- Established distribution networks, channels, or partnerships
Beyond adjacency, companies should identify underserved areas within the new industry. Often, adjacent industries share more similarities than differences, creating opportunities to transfer learnings and introduce disruptive innovations.
Another key factor is change—whether driven by evolving consumer demand, new regulations, or shifting competitive dynamics. When an industry is in flux, businesses are more receptive to fresh solutions. In such cases, a proven solution from another industry can be perceived as a lower-risk experiment, making adoption easier.
- Expanding an Existing Product into a New Geography
Geographic expansion presents another avenue for growth. Conventional wisdom suggests expanding into geographically adjacent markets, which can be advantageous. However, proximity alone isn’t enough; organisations must also evaluate:
- The industry structure and value chain in the new geography
- Business models and buying behaviours
- Cultural nuances and local market expectations
Without alignment in these areas, the product may need modifications to meet market needs effectively. Additionally, organisations can consider “piggybacking” on existing customers with an international presence or leveraging established channels and partnerships.
Cultural intelligence is key to succeeding in a new market. Beyond business transactions, companies that actively contribute to local communities and build strategic relationships are more likely to establish a strong foundation.
The Role of Inorganic Growth
This article has primarily focused on organic methods of creating new revenue streams. However, inorganic growth—through joint ventures, mergers, or acquisitions—is another viable path. While these approaches may appear to be quick solutions, they come with inherent challenges, including:
- Optimism bias in assessing opportunities
- Complex valuation processes
- Cultural integration difficulties
- Challenges in achieving joint value creation
Key Takeaways
- Organisations must earn the right to grow by establishing a strong foundation.
- New revenue streams can be created by expanding through product, industry, or geography.
- Changing one lever at a time is the least risky and most sustainable growth strategy.
By thoughtfully leveraging these growth levers, organisations can achieve sustainable expansion while mitigating risk and maximising long-term success.
If you are a business builder, how else have you achieved new growth?