How To Balance Growth Initiatives With Incremental Initiatives
When should you take the big swings? How should you take them? When should you focus on incremental growth?
Surprisingly, the differences between growth opportunities and incremental opportunities – as well as why both are important and which to pursue when – this is something I often have to explain to people who should know what these are, mostly because the definition is right there in the name.
Not you people. Other people.
Like I recently had to explain this to the CEO of a pretty successful growth stage startup, when he presented me with the outline for an initiative, and asked for my thoughts. My first question after a brief read was: “Is this a growth opportunity or an incremental opportunity” – and he asked, “What’s the difference?”
I mean, I get it. I don’t always use the Harvard Business Review terms and MBA strategies. But at the same time, my question was just me saying, in a formal way, “Is this a big swing? Because I can’t tell from what you’ve given me.”
Here’s the main difference
Growth initiatives are indeed big swings (high risk/high reward). They could be the launch of a new product or product line, development of an entirely new feature set with a new set of use cases, entering a large and disparate new market, a substantial business model pivot, and so on. They usually contain all three – repeat, all three – of these factors:
They are a long term play.
They have the potential for high margins.
The market size is large and the TAM is high.
They are intended to spur high growth over a long period.
Incremental initiatives are changes or enhancements that are made to optimize or capitalize on the revenue, margins, and/or profit from an existing product or opportunity. In relation to growth initiative characteristics, they’re usually more conservative.
Extending current customer LTV or reducing CAC.
Reducing costs or increasing value prop and thus pricing or price model tiering.
Increasing market share in an existing market.
Some things I want to make clear up front:
These are not “big projects” versus “small projects.”
However, growth initiatives are always big swings, while incremental initiatives can be big swings or small swings.
You shouldn’t call a “big swing” incremental initiative a growth initiative, and you should never, ever try to pull off a “small swing” growth initiative.
That’s not how growth works.
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