“He will win whose army is animated by the same spirit throughout all its ranks.” – Sun Tsu

Growth
    
Growth is an imperative objective for all businesses, especially public companies. Management fights to achieve it because investors demand it. Revenue growth means a higher share price. Achieving growth reduces average fixed costs, which otherwise diminish profit margins. Expanding into new products, markets, and business sectors results in improved margins and increased revenue. However, there are instances where organizations articulate a desire for growth yet are not properly structured or managed to support this aspiration. In certain cases, organizations may unintentionally inhibit growth.

Common Goals

The absence of common goals and objectives across departments (silos) can significantly impede growth. For instance, the credit department should coordinate with management, sales, and marketing to establish shared goals for meeting new business targets and developing new products or markets. Instead, there is often a tendency to stifle innovation through excessive analysis (paralysis by analysis), which frequently leads to the rejection of new initiatives. There is minimal incentive for credit personnel to adopt a proactive approach, as decisions to decline proposals typically do not result in negative consequences – no approvals equals no write-offs. 

You don’t get fired for write-offs in deals you don’t approve and consequently don’t get funded. The same goes for residual settings by Equipment Management; lower assumed residuals in pricing mean a lower chance of residual write-downs. Moreover, the compliance department often adopts a risk-averse stance, which can adversely affect new business development. They face scrutiny when challenges arise, leading to a reluctance to endorse innovative initiatives. Similarly, personnel within operations may view new projects as additional burdens (What? More work!) rather than opportunities to increase the business’ profits. Support departments often possess the authority to obstruct progress.

Do the Math 

To cultivate a growth-oriented organization, it is essential first to analyze and determine the volume of business required to offset attrition/run-off and achieve growth targets. Calculate how much new business must be booked to grow.

Align Objectives

Subsequently, departmental objectives must be aligned through monthly meetings with Sales, Credit, and Equipment Management to review both won and lost deals. 

For deals won, work to replicate them through the sales force – I have seen situations where each salesperson has a successful niche, yet others don’t do the same type of deal – why? Communicate success with the recipes for success. The rest of the sales force must have the knowledge to replicate it. 

For lost deals, a post-mortem review is essential to understand the winning structure. Any market intelligence on competitors’ pricing, cost of funds, or residuals is helpful but hard to obtain. Ask your customer why you did not win, then adjust your strategy. Understand why Credit turned down deals. Review Equipment Management policies, as it may be wise to accept slightly higher residuals to win more business that will generate net spreads on enough deals to cover occasional residual write-downs. It is better to win more business and sacrifice residual gains as you have more customers, new relationships, and more chances for renewals and residual gains. That is all part of the formula for growth.

Large residual gains without write-downs may indicate that your residual policies are too conservative. 

A pro-growth culture should be established within the organization, supported by competent, creative, and results-oriented staff. Retaining existing customers (being relationship-minded) and replacing expiring deals are primary components of the formula for growth. The rest is hustle, creative new ideas, and teamwork.

What is the answer to creating a growth-oriented organization? 

First, you must do the math to determine how much business you need to generate to offset runoff and achieve the growth target. 

Then, you must ensure that all disciplines’ goals are aligned and conduct regular meetings to ensure they are met. 

Do postmortem reviews of lost deals, credit write-offs, and residual write-downs.

You must foster a pro-growth attitude among the business staff. 

You need capable, creative, results-driven staff who work well together.

You must keep existing customers. You have to replace runoff. 

You must hustle to increase business either by benefiting from an expanding economy, by taking business from the competition, or by coming up with new initiatives that create new revenue sources. 

Not very easy!