So your business is growing. That’s wonderful. After all, it depends on the situation.
A few years ago, my partner Barrett and I Predictable revenue.. We talked about business growth. Ross is a leading expert on business growth. He asked us if we were growing with inertia or momentum. Both of them had pure white faces.
“What is the difference between growth and momentum?” We asked. Aaron unpacked it for us, and it makes a lot of sense. I’ve looked back at the conversation over the last few years, and this is the best way to explain it.
Let’s look at an example of two fictitious companies, NewCo and DiffCo. Both NewCo and DiffCo are companies that offer brand new products / services that address consumer issues. They are both doing very well to get started, as they both meet the needs of their consumers.
For years, NewCo and DiffCo have been neck-to-neck and are producing results. They are the envy of many companies. Everyone wants to work for them. Then something happens. The fate of both companies is divided.
NewCo realized that it was growing too slowly due to inertia. They kept the same way and did not improve their products or services or expand into new markets. Soon they were eaten by competitors.
Meanwhile, DiffCo gained momentum and continued to grow. They come up with new products, offer new solutions and services, and we are always looking for new clients. Ten years later, DiffCo was so different that it was no longer known for its famous products. A model of their momentum continued to grow it.
Do you know which company these are actually in? I’m sure many examples come to mind. In business, you can grow with inertia or momentum. However, only one way will keep your company in the long run.
Growth due to inertia
Inertial companies grow by doing the same. They belong to the “don’t fix if not broken” model. These companies may have initially provided excellent solutions to consumers. A few years later, they were eaten by better products and stopped selling to new competitors.
A typical example of an inertial company is Blockbuster. It grew by inertia until it had stores in every town. The blockbuster movie has become the undisputed king of movie rentals. Then the internet came and they said, we are a company that rents movies from physical stores.
later Marc Randolph came up with the idea for Netflix. He helped innovate DVDs through email. After his departure, Reed Hastings continued to innovate with streaming video and then began creating entertainment. Goodbye blockbuster.
Growing with momentum
Are you a vigorous growth business? Momentum companies grow by constantly looking for new businesses. When they find new products and solutions, they don’t stop. They continue to think of better ways to support their customer base and serve them.
Amazon is a prime example of a company with momentum. Jeff Bezos started Amazon as an online bookstore, started selling anything online, allowed third parties to sell, created his own products, and created entertainment. Amazon has maintained its momentum by making it easy for customers to do one-stop shopping. Nobody thinks Amazon is an online bookstore anymore. They consider it a one-stop shop.
How to become a vibrant company
According to Jim Collins, who researched the great companies in Is the bestYou need to come up with your own momentum model he described in his companion book Turn the flywheel..
Collins suggests that an organization needs to create (or recognize) a system for business growth and continue that system. Business growth is not about coming up with one great idea. Rather, growth is about creating a system that constantly creates, improves, researches, evaluates, and executes ideas.
Collins explained that Amazon’s flywheel works this way. Amazon can increase revenue per fixed cost and lower prices for more products. This will increase customer visits and allow third-party sellers to expand their stores and distribution. It is a virtuous cycle that enables continuous growth.
It’s growing fast for my company as well. We are good at attracting more website visits, getting more leads, providing better service, getting more return business, attracting better keynote speakers, etc. We do that by offering a wide selection of keynote speakers. In this way, my company was able to maintain momentum during the pandemic.
So the growth of your business may be great now. However, it may be due to inertia rather than momentum. If you want to be another 10 years later, check out the system to understand why and how it’s growing. Thank you later. Even better, please send me some options or warrants.
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