Growth Driver IV: Growth Strategy

environments with fast-changing structures. A carefully created planning process does not necessarily require a strict format, if the process itself ensures a correct prioritization of the firm goals, even though the execution on these happens in a rather flexible

manner.

Our investigation enhanced this understanding, as the investigated firms approached planning as clear goal-setting activities that continuously reassessed the current state of their market position, followed by quick actions of experimentation and adjustments. In other words, the founders have followed a strategy that allowed their organization to be agile towards today’s changing customer needs while staying focused on the higher mission set by the founding team. In most HGFs we interviewed, the common practice to develop and execute their strategy was the setting of clear objectives for the future, and their continuous reassessment along the way (AdviceLab, 06:31; MicroSecond, 6:37;

MyFish, 20:57; Poweray, 2:01; Snackable, 15:24; Spector, 11:42).

An objective is a term that carries the role of a Northstar metric in the firm. Similar to the firm’s mission is the objective of a clearly defined goal that can be executed in many different ways, and employees can come up with individual and innovative ways to fulfill that objective. The communication of these goals becomes just as important as the setting of these goals in the first place since it requires clarity about these objectives for the employees to productively produce progressive ways to fulfill them.

We have found that most of our interviewees contradict what we have gathered in our literature review when it comes to the agility of their developed strategies. We have established in our analysis (Chapter 4.2.2, Agile Strategy) that most founders lead their firm by continuously reassessing the firm’s short and long term goals. In order to ensure the validity of their reassessments, they run experiments to understand which new opportunities yield the highest growth potential for the firm. This reassessment can also lead to a shift in understanding how growth is measured, as it occurred to Snackable and their engagement with a new distribution partner. Their reassessment led to an evolution of their business model, as they have identified the opportunity to change their distribution model from a direct-to-consumer towards a

business-to-business-to-consumer (B2B2C) model. While this changed the complete business model and the

objectives for their employees, the mission of the firm remained the same (Snackable, 7:46, 18:15).

5.4.2 Measuring Growth

HGFs rethink how growth is achieved. Achieving rapid business growth becomes a customer-centric question that is answered by solving the right customer problems and

needs.

As can be seen in Table 13, we have found that growth for all of our interviewees was approached in a different way, for some it was a diversifying strategy, for others a partnership-driven strategy, but one thing that most have in common is the constant involvement around the customer needs, followed by a subsequent phase of rapid experimentation to identify the biggest growth potential. Scholars agree that there is no one best way to grow a firm (Galbraith, 2012; Van de Ven et al., 2013; Woodward, 1958). When it comes to evaluating a growth strategy, most scholars align with

Senderovitz et al. (2015) that a growth strategy is most beneficial when they harmonize and collaborate directly with the remaining internal strategies of that firm, which differs from the findings from our data analysis.

Four out of seven founders (Table 5) showed the clear ambition to grow, however, the way this growth was framed seems to differentiate from what is described in the

literature. In significant business decisions connected to growth, founders representing the literature view may focus on the question of what grows the business more, whereas the founders we have interviewed asked how to serve more customers with the need for our product. The firm growth process became a more customer-centric process. The effect showed a different approach in following business strategies, where the founder does not assume that they know how the future market and demand looks like and rather focuses on running smaller experiments based on changing consumer needs.

The findings of strategic entrepreneurship, as coined by Monteiro (2019), capture this understanding of growth of our sample. For this thesis, we would classify our

interviewees as strategic entrepreneurs. We find that strategic entrepreneurs differ from

traditional founders in two basic assumptions in regards to their understanding of growth: First, rapid growth is a closed period that needs to be prepared and activated consciously (Coad et al., 2014; Hölzl, 2014; Monteiro, 2019) and this preparation

requires a perfect fit between a relevant customer problem and the offered solution. This brings us to the second assumption, the firm needs to act quickly, and collectively, in identifying and utilizing potential market opportunities.

5.4.3 Agile Strategy

HGFs rely on business strategies that allow them to quickly identify and test new growth opportunities in the market.

Regarding strategy, Brüderl and Preisendörfer (2000) claim in their empirical studies that carefully planned growth strategies appear to be more fruitful than more innovative strategies to growth. Planning participates in organizing a firm for growth (Barringer et al., 2005: 899) and as a firm grows, it needs to introduce more formal processes,

especially in relation to planning and control (Hambrick & Crozier, 1985) to communicate their mission and vision effectively to all stakeholders (Roure & Keeley, 1990).

We illustrate in Table 13 that growth for all of our interviewees was approached differently. For some, it was a diversifying strategy, a customer-centric strategy, or a partnership-driven strategy, but all of them had in common that they aimed for a clear moment of product-market fit, before they engaged in a period of high-growth

(AdviceLab, 6:31; MicroSecond, 13:10; Snackable, 04:54). The moment of product-market fit was described as a clear moment where the customer demand increased dramatically, as everything from product, communication, and distribution aligned with what the customer was looking for.

Keeping all the above-listed arguments in mind, it becomes clear that growth as understood in the literature and Barringer et al. (2005) differentiates significantly from the approach of our interviewees and how more recent research understands it (Monteiro, 2019). Brüderl and Preisendörfer (2000) clearly state that HGF’s most

profitable approach should be to follow sales processes rather than innovation activities - all firms we have interviewed aligned their strategies towards identifying new

opportunities that unlock exponential growth drivers. In order to execute on this logic of growth, the firm requires certain attributes that partly align with scholars, as in the setting of firm objectives that are mission-driven (Barringer et al., 2005), clearly communicated goals towards the organization (Hambrick & Crozier, 1985; Roure & Keeley, 1990), and the organizational commitment to rapidly experiment to identify new opportunities to grow exponentially.