Any Business we start with a Product or Service Idea or both (i.e. Product and Service). However, after inception, we try to create further the Organization with several initiatives, measures, strategies and approaches. Usually there are two ways to Build an Organization incrementally on an Idea. In this Management Insight, we look at both the ways of Building an Organization and Scaling up.
1. Product/Service or Idea Based:
In this approach, basically Business Inception or an Organizational Inception, starts with a Product Idea or Service Idea. Once we do the Pilot study and finish the Feasibility study, we go on and Build/Manufacture the Original Product or Service. First, we start selling that Specific Product in Hand. Later on as Time Passes though We Try to Identify Product Variants to Give More Variety and Choice to Customer. Thus we will be Building a Product Portfolio of Related Products. Further we keep Selling the Portfolio of Products. If the Revenue is not Sufficient, We further Diversity our Organization into Unrelated Products and manufacture selling Products from Different Verticals and Industries. At this stage, When we started with the Product Idea, actually We do not know how much is the Market Available to Us unless we do In-depth Market/Industry Survey. At this stage if we know the Market Size in Terms of $s (both nationally and globally), and if we know the Number of Players in the Industry, and Their Market Shares, We try to keep targets for Ourselves with respect to How much is the Market Share We want to Grab and how much is the Market Size We want to Make for Ourselves. These things are Unclear Unless we do the Market Survey. Just with Product or Product Portfolio in hand, We don’t know the Size of Our Market. How much amount of $s Products will be sold is unclear unless we do Market and Industry Survey.
Thus, in this approach, we keep developing Product Portfolios, Study Market Size and Keep Targets for Ourselves. This is One way of Growing or Scaling the Organization.
2. Objective/Goal/Target Based:
Another Way to Scale Organization is, Initially itself We start with a Revenue Goal/Target for Ourselves. As part of Business Plan, Entrepreneurs keep a Revenue Target for Them Selves for the Coming 3 to 5 Years Time. By keeping these figures in mind, the Organization tries to Identify Products, Product Variants, Services, Identify Value Added Services, Addon Services, Complementary Contracts, etc. Thus the Organization Tries to Identify Avenues for Revenue Growth Horizontally keeping the Revenue targets in Mind. They also Expand Markets, enter into New Market Regions, etc. This kind of approach may create a bit pressure on the Organization, because Revenue comes first; Innovation, Creativity, Creating New Products are Dominated by the Priority of quick increase for Quarterly Revenues.
Hence, Organizations, have to Combine both Approaches to be Competitive in the Market. One cannot be Obsessive about Revenues all the time; and also keep innovating should be the priority. The best approach could be Keep innovating and inventing Product Portfolios along with Expanding Markets and Market Regions can yield Better Long-Term Results for the Organization. This approach ensures Long Term Survival for the Organization. This also makes Customers Trust the Organization, because Results are Being Delivered through New INNOVATION, not obsessed with REVENUES; this makes Consumers Loyal to the Brand as well (as is happening with Apple and Intel).
In the Second Approach, keep on Adding more and more services with Additional Burden to Consumer also May not Yield Better Results. Sometimes, this may lead to Brand Switching attitude from Consumer. Hence, best approach is to combine both the ways in order to scale up the Organization. That is “Innovate Products and Then Expand Markets”. This should be the approach to scale up Organizations.
Thank You,
Hope this is Useful.
Best Wishes,
Dr.Goparaju Purna Sudhakar, PhD, PMP