The three growth levers

Finding clarity among the chaos of data, trends, and opinions can be challenging when building a growth strategy. But last week, I had a conversation with a member of The Fold, and the number one thing that struck me was how clear he was on his team's remit as it pertains to innovation. When I asked him what his focus was, he didn't drop a beat; "Our job is to find new propositions that decouple revenue growth from production volume".

I can't remember the last time someone answered that question with such clarity and confidence, and what struck me was that the way he had defined his scope was through the growth lever he was pulling (a lever being a tool, action or variable you can adjust or manipulate to influence outcomes).

As strategy, innovation and proposition teams - I believe every new venture, product or service we're building, at its core, is tied to one of three fundamental levers, and I thought it'd be helpful to define each of them and give you some ideas as to how you might pull them. Ultimately, I think the answer to 'How do we grow?' can be found in one of these:

Lever 1: Decouple growth from production volume

How can you increase income without proportionately increasing the number of goods produced?

Apple is perhaps the company that has answered this question most successfully. Their focus in recent years has shifted dramatically from the relatively low-margin realm of products (iPhone, iPad, Mac) to the high-margin realm of services (App Store, Apple Music, and Apple Pay). This is the lever Apple pulled that has enabled them to thrive, even while their physical production volumes (particularly for iPhone) have slowed.

Here are some ways you might answer this question for yourself:

• Premiumisation: Dial up your existing products' quality, functionality or perceived value to realise a higher sale price and margin.
• Diversification: Complement existing products or layer over them with valuable ancillary services that you can build once and sell many times.
• Platformisation: Turn your product or service into a platform that allows third-party producers to generate additional value for you.

Lever 2: Leverage underutilised assets in new ways

How can you maximise the potential of existing resources and create additional value without investing in new assets?

Amazon has executed this brilliantly with AWS. Initially, its cloud infrastructure was built to support the scalability of its own online retail operations (especially around the holiday season). Now, they monetise excess computing power and storage by making it available to other businesses. In Q4 of 2022, AWS generated $21.4bn in revenue.

Here are some ways you might answer this question for yourself:

• Asset Monetisation: Identifying idle or underused physical assets or intellectual property and finding new ways to commercialise them.
• Talent Utilisation: Recognising underutilised specialist skills or knowledge in your existing workforce and deploying it in new ways.
• Data Leveraging: Analysing the vast amount of data you collect, understanding what's valuable and making it available to external parties.

Lever 3: Serve new geographies and customer segments

How can you find new customers for the products and services that you already have?

Netflix's expansion into international markets answers this question. Realising the saturation and intense competition in North America, Netflix began a gradual global expansion, not by offering the same content everywhere but by investing heavily in local content creation to cater to diverse tastes and cultures, adapting their service to different countries’ regulatory environments and viewing preferences.

Here are some ways you might answer this question for yourself:

• Market Extension: Identifying geographies or demographics where your products are not yet available or popular but where there is a demonstrated demand for similar products.
• Product Customisation: Tweaking existing products to meet regional tastes, cultural preferences, or different regulatory standards.

Identifying the growth lever you're pulling, the strategic question you're asking, and the answer to it is just the start. You still need to do the work to identify, develop and validate new ventures, products and services within each of them. But hopefully, this triad framework provides a helpful lens through which to look at the projects you're working on and gives you a jumping-off point for what's next.

If you think any are missing, reply let me know. I'd love to add this and build it into a worksheet resource for you and your teams to use over the rest of the year.

For more advice, recommendations and support on innovating with more speed, focus and certainty, join The Fold, our free membership community for corporate change-makers.