Growth While Shrinking? It's Called Optimization, and It's Possible

Often when trying to make a business more profitable, it can seem daunting to decide what to keep and what to throw out.

Generally because there is not a clear business plan. Without a growth strategy, the CFO or CEO will just start at the highest line item expenses and start chopping.

In cases like this, the devil is really in the details. Jamie Hancox today talked about the trend towards consolidating eCommerce stacks. Which I agree is definitely a trend I am seeing. However, this is noticing the effect and not the cause.

The cause is most often poor growth or inefficient growth causing a re-look at expenses. Delaying decisions that should honestly have been made late last year.

For technology vendors, it can mean moving from: Best of breed -> Best for me now.

Still, we are having the wrong conversation. The stack is a means to an end. Don't be surprised if growth keeps plummeting the more you cut. If you haven't both identified and prioritized your most important growth customer segments from the beginning and build everything in your business around that, you won't know what is nonessential later while you're cutting.

At RMW Commerce here is how planning begins with our top customers. First decide where your customer growth is going to come from. Why do they come to you?

Next, decide where your channel growth will come from? Where will they come from and how much will it cost to acquire them?

Next, are your people and process optimized around these growth plans? What can be made more efficient or reorganized? This step is often entirely skipped in a rush to reduce technology spending.

Finally, you can start to make technology decisions. For a more profitable business you might need to be happier with a longer-range growth plan as long as your top-line is still increasing.

People and process aligned in service of your growth plan.

Technology aligned to service your people and processes.

Better alignment can create growth while saving.

In this environment, even modest growth can still mean you are gaining share vs your peers.