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Finding New Growth Trajectories

Written by Miguel Van Damme

The prevailing macroeconomic landscape, marked by elevated interest rates, inflation, volatile energy prices, and escalating global conflicts, has hindered the growth ambitions of many companies. Inorganic growth strategies, previously bolstered by buy-and-build strategies facilitated by low-interest rates and abundant cash, are no longer applicable.

As a result, investors are looking for a new growth trajectory for their portfolio companies. In this article, we will share some insights into discovering an innovative growth approach, drawn from our client engagements spanning various sectors, including software, manufacturing, and healthcare.

Our four-step process

To kickstart, it is crucial to deeply grasp the market your company operates in. Let's shift from relying solely on experienced executive opinions to embracing a more data-driven analysis of market dynamics. While experience is valuable, blending it with quantitative insights ensures a comprehensive strategy.

Some unexpected findings made during in-depth market analyses:

  • Using our AskAldo analytical methodology, we discovered for a manufacturing client that Poland was emerging as the prime market in Europe for their products. Surprisingly, the sales team had overlooked this potential due to an existing belief that Poland was a low-value and fragmented market.

  • A distribution client thought they were holding a solid market share compared to the market leader. A closer look uncovered a twist – while the leader's turnover-based market share seemed steady, they were replacing more expensive branded products with their own, more profitable private-label alternatives, resulting in lower turnover but higher profit margins.

  • A chemical firm was about to bet on a new customer segment. Before diving into substantial plant modifications, they sought our input to challenge their market assessment and go-to-market assumptions. Our findings were straightforward: the reachable market was ten times smaller than anticipated, with limited growth, and most of the value was being captured by service players further down the value chain.

  • A software company's board hired BrightWolves to evaluate their European expansion plan. The strategy seemed solid, rational, and conservative... until our analytical model revealed a flaw in assuming market saturation in their home regions. Shifting gears, the company refocused sales efforts domestically, experiencing rapid success.

The next step is to clearly decide where you want to play. The pitfall is to catch the “Carrefour syndrome”. The French retailer expanded into various offerings, losing its uniqueness and coherence. This diversity made it hard for customers to pinpoint Carrefour's unique selling point. In a world full of choices, clarity about what makes you special is crucial for leaving a lasting impression.

As you can't be everywhere at once the third step is to be selective about your offering and target audience. This becomes easier when you have already figured out what makes you unique (step 2). Once you know your strengths, look to the market for exciting players who could benefit from your offering. The key word here is "interesting" – your growth plan should align with the rising stars of tomorrow. While it might sound straightforward, we've encountered a case where the focus lied on the wrong clients.

  • An industrial B2B player had clearly defined its target customer segment. Our quantitative analysis uncovered that the targeted customer segment was rapidly losing pace versus other segments in the market. No matter how solid the growth plan looked on paper, it had no shot at boosting sales if the customer segment was on the decline. To steer clear of this pitfall, pinpoint the most promising clients in your chosen market and tailor your value proposition to address their needs.

The last step, and recommendation, is to act like a farmer: envision the next 5 or 10 years, plan for the upcoming 12 months, and get ready for the week ahead. A detailed 5-year action plan might not benefit many companies. With market conditions in constant flux, agility and responsiveness are crucial. The only way forward is to take action today.

This article has presented a four-step approach to tailor growth strategies for today’s market. It emphasizes the importance of understanding your market, challenging your beliefs about that market, choosing the right offering, and moving fast. To flourish in this dynamic landscape, businesses must act today and remain flexible to seize opportunities as they emerge.


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