Filling the Growth Gap: Avoiding Unrealistic Assumptions

The Challenge of Filling the Gap

Many companies eventually face a gap between their growth goals and what their base business can deliver. Filling this gap requires either innovative new offerings or acquisitions. However, this process can be challenging, as executives are easily fooled by rosy assumptions that, when analyzed in a disciplined way, turn out not to be practical.

The Dangers of Spreadsheets

Spreadsheets, a favorite tool for projecting growth revenue, actually lead to unrealistic conclusions because they reduce the world to linear models, when in reality the growth process is non-linear, sometimes even exponential. By imposing a linear model on a complex and dynamic system, spreadsheets can create unrealistic expectations and make it difficult to accurately predict revenue growth.

The Importance of Realistic Discipline

To avoid these pitfalls, it’s essential to impose realistic discipline on growth projections. This means considering the likely times at which revenues will be realized, and not just relying on linear spreadsheet models. By doing so, companies can get a more accurate picture of when a growth program is likely to show results and close the growth gap.

Practical Considerations

When filling the growth gap, companies must consider a range of practical factors, including:

* The time it takes to develop and launch new products or services
* The competition and market dynamics
* The resources required to support growth
* The potential risks and challenges associated with growth

Conclusion

Filling the growth gap requires a disciplined and realistic approach. By avoiding the pitfalls of spreadsheets and imposing realistic discipline on growth projections, companies can get a more accurate picture of when a growth program is likely to show results. This enables them to make informed decisions about how to fill the gap and achieve their growth goals.

FAQs

Q: Why do spreadsheets lead to unrealistic conclusions?

A: Spreadsheets reduce the world to linear models, when in reality the growth process is non-linear, sometimes even exponential. This can create unrealistic expectations and make it difficult to accurately predict revenue growth.

Q: What is the importance of realistic discipline in filling the growth gap?

A: Realistic discipline is essential to avoid unrealistic expectations and get a more accurate picture of when a growth program is likely to show results. This means considering the likely times at which revenues will be realized, and not just relying on linear spreadsheet models.

Q: What practical considerations should companies consider when filling the growth gap?

A: Companies should consider factors such as the time it takes to develop and launch new products or services, the competition and market dynamics, the resources required to support growth, and the potential risks and challenges associated with growth.