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The 5 blind spots of sustainable growth

Proactive and reactive start-up strategies require alignment
January 19, 2023
By Nada Elbarkouky, MSc (Marketing) 22

This research summary is brought to you by John Molson’s National Bank Initiative in Entrepreneurship and Family Business.

The coronavirus pandemic has caused a global economic calamity that has left few countries unscathed. Businesses had to be flexible to overcome unforeseen challenges, irrespective of their stage in the business life cycle. Managing the sustainable growth of any business in such setting is a complicated task.

As a part of her MSc thesis at the John Molson School of Business,  Nada Elbarkouky (MSc, Marketing) presented research results that shed light on challenges high-growth companies might face in their journey. Focusing on some young and privately held technology start-ups from the Middle East and North Africa (MENA) region, this research investigates how start-ups can sustain their growth momentum during times of uncertainty.

It was important to look at successful start-ups that have sustained their growth momentum and have undergone rapid scaling, to understand their shared mindsets and capabilities.

These businesses typically faced two levels of business challenges on their road to success.

  1. Waves: mid-levels of environmental turbulence (e.g. competition, barriers to entry, seasonality, etc.) whereby entrepreneurs can be proactive in facing these issues because they are easily predictable.
  2. Storms: high-levels of environmental turbulence (e.g. COVID-19 pandemic, war, tech outages, etc.), that require entrepreneurs to be reactive because these events are difficult to predict.

The research offers practical implications that can be effective in mitigating the waves and storms that start-ups might face.

Establish a stable foundation

It is vital to achieve stability before entering the growth phase. The balance between stability and agility is crucial in the early stages of the business life cycle, because it enables you to grow while also having a fixed structure and solid backbone. This stability will allow the business to be flexible toward learning, experimenting, and even making mistakes, without compromising the integrity of the company. In doing so, the business can embrace these mistakes as learning opportunities that can be useful toward iterating and improving current practices, all while having a strong foundation – build, measure, learn, grow.

Optimize the marketing funnel

Though there are 7 steps within a traditional marketing funnel, it is common for practitioners to focus on one area rather than taking a holistic approach. For instance, the research found that start-ups tend to focus on acquisition without considering monetization, resulting in long-term adverse effects. Another important aspect of respecting the funnel is to maintain customer satisfaction to nurture customer retention. Therefore, developing a plan to optimize each step of the funnel will maximize the value created by the start-up.

Don’t use generalized strategies

Be careful using generalized growth hacking strategies. There are many cases where start-ups tend to blindly copy strategies used by prior successful companies (e.g. AirBnb, Dropbox, etc.). In doing so, they apply quick hacks or shortcuts for immediate results, while ignoring their unique business value proposition. Growth hacks must be tailored to the start-up. Each start-up needs to creatively leverage their network and support ecosystem to achieve desired growth.

Harness the power of smart investments

Be comfortable with how investments impact the business. Often, start-ups fear investments because they may result in a loss of control or debt. However, when investments are allocated for laying the foundation, it contributes to sustained growth momentum and creates a safety buffer during storms. Though liquid capital is important, it is the compatibility between you and your investor that should be prioritized. Selecting an investor that aligns with the start-up’s goal and organizational style is more important than an investor that offers more capital.

Adopt a growth mindset

Foster self-awareness to feed a healthy growth mindset. Founders need to understand that it is impossible to control every part of the business. They must learn to delegate work in areas where they may lack knowledge or necessary skillsets.  Having a growth mindset allows founders to seek and hire experts to overcome their pitfalls, while not being blinded by ego. For instance, if you lack accounting knowledge, hire an accountant. As the start-up team continues to grow, it is important to have open communication and support to achieve sustainable growth. No person or business is an island which means the entire organization must work together, without silos, to create a successful environment.

Nada Elbarkouky, MSc (Marketing) 22

Nada Elbarkouky, MSc (Marketing) 22, presented her research to fulfill the requirements of the John Molson School of Business Master's of Science in Marketing in 2022.

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