The Virtues Behind ROI-Driven Growth
And How Being Open to Upside is Better than Forcing Linear Growth
Whenever business owners talk about ambitions, it's always about "more". More revenue, more employees, more market share.
But "more" comes at a cost.
Projects go over budget. Talent gets milked dry. Customers suffer, morale goes down, and the business begins to struggle.
It's important to have a balance. And ensure that ambition doesn't create an unsustainable growth model.
I hear people complain that it's the funding winter. Or the recession. In reality, we are just back to normal, and this is part of the normal business cycle.
Business is supposed to be boring. Full of constraints, hard decisions, and tradeoffs.
And in such periods, business fundamentals are in fashion again.
We are back to simply making more than what you spend. Back to implementing standard operating procedures. And back to making bet sizes smaller, as opposed to going all-in.
When we work with clients at Monolith, we always set growth targets in conjunction with ROI and ROE. One would say that we prioritize that more.
ROI means Return on Investment, that clients get more money than they spend, and ROE means Return on Effort, which means deleting wasteful processes & tasks, and ignoring things that don't move the needle.
Sustainable & profitable growth is done through frequent marketing experiments. Tests that build on marketing fundamentals that build the business. That means differentiated content, a message that resonates, and building a reputation that's credible & believable.
It turns out that growth often reveals itself in bursts. Something that many of our long-standing clients (over 4 years) experience a lot.
Initially, we'd just have "ok" growth and "ok" ROI.
But there are times when an experiment is a big home run.
Then, we reinvest more. We’ll keep growing. Competitors eventually catch on and copy us. And the well eventually dries up.
And we’re back to boring growth & boring ROI again. But we’ll keep testing and experimenting.
We've found that growth is a step-wise function when you zoom in real close, and never a linear one. It's a rising zigzag, and never a straight line. It only looks straight and to the right when you zoom out to the 3, 5, or 10 year timeframe.
For months, which can feel slow, it's wise to stay prudent. Prudence makes ROI, ROI creates retained earnings. Retained earnings expand your capacity to bet more & experiment more, and then open yourself that next burst of growth.
This is the essence of ROI-driven, sustainable growth.
It is wise to remind ourselves that everyday virtues also apply in business. Temperance through measured bets is better than gluttonous spending. Diligence & patience is better than the greed to expand.
Kenn Costales is the Founder of Monolith Growth Consulting (a growth marketing agency) and Mai (a writing software for marketers & business owners). He is an honoree of Forbes 30 under 30 and Tatler Asia’s Generation T.