Vector Growth Strategy Methodology

Growth is essential for value creation

Our cornerstone belief is that untapped revenue growth potential represents the largest source of value creation for most companies today.

What we call the “Growth Imperative” stems from some straightforward observations:

The lion’s share of value creation is determined by two factors:

Generating profit margins that exceed the cost of capital
Sustaining above-market growth rates

The dominant focus of most companies has been on cost side of the profit equation, and many are reaching the points of diminishing returns and far less management attention has been devoted to growth and innovation

Firms must now grow the top line in order to drive higher valuations

We believe that our growth-oriented services are especially important given the difficult conditions currently being experienced in most industries and capital markets:

Difficult markets provide an excellent opportunity to expand market share
There are few attractive options for company management teams and private investors to monetize their investments – the timing is ideal to improve the fundamentals in anticipation of future opportunities

When market conditions are poor there is a tendency to cut costs and focus on trying to maintain the status quo in order to survive until conditions improve. We believe that this defensive strategy is exactly the wrong approach for most businesses and can prove fatal:

The length and severity of the current downturn is increasingly stressing the status quo - "business as usual" can be a recipe for disaster and cost containment will prop up results only temporarily without revenue growth
Competitors are likely following the same “yellow flag” strategy, leading to more price-based, commoditized competition and eroding margins
Your best employees will leave for situations where they can further their career rather than treading water in survival mode - often top salespeople are the first to seek greener pastures

We believe that the best defense is a strong offense. Improving sales and marketing practices while competitors are in hibernation represents a great opportunity to gain market share during a downturn and provides a platform to gain additional share as the economy recovers. A disciplined approach is critical to defining the initiatives that will generate increased share:

Understand your company's strengths and weaknesses from the perspective of the market, answering questions such as:
- What are the buyer values of your customers and prospects? (they may have changed in the downturn)
- How do you compare to the competition in terms of price, service, and quality?
- Are you losing deals or leaving money on the table due to ineffective value propositions?
Align selling messages to emphasize your strengths and your competitors’ weaknesses - we commonly find that salespeople are using messaging that worked in good times but is wrong for today's environment
Reassess and streamline sales and marketing practices to eliminate activities that do not add value to the sales process and to simplify the decision making process
Align the organization, processes, and incentives to help (and not hinder) the sales team in their pursuit of share

Studies have shown that more than 60% of value creation results from top-line growth - far more than from cost reduction or market factors. Even modest improvements in revenue performance, when sustained, can have a very positive impact on valuation.