E-Book

NO. 14

How to Manage
the Inflection Points
of Growth

SAP Center for Business Insight

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Dont Be Distracted by Growth.

Growth is good, but it can also be
distracting. It keeps companies from
focusing on the changes they need
to make in order to adapt. Companies
need to keep an eye on the future or
risk seeing their dreams collapse.
There are four inflection points to watch for:

How to Manage the Inflection Points of Growth

2013 SAP AG or an SAP affiliate company. All rights reserved.

NO. 14

Inflection Point #1:

Management Thresholds
Small businesses cant grow without reevaluating management strategy.
There are three management thresholds to plan for:

Creating

the dreaded org chart. At a certain point

companies have to put a layered management structure in
place without creating an overwhelming drag on profits.

Bringing

in the suits. The founder must bring in a

professional management team to add the strategic
discipline thats required to drive sustainable growth.

Connecting

all the moving pieces. Expansion, new

geographies, acquisitions it all must be linked together
with rational planning processes.

Source: Inflection Points: A Guide to Growth

How to Manage the Inflection Points of Growth

2013 SAP AG or an SAP affiliate company. All rights reserved.

NO. 14

Inflection Point #2:

The Big Order
Orabrush, Inc., maker of an innovative tongue-cleaning device, was not prepared
when Wal-Mart suddenly called in 2011 with an order for 735,000 Orabrushes
to be distributed in 3,500 stores.
Orabrush came through, but not before the order revealed gaps in its
manufacturing processes, management processes, and supply chain that
it had to address.

Source: Inflection Points: A Guide to Growth

How to Manage the Inflection Points of Growth

2013 SAP AG or an SAP affiliate company. All rights reserved.

NO. 14

Inflection Point #3:

Global Expansion
Its the rare company that can do things the same way in every market. Management must
understand the specific strengths and weaknesses it brings to each market beyond the core
products or services, such as:

Customer relationships

Industry expertise

Technical knowledge

Source: Inflection Points: A Guide to Growth

5

How to Manage the Inflection Points of Growth

2013 SAP AG or an SAP affiliate company. All rights reserved.

NO. 14

Inflection Point #4:

Access to Capital
There are three paths that small and midsize companies can take to get the capital
they need to grow all of which revolve around a central question: when or whether
to pursue external funding.

Hypergrowth. Companies that have a product or a business

model that they believe is going to take off quickly are most
open to external investment.

Growth

from operations. Family-owned businesses tend

to be risk-averse and prefer to fund growth from profits.

The capital well runs dry. At some point, receivables and the

bank account wont be enough to fund that new warehouse.

Its time for more sophisticated financial management and
a plan for securing new levels of funding.

Source: Inflection Points: A Guide to Growth

How to Manage the Inflection Points of Growth

2013 SAP AG or an SAP affiliate company. All rights reserved.

NO. 14

Four Steps for Proactively Managing

the Inflection Points

Always Look Big Even If Youre Not

Be Ready to Change the Business Model

You dont have to be a 500-person firm to do business globally anymore.

You can be a 10-person engineering design firm in Kankakee, Illinois, and
you can reach people in Taiwan because you have a specific skill set. Were
moving more and more into that type of micro-verticalization.
Steve Niesman, CEO and President, itelligence North America

UsedCarboardBoxes.com began life as a retail business for buying and

selling used cardboard boxes to consumers. But a big order from Wal-Mart
convinced founder and CEO Marty Metro that a business-to-business
model could be much more lucrative over the long term. We used to sell
$100 moving kits, he says.Now our average order size is a $7,000 truckload.

Source:
Q&A: When Small Businesses Need to Grow Up

Source:
Inflection Points: A Guide to Growth

Keep Resources and Infrastructure Flexible

Plan for Disruptions; Dont Wait for Them

Identify areas where the business can support variable resources.

Harmonize supply chain processes across the globe.

Growing companies constantly need to prioritize the most urgent needs.

A good rule of thumb for prioritizing: start with the customer and work
backwards.

How to Manage the Inflection Points of Growth

2013 SAP AG or an SAP affiliate company. All rights reserved.

NO. 14

Theres more.

TO LEARN MORE ABOUT THE INFLECTION POINTS AND

HOW TO MANAGE THEM, READ OUR IN-DEPTH REPORT
INFLECTION POINTS: A GUIDE TO GROWTH.

The SAP Center for Business Insight discovers and develops new research-based thinking
to address the challenges of business and technology executives.

How to Manage the Inflection Points of Growth

2013 SAP AG or an SAP affiliate company. All rights reserved.

NO. 14

NO. 14

2013 SAP AG or an SAP affiliate company. All rights reserved.

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SAP Center for Business Insight

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