Reassess Your Growth Strategy to Thrive Amid Tech Evolution

Tech CEOs must properly align the business strategy to the specific growth stage of the organization. Each stage of maturity has unique needs and requires a tailored strategy. But think critically about the most accurate stage; Gartner breaks down the growth stages into six options:

Problem-solution fit. In this stage, the strategy focuses on identifying and understanding the target market’s challenges and developing a solution that effectively addresses those needs. The critical elements of the strategy include customer identification, market research, customer validation, resource allocation, iterative product development, and refining the value proposition to advance from the initial set of customers.

Product-market fit. This stage revolves around refining the product or service to meet the specific demands of the target market. It involves gathering customer feedback, iterating on the product, optimizing pricing and packaging, and establishing a solid product-market fit. The strategy also includes developing marketing and sales strategies to acquire customers repeatedly and effectively.

Readiness to scale. Here the strategy shifts toward preparing the company for scalable growth. This strategy involves building a scalable infrastructure, streamlining operations and establishing key processes and systems and financial controls. This process involves regularly assessing the current skills of your team to ensure they meet future needs, upgrading personnel to maintain a high-performing team, securing additional funding or investment, and boosting sales and marketing efforts to enhance customer acquisition.

Growth acceleration. This strategy transitions to focus on accelerating growth and expanding market share. Key elements include building out a larger portfolio of solutions, optimizing marketing, scaling customer acquisition efforts, enhancing customer retention and satisfaction, expanding individual customer accounts, and leveraging data and analytics to drive informed decision making. The strategy may also involve exploring strategic partnerships, entering new markets or expanding product offerings. This is the key stage where CEOs tend to overestimate their maturity and make investment mistakes — for example, beginning to extend product lines/offerings without successfully bringing core offerings to scale in the market. This dilutes their capital and complicates the selling motion, resulting in stalls in growth.

Expansion. The strategy at the market expansion stage opens up exciting new opportunities for your business. It focuses on entering new markets, geographies or customer segments. This involves implementing new sales and product strategies to distribute products, developing partnerships for certain market segments, expanding sales efforts to generate indirect revenue, and securing operating capital to support marketing demand generation in new segments with partner funds. Such expansion can bring your business a new wave of growth and success.

Transformation. In this stage, the strategy focuses on driving essential growth bets each year. There are four primary growth bets; CEOs must map to these four segments and prioritize one segment per growth cycle to avoid dilution of focus and stalling their growth. Growth bets can be technology innovations for expanding the serviceable addressable market in your core market, new offerings for an adjacent vertical market, or optimizing your current offerings to take share from competitors. A growth bet involves exploring new technologies, business models or revenue streams to ensure long-term sustainability. The strategy also includes continuous improvement, fostering a culture of innovation that embraces change to drive transformative growth.

The alignment of a strategy to the specific growth stage of the business is vital for tech CEOs. However, even the greatest strategy will fail if it isn’t activated internally and externally. Tech CEOs need to carefully construct a strategy and effective ways to communicate and ensure resources are aligned with the growth stage.

The ability to capture and communicate strategy is crucial to aligning the entire organization toward common goals and ensuring every action is purposeful and effective. It enables better resource allocation, decision making and risk management, as everyone understands the direction and objectives of the company. Clear communication of strategy fosters a culture of transparency, trust and collaboration, which can drive innovation and improve overall performance.

Though there are many methods for creating a transparent and readily consumable strategy, a strategy-house model helps avoid execution delays, major unplanned pivots and stalls at any given stage.

A strategy house enables tech CEOs to continuously align their organization around the major elements of the strategic plan for the current stage (see figure).

Consistent review and reassessment of allocations and investments will help tech CEOs identify areas of improvement or potential growth opportunities. This enables the organization to remain competitive and ensure that resources are being put toward actions and products that support the organization’s overall goals. More importantly, it helps keep the organization and people in your company aligned to key goals. A focused team will outperform companies that take on too many initiatives. The CEO’s primary job is to not come up with the next great idea, but to keep teams focused on the core initiatives that will deliver results.

CEOs who are product innovators need to be CTOs and hire a growth CEO to effectively execute the strategy house and scale the company.

As the organization moves through the stages of maturity, there is a natural evolution of resource requirements. Though there are a variety of hierarchical options — i.e., clear lines of authority with specialized departments, outcome-focused with cross-functional teams or flat with fewer management levels — all tech CEOs must regularly reevaluate resource allocation based on the priorities of each stage.

For example, during the early stage of problem-solution fit, the focus will be on R&D, requiring investment in talent to build the technology. As the company moves toward product-market fit, tech CEOs can allocate resources to marketing and scaling operations.

As the business matures and becomes more structured, adapting or adopting enabling technologies becomes increasingly difficult. However, enabling technologies also become vital for strategy activation. When tech CEOs pursue a significant platform or technology pivot, the 2023 Gartner Tech CEO Survey finds that only 27% are most successful in making that pivot where it meets their expectations. As a result, it is vital for tech CEOs to make smaller, more proactive changes in their technology enablement and, even more important, to navigate these changes with the appropriate strategy and realization planning in mind.