The best way to grow


For the first time since 2008, the majority of executives we speak with are talking about growth, not cost cutting. Companies refuse, however, to throw caution to the wind; they want to avoid the pitfalls and high cost of an acquisition. Many leaders are looking to organically grow by expanding into new, adjacent categories. While less risky in many ways, new market entry is not a no-brainer. Success requires both deliberate planning and a start-up mindset.

Companies face many barriers when expanding into new categories or markets. Achieving meaningful brand differentiation is difficult particularly when the market has been commoditized. In other cases, competition has locked up channel partners such as retailers or distributors, preventing the new player from gaining sufficient access to the market. Finally, generating a strong ROI will be tough if the entrant is unable to achieve sufficient volume or economies of scale.

Canadian financial services giant, Sun Life Financial, provides a number of lessons for sensibly expanding into complementary markets. In 2010, Sun Life made the strategic decision to expand its investment management presence in Canada with Sun Life Global Investments, seeing it as a complement to their successful insurance franchise. Sun Life Global Investments was launched with a handful of employees, 12 funds and zero assets under management. Fast forward to 2014, the firm has grown to nearly 140 employees, 87 funds and $7.8B in client assets under management. How did they do it, particularly in a tough investment management climate?

Once the decision to add asset management to their strategic growth priorities was made, the Company moved quickly to assemble the right team. First, they recruited within Sun Life Financial high-performers who were familiar with the culture, brand and practices. To maintain momentum, this internal start-up was quickly supplemented with external hires who possessed key investment industry experience.

Secondly, the team explored and then aligned around a singular mission – to bring the best asset managers and investment solutions from around the world to the Canadian investor.

“We focus on the end investor and work closely with advisors and pension plan sponsors to build solutions that meet investor needs,” says Lori Landry, chief marketing officer and head of institutional business at Sun Life Global Investments. “We fill in gaps where other offerings may fall short, and we work hard to put the customer at the centre of everything we do”.

With a strong team and mission in place, senior managers got to work on developing a brand and marketing strategy that best leveraged their channel and addressed investors’ and financial advisors’ needs in a compelling way. The goal was to build a distinct reputation for Sun Life Global Investments as an asset manager with a unique and authentic value proposition (offering the best global investment managers and products regardless of provider) and go-to-market approach (sell through trusted and expert advisors or through employers), while leveraging the awareness and credibility of the corporate Sun Life Financial brand.

As the above example demonstrates, companies need to really understand their own business, target customer’s needs and market dynamics when looking to expand into new markets. This simplified four-step framework can help managers evaluate growth opportunities:

The market gap

  • Is there a value ‘gap’ between what providers deliver and what customers want? Changing buying habits (e.g. mobile commerce) and a recessionary mindset is shaking up the customer’s value equation in many categories, putting a reliance on thoroughly ‘knowing your customer.’
  • Does the market have untapped ‘white space?” New technologies and business models give firms an ability to reorder existing product categories or create new ones (e.g. iTunes)

The offering

Available capabilities

  • Which competencies, assets and customer relationships can be quickly leveraged? The fastest way to market and ROI is by using existing capabilities and then driving scale economies.
  • Can the resource gaps be quickly addressed? Sustaining early market success will depend on identifying resource and skills gaps early on and quickly filling them.

Competitive reaction

  • What competitive moves could hamper your plans? Many executives give short shrift to understanding their competition. The reality is that most incumbents will not sit idly by and let you steal market share without responding. Managers can analyze competitive moves by using simulation tools like business war gaming and game theory.
  • Do non-industry players pose a threat? Large and profitable companies in low-growth environments may also choose to leverage their scale, customer franchise or new technologies to compete in your target market (e.g., Rogers in home monitoring).

For more information on our services  or work, please visit the Quanta Consulting Inc web site.

 

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