When choices dilute growth
Making choices is critical for us as humans, but when it comes to sales and organizational efficiency, too many choices can be counterproductive and slow down growth. Organic growth requires that you fulfill customer needs, are differentiated from the competition, and are internally clear on priorities. Can there be a silver bullet?
Sales
Both books (like The Paradox of Choice – Why More Is Less) and articles (like Choice overload: A conceptual review and meta-analysis) highlight that when customers are faced with too many choices, it can hurt sales. It comes down to four key factors —choice set complexity, decision task difficulty, preference uncertainty, and decision goal.
If an organization really understands a customer need and the surrounding market dynamics, the initiatives and offers the organization presents to the market become better and more specific (fewer options). The risk of choice overload for the customer is minimized, with higher sales and market hit rate as a consequence. We often see this from our experience working with customer journeys, customer experience, and innovation.
Organizational efficiency
Prioritization at a strategic and operational level is often the difference between success and failure. If this is not done correctly, there is a negative impact on organizational efficiency. Of course, while no senior management wants to communicate unclear priorities, they sometimes create an operational dilemma resulting from strategic confusion.
Prioritization is difficult, no doubt. When a senior executive team doesn't make the tough choices, they quickly acquire an entire portfolio of priorities. Perhaps they don't want to take the risk of not being compliant, missing a market opportunity? This often leads to unclear focus for those making decisions operationally. It is not uncommon for middle management to face too many choices that all are in line with priorities making it impossible to answer questions like:
What is the balance between big bets vs. improving current footprint?
What is the balance between customer value vs. business value vs. brand perception?
We've seen that organizations with strong market and customer focus set more distinct priorities to significantly drive business growth, allowing the employees to prioritize actions in a straightforward way.
The Silver Bullet?
Is there a way to avoid diluting growth ambitions? Yes, it's all about findings answers to:
Where do we make money today and in the future?
Focusing on these areas, who are the target customers, and what benefits shall we provide them compared to the competition?
Which steps along the customer journey have the highest impact on the overall customer experience?
Tough internal choices rooted in market and customer insights create focus (fewer priorities), leading to more specific offers in areas where you can beat the competition. Pretty good pre-conditions for increased sales and organizational efficiency, don't you think?
More reading: In the article, How to address the untapped potential of business strategies, we highlight the effect of customer and market focus.
