Growing Pains…..

There is lots of talk as Labor Day recedes in our collective rear-view mirror about the end of the recession and the start of a rebound. The mixed economic statistics suggest we may have a very uneven recovery. Regardless, as we emerge from the downturn, there will be a premium on business results that have been hard to come by in recent years. The top priority? Growth, both in revenue and profits.

It’s easy to understand why. So much of the focus of business in the developed world in the past several quarters has been cost reduction, synergy-expense recognition and restructuring. All that is vital, of course, to healthy companies and healthy economies. While we have experienced some skilled and finely tuned cost-cutting, there is precious little evidence of the only things –- revenue and profit growth — that will really enable employment expansion, new job-creation and increased capital investment, which are critical for long-term economic growth.

But there is reason to be optimistic if you read a few recent tea-leaves.

Exhibit One is the experience of an exciting startup that is a leader in location-based services for mobile consumers and whose board of directors I am joining. Using their application, anyone anywhere in the U.S. can quickly find nearby businesses, people, movies, pizza, taxis, weather, news, you name it.

This company is experiencing explosive usage growth, and revenue is coming along with this increase in demand for their innovative product, which was not possible before the omnipresence of wireless networks and smart mobile devices. The revenue is sourced both from consumer subscriptions sources (in a hybrid model where network operators pay a fee to subsidize their customer use, and where subscribers pay for preferred content and access) as well as advertising.

Exhibit Two: Another company on whose board I sit, is seeing demand is increasing for its leadership training and development courses. These areas unquestionably were cut during the downturn, and companies are now looking hard at retaining their key employees through development programs as well as creating an alluring ‘HR’ brand by investing in talent.

The start of any growth strategy begins with your customer. We are in the battle for customer’s time and attention in any industry involved in this “convergence” world – telecommunications, information, entertainment or internet. Because this such a competitive world – we must be uniquely respectful of the time that our users have to spend with us.

So, starting with the customer, the primary thing to be concerned with is their happiness or satisfaction with our products and services. At EarthLink, where I ran the $1B consumer business, we tried to organize the entire company around our 2.5 million customer relationships. Satisfied customers tend to positively influence other customers, and – especially in such subscription businesses as telecoms – since so much of the shareholder-value-killing churn happens early in the life of the customer, taking care that your newcomers are feeling positive is extremely important.

Of course, big catalysts for growth are such innovative products and services and the location-based products I was discussing a moment ago. And surely, as growth returns, much of it will be based on new products, services and features that might not have existed even months ago. Among these: increased personalized services, reflecting your unstated wants and needs, based on what we can know about your location, or habits or behavior. Also, expect enhanced aggregation services, marrying much of your diverse data and deriving intelligence about what to recommend you do next.

This is not “crystal-ball” stuff; many of these applications are starting to emerge as personal data goes to the cloud and then value is added by companies or other customers. One innovative example of this comes from Nike. Their new Nikeplus website allows users to store all sorts of data about their workouts (distance, speed, even their mood) to a profile that can be protected or shared with other users. Nike brings coaching and even encouragement from other users to their individual customers, and allows the customer to control the extent to which they want to participate.

The companies that will grow fastest in the next upturn are those that deeply understand their relationship with their consumers, and those who can deepen that relationship measured by time spent, use and attention. The borders between network services, hardware, applications, content and software are becoming more fluid, and that will continue to evolve. But those companies that triumph will be those who really profoundly understand their customers’ wants and needs and supply products and services that rise to meet that demand, whether articulated or not.

For more on this topic, check out a recent interview I did as part of my membership on the Customer Experience Board, a group of global executives. The report can be downloaded here. Please click on the link to download the Benchmark Report on Competition and Convergence in the Communications Space, where I was a featured contributor.