(Folks: Please do not write to me and say I am using ridiculous numbers. I am using exaggerated numbers to illustrate the point succinctly).
Therefore when assessing the growth of your business / division, you can see that you actually went backwards relative to the market.
So why is this important? Most managers would be ecstatic with 10% year-on-year growth. However the issue is not whether the business has grown. That is a given. The issue is that, in this scenario, competitors are growing faster and you are being left behind.
To illustrate this point further lets extrapolate the exact same growth rates (10% and 50%) over a five year period.
Think about what this now means for your business. For example:
- As a supplier to various companies are you becoming to be seen as a niche player within the market?
- Do potential customers worry about where your business is headed as they are continually bombarded by the success of your competitors?
- Are your competitors achieving scale benefits not available to you?
- Do these scale benefits provide a price benefit to your competitors that make it more and more difficult to compete?