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ATD Blog

Growing Talent Development Firms: Accelerating Growth

Wednesday, September 29, 2021
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In my previous blog post, I talked about how often growth can be painful, but if it’s defined, planned, and learned from, this pain can be readily avoided. Assuming you have put in place the processes and tools to avoid painful growth, you may be in a position of accelerating it. There are many pathways to growth, as I noted in another blog post, but what can you do to move it along more quickly and still avoid the potential for pain? Not too long after that 2017 post was published, a great book was written about pathways to growth, which I strongly recommend for those interested in moving forward more quickly: Growth IQ by Tiffani Bova (Penguin/Random House, 2018). In the book, 10 paths are identified with real world examples of companies, almost all of which we know, that have either succeeded or failed on their path.

The purpose of this post is not to reprise the findings of that well-regarded book. After all, none of the companies cited are in the training and education industry, and the vast majority are B2C examples. Rather, I will identify the most common practices used in our predominantly B2B corporate L&D industry to accelerate growth and let you evaluate the overlap, if any, with these and Ms. Bova’s.

The good news is that we have an industry relevant starting point with some research conducted several years ago with leading and high-growth suppliers in the L&D space. Accelerated Growth Strategies: Doubling the Size of Your Company in Five Years, a study discusses during the ISA 2016 Annual Business Retreat, revealed that 12 firms were selected based on the criteria of having grown more than 100 percent during a five-year period, once past $2 million in revenue. Each was asked to explain the main reasons for achieving their accelerated growth. Results showed that one or more of five distinct strategies were responsible.

Sales Team and Partner Growth

First and foremost among the reasons for accelerated growth was the expansion of those responsible for selling the company’s offer. Of course, this stands to reason in that the more people on the pavement “knocking on doors,” the greater chances for opportunities to close sales (both direct sales employees and channel partners). But how can you afford to put these people out there when typical ramp-up time for a newly hired sales rep in our industry is anywhere from 12 to 18 months and failure rate is high, perhaps in the 50 percent range?

The dilemma is that you can’t generate revenue without a well-oiled sales machine, but you can’t have a well-oiled sales machine without the revenue to support it. High-growth firms attributed much of their accelerated growth to the fact that they were committed to hiring and training their salesforce. The key here is that the accelerated growth companies surveyed for this research all had fine-tuned sales processes that permitted them to double their revenues just by increasing their selling staff.

Marketing Investment

The debate in the training supplier industry, and perhaps in others, has always been how do you manage sales and marketing—separately or together? Apparently, there isn’t one agreed upon answer to this question as evidence is available for the success of both approaches. For this post, however, we will consider them separately with specific delineation of roles and duties. Most notably, that marketing is responsible for messaging, branding, PR, and the like, while sales is responsible for generating and following up on leads then closing business.

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The responsibility overlap appears to be in the area of lead generation. Regardless, however, if the two functions were managed together or separately, these firms also were committed to frequently getting their names in front of prospects through traditional print and evolving electronic media. Of course, when managed separately, there has to be significant coordination between the two. The high-growth firms spent money on marketing their wares, typically in the neighborhood of more than 9 percent of revenue, which is 50 percent higher than most of their peers.

Thought Leadership

Most L&D suppliers relish and closely guard their intellectual property, which is presented as thought leadership. In fact, almost all of them got their start by building and selling it. As the world has become much more information accessible friendly, it has been more and more difficult to protect this IP.

It is no longer possible simply to sustain long-term growth with one, or even two, product offering for years on end. There is frequent imitation and even quasi-pirating in the industry. The high-growth firms all are committed to continually developing and evolving their IP beyond their initial foray, mostly expanding it to other applications. Furthermore, they use their strong marketing expertise to continually put this thought leadership in the public domain to “own” it in the marketplace. In fact, nearly all of their marketing is spent on thought leadership. This takes place via articles, books, blogs, and research that keep their name in front of potential buyers’ eyes.

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Operational Excellence

Almost all companies in any industry seek the holy grail of business scale. Whether your offer is an off-the-shelf program or a series of consulting services, without some form of scaling these, you will be in a continuous loop of “reinventing the wheel” methodology, which is neither sustainably profitable nor replicable. The high-growth firms see enhanced efficiencies through the reduction of costs and quicker pull through of revenue through scaling their operations as their way to optimize bottom-line performance. But these companies also have multiple divisions or offices that operate with separate P&Ls, thereby allowing them to continually evaluate product and geographic success.

Product Line Extension

Just as thought leadership is a continuous focus of the highly accelerated growth firms, so is the extension of their foundational programs and services. They add new programs with different applications. For example, their leadership development programming largely meant for line managers gets applied to sales and service management. Or they see relevance in their current education vertical market for the healthcare market. Product lines can be expanded numerous ways but predominately via different target audiences or industries. The high-growth firms can take advantage of the lessons they are learning from one application to the next. Most importantly, their growth is driven by not having a single product or service exceeding 20 percent of their revenues.

No doubt there are many other ways to achieve accelerated growth. As you think through the best practices for your situation, ask yourself three basic questions:

  • First, what level of accelerated growth do you want (how much and how fast)?
  • Given the five practices above, which of these are you both most prepared for and best at doing?
  • How are you going to sustain this growth, and what resources do you have and need to do so?

For more insight, check out my book The Complete Guide to Building and Growing a Talent Development Firm.

About the Author

Steve Cohen is founder and principal of the Strategic Leadership Collaborative, a private consulting practice focused on business strategy and development. A 40+ year veteran of the talent development industry, largely on the supplier side, he has demonstrated a proven track record for building equity by growing top and bottom-line performance for eight different consulting enterprises in the education and training industry he has either founded and/or led. He has been called on to consult with numerous firms needing strategic planning guidance, business coaching, and board advisory services.

His first book, The Complete Guide to Building and Growing a Talent Development Firm, was published by ATD in 2017. His recent follow-up, 12 Winning Strategies for Building a Talent Development Firm is now available on Amazon.

He can be reached at: 952.942.7291 or [email protected]

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