What are strategic Business Units (SBUs)?

At CW1, we recognize that startups and SMEs face unique challenges in achieving sustainable growth. Limited resources, scalability concerns, and market competition can all impede progress and hinder success. That's where Strategic Business Units (SBUs) come in. SBUs are a distinct organizational structure that enables businesses to segment their operations into semi-autonomous units, each with its own strategy, operations, and profit and loss. This structure differs from traditional functional and divisional structures and provides businesses with greater flexibility and adaptability. Read an in-dept definition here.

For startups and SMEs, SBUs offer a promising solution for achieving sustainable growth. CW1 has conducted a study comparing startups with a single value proposition to those structured with multiple business units, and the results revealed that SBUs help startups and SMEs grow 15% faster than the normal ones. By leveraging the benefits of SBUs, businesses can focus on specific markets, products, or services, and tailor their strategies accordingly. This enables them to operate with greater agility, responsiveness, and efficiency, and optimize their operations for maximum growth.

Moreover, structuring the startup idea into different SBUs diminishes the probability of failure. While startups usually are focused on one product and one idea, and go to market with one product and one idea to get validation, subs allow instead to create multiple smaller problems and solutions around the main product, and thus opening doors to faster development and newer products. See the case of Hubspot which started as a cloud based CRM, and then made different integrations such as a CMS, then an Email newsletter delivery service,Email-Marketing, then a Customer Support, and all the other functionalities that they offer. And all this, around the main thing sellers need, the CRM program and system.

One key benefit of SBUs for startups and SMEs is scalability. By segmenting their operations into discrete units, businesses can more effectively manage growth and ensure their business models and processes are scalable. Additionally, SBUs allow startups and SMEs to be more responsive to market changes, which is essential in rapidly evolving industries.

Moreover, SBUs can help startups and SMEs gain a competitive advantage by enabling them to focus on specific markets or customer segments. By tailoring their strategies to the unique needs of each SBU, businesses can differentiate themselves from larger, more established competitors, and position themselves to capture market share and build customer loyalty.

Bottom line, at CW1, we believe that SBUs offer a powerful tool for startups and SMEs looking to achieve sustainable growth and meet their customer expectations. We provide our clients with tailored approaches to implementing SBUs, incorporating best practices, and insights from our extensive experience in organizational strategy and business transformation. By leveraging our expertise, startups and SMEs can optimize their operations, achieve sustainable growth, unlock their full potential, increase life time value and improve customer value perception, and increase sales.

Strategic business units examples in real life

Example 1: Airbnb

Airbnb, the popular online marketplace for booking accommodations, has achieved remarkable success through its SBU structure and business-processes. The company has organized its operations into three main SBUs: Hosts, Guests, and China. Each SBU is responsible for its own operations, marketing, Customer acquisition, sales team and revenue management.

This structure has allowed Airbnb to tailor its strategies to the unique needs of each SBU, enhancing its ability to compete in different markets and with different types of new customers and products or service. For example, the China SBU was created to specifically address the unique needs of the Chinese market, which has its own set of regulations, cultural considerations and relationships with customers. By creating this separate unit, Airbnb was able to enter the market more effectively and tailor its operations to the unique needs of Chinese customers based on customer-feedback.

The benefits of using SBUs have been significant for Airbnb. By segmenting its operations into discrete units, the company has been able to achieve greater agility, responsiveness, and efficiency. It has also been able to leverage the expertise of each SBU to drive growth and optimize its operations. Overall, Airbnb's SBU structure has played a critical role in the company's success and continued growth by thinking on their customer journey and customer behaviour.

Example 2: Dropbox

Dropbox, the popular cloud storage and file sharing platform, has also leveraged SBUs to achieve growth, success and create lifetime value. The company has organized its operations into four main SBUs: Dropbox Business, Dropbox Paper, Dropbox Spaces, and HelloSign. Each SBU is responsible for its own strategy and operations, and each has its own Metric, segmentation, product or service development team and even Customer lifetime value.

This structure has enabled Dropbox to focus on specific markets and customer segments, tailoring its strategies and products to the unique needs of each SBU. For example, the HelloSign SBU was created to specifically address the needs of businesses looking for electronic signature solutions. By creating a separate unit for this product, Dropbox was able to better meet the needs of these customers and gain a competitive advantage in the market.

The benefits of using SBUs for Dropbox have been significant. By segmenting its operations, the company has been able to achieve greater efficiency, agility, and responsiveness. It has also been able to leverage the expertise of each SBU to drive growth and innovation, and to optimize its operations for maximum impact.

Example 3: Zoho

Zoho, the Indian-based software company, has organized its operations into multiple SBUs, each with its own strategy and operations. The company has more than 50 SBUs, including Zoho Books, Zoho CRM, and Zoho Workplace, among others.

This structure has enabled Zoho to focus on specific markets and customer segments, tailoring its strategies and products to the unique needs of each SBU. For example, the Zoho CRM SBU is responsible for developing and marketing the company's customer relationship management software, which is targeted at businesses of all sizes with different potential customer, customer behavior and business lifecycle. This SBU has been critical to Zoho's growth, funnel and success, as it has allowed the company to gain a competitive advantage in the market and meet the needs of a wide range of customers while becoming a strong competitor with other solutions such as hubspot.

The benefits of using SBUs for Zoho have been significant. By segmenting its operations into discrete units, the company has been able to achieve greater efficiency, better marketing strategies, different marketing campaigns, creating most valuable marketing and sales, agility, and responsiveness. It has also been able to leverage the expertise of each SBU to drive growth and innovation, and to optimize its operations for maximum impact and customer lifecycle and brand loyalty. Overall, Zoho's SBU structure has played a critical role in the company's success and continued growth by providing an excellent crm platform for its customers.

At CW1, we recognize that startups and SMEs face unique challenges when it comes to achieving maximum growth rate and acquiring and reach-out to potential customers . Limited resources, scalability concerns, and market competition can all impede progress and hinder success. Strategic Business Units (SBUs) offer a promising solution for startups and SMEs looking to overcome these challenges and achieve their business objectives.

SBUs enable businesses to segment their operations into semi-autonomous units, allowing them to tailor their strategies and operations to specific markets, products, or services. This structure differs from traditional functional and divisional structures, offering startups and SMEs greater flexibility and adaptability.

When implementing SBUs, startups and SMEs should consider factors such as market opportunities, customer segments, and product/service offerings. They should also ensure that their SBU structure aligns with their overall business objectives, and develop a governance structure that provides necessary oversight and guidance for each SBU, while also allowing for flexibility and autonomy.

Strategic Business Units (SBUs) offer startups and SMEs a promising solution for maximising their growth rate. By segmenting their operations into discrete units, businesses can tailor their strategies and operations to specific markets, products, or services, and optimize their operations for maximum growth. Here are some key considerations and best practices for leveraging SBUs to achieve maximum growth rate:

Key Considerations:

1. Identify the right SBUs: Before implementing SBUs, startups and SMEs must identify the right units for their business. They should consider factors such as market opportunities, customer segments, and product/service offerings.

2. Align the SBU structure with business objectives: Startups and SMEs should ensure that their SBU structure aligns with their overall business objectives. This will help them achieve maximum growth rate by enabling them to focus on the right markets and customer segments.

3. Develop the right governance structure: Governance structure is critical to the success of SBUs. Startups and SMEs should develop a governance structure that provides the necessary oversight and guidance for each SBU, while also allowing for flexibility and autonomy.

Best practices for leveraging SBUs to achieve maximum growth rate include fostering collaboration between SBUs, encouraging innovation and experimentation, and leveraging technology. By following these best practices, startups and SMEs can enhance their agility, responsiveness, and efficiency, and unlock their full potential for success.

Best Practices:

1. Foster collaboration between SBUs: While SBUs are semi-autonomous units, they must still work together to achieve the overall business objectives. Startups and SMEs should foster collaboration between SBUs to enhance their agility, responsiveness, and efficiency.

2. Encourage innovation and experimentation: SBUs offer startups and SMEs the opportunity to experiment with new ideas and products without impacting the overall business. Encouraging innovation and experimentation within SBUs can help businesses drive growth and gain a competitive advantage.

3. Leverage technology: Technology can be a powerful enabler for SBUs. Startups and SMEs should leverage technology to enhance collaboration, streamline operations, and enable data-driven decision-making.

At CW1, we provide our clients with tailored approaches to implementing SBUs, incorporating best practices and insights from our extensive experience in organizational strategy and business transformation. We help startups and SMEs identify the right SBUs, align their SBU structure with business objectives, and develop a governance structure that promotes collaboration and innovation. By leveraging technology and data-driven decision-making, we help our clients achieve maximum growth rate and unlock their full potential for success. Contact us today if you are invested to improve your business to increase revenue from high value customers while optimizing sales cycle and customer relations for your existing customers.