Linear thinking hits its limits in SMEs
When mid-sized companies draw up growth plans, they usually think in straight lines: 5% more revenue a year, a 2% margin improvement, perhaps an acquisition. But the maths of progressive value creation points to a different path.
The 7-year model, built on the IKM stage model
Our 7-year model is based on the IKM stage model: 13 transformation stages that build on and reinforce one another. The effect is not additive but multiplicative.
A typical scenario: €50M → €114M revenue
Take a typical scenario: a company starts with €50M in revenue and a 12% EBITDA margin. By systematically raising all 13 IKM stages — from human performance through operational excellence to financial consolidation — it follows a growth path that reaches €114M in revenue and a 19% EBITDA margin in year 7.
The order of the stages is decisive
The key lies in the sequence:
- Human performance — stages 1–4
- Operational lift — stages 5–6
- Market realisation — stages 7–9
- Financial consolidation — stages 10–13
Each phase builds on the results of the one before.
Why linear thinking fails
Why does linear thinking fail? Because it ignores the interactions. A team with strong self-regulation (stage 2) makes better decisions (stage 3), which raises productivity (stage 5), which accelerates innovation (stage 7), which increases customer value (stage 8), which ultimately boosts free cash flow (stage 13).
Empirically proven: an ROI of 11:1
The 7-year model is not wishful thinking — it distils the empirical evidence of more than 25 transformation projects. Our clients' average ROI is 11:1 over the full period.