Companies that grow outperform their peers in terms of value by 30%. Growth also has benefits for organizations and customers such as new opportunities and resources for innovation. With growth being a priority for most businesses, many companies are looking to grow in order to quickly recover from the effects of COVID-19.
Executives will tell you that it is difficult to maintain growth. Many companies have implemented programs that have successfully increased revenue, but these programs often do not reach the company’s full growth potential.
Transforming growth requires that the entire company act as one unit–from the marketing and sales teams responsible for acquiring customers to the customer service staff who help ensure customer satisfaction. Because conditions in the market, competitive threats, and customer attitudes change frequently, this kind of growth demands a combination of determined execution and flexibility.
We have worked with many different types of organizations to help them make significant and lasting changes that will increase their revenue. We have identified seven principles that these organizations have followed to be successful.
Principles for Achieving Transformational Growth
Persistence and execution are important for growth.
Look Past the Myths
Though growth transformations present significant challenges, executives can sometimes be deterred from attempting them by a few persistent myths. These myths include the belief that growth transformations are high risk, that they are too difficult to pull off, and that they require trade-offs between growth and profitability. However, these beliefs are not supported by evidence. In fact, growth transformations can be successful, and they do not have to be high risk. Moreover, they can be accomplished without sacrificing profitability.
It is commonly believed that focusing on growth during a crisis is a waste of time and resources. However, data from McKinsey suggests that, for businesses with secure finances, investing in growth during tough economic times can actually be quite beneficial. With this in mind, it seems counterproductive to wait for the economy to improve before taking steps to improve one’s company. In fact, many businesses that have undergone transformations wish they had started sooner.
The myth that growth transformations take too long and cost too much is often heard. It is true that growth transformations require investment and the full payoff may not come until year two. However, disciplined organizations can quickly unlock significant efficiencies and capture short-term revenue wins.
While some businesses may feel that growth is out of their control, this is not entirely the case. There is always room for businesses to grow, no matter what their sector may be.
Clean sheet a Bold Growth Goal
The all-too-familiar approach to setting growth targets—taking last year’s figures and adding or subtracting a few percentage points based on experience or gut feeling—has always been counterproductive. The acceleration of the mass migration to digital triggered by COVID-19 requires leaders to cast a skeptical eye on trend lines and historical precedents and set goals that reflect the new landscape’s potential. Time and again, we’ve seen leaders using this zero-based approach set and meet goals 40 percent higher than they achieved with their traditional strategies.
A zero-based approach to cost planning is a way of thinking about and doing business in which all costs are considered as variable and always up for scrutiny, rather than fixed. This type of thinking can be applied to growth in order to improve company performance. In order to achieve peak performance, businesses need to break down the company into its components and set goals for each revenue driver. This process should be guided by curiosity and an open mind in order to create more ambitious goals that challenge the status quo.
A The company’s large size made it difficult to change long-held assumptions about its ability to grow. B The company’s brick-and-mortar business had been declining for years, but its online business was growing. C The company’s leaders reset their ambition and achieved a double-digit growth rate.
Drive Big Impact From Multiple Moves
In our experience, growth seldom occurs in one large event, but is rather the result of many small improvements. We have seen companies achieve double-digit growth by identifying a few key areas in which they can improve and then applying best practices. This results in a series of small wins that add up to significant overall improvement.
executives are unsure how to drive commercial excellence and break down the opportunity into smaller wins, but there is a body of empirical evidence on how businesses can do this effectively. Marketing effectiveness, sales team motivation, and pricing innovation testing and scaling are all areas that have been proven to produce results. The challenge is not to come up with new methods, but to look outside the organization for proven methods and emerging solutions, and apply them with discipline and rigor to the drivers that genuinely push the needle on growth.
The company reviewed its marketing effectiveness and found that it had neglected brand awareness and overemphasized performance-marketing tactics. The company reset its marketing budget and reallocated investments, boosting high-conversion inquiries by 24 percent. The team enhanced the website’s user experience to increase inquiry flow; intensified coaching and adopted performance-management “nudges” to improve frontline sales; and introduced multichannel communications and peer-mentorship programs to support student success. Together, these efforts reversed five years of sales decline, propelling the company to double-digit growth in new sales in less than a year.
Value Creation for Transformational Growth of an Organization
To effectively transform, leaders must create value. Value creation helps you transform in the right way and by doing good.
I will not speak about the process that you have already heard about from the previous speaker. Instead, I will talk about your purpose, how to create value, how to get a value creation mindset, and how to create a truly lasting transformation.
Companies like people change all the time, and we only notice some of it. For example, McDonald’s adding a vegetarian burger to their menu is a change. Many companies have tried to become more nimble, agile, and fast during the Covid pandemic. Companies are learning that they need to be customer-focused.
Many companies change and adapt over time, using technology and data to stay ahead of the competition.
But some go through major transformations:
- Amazon was an online retailer of physical books in 1995 to selling for others in 2000. In 2006 cloud computing and one of the biggest in the world
- American Express started in 1850 as express mail delivery and transformed into credit cards in 1950 or so.
- Corning from glass bulbs, to specialty items, Pyrex and gorilla glass
- IBM decided in 1993 to abandon hardware and moved into soft services
- Netflix from renting DVDs to streaming content and own content
- YouTube was a dating site in 2005, bought by Google in 2006 to become a video site
- Apple from desktop to mobility when Steve Jobs returned
- Management must learn to transform effectively.
You can learn all about transformation from the net, and it is all process driven Steps include:
- Evaluate your existing business situation
- Get executive buy-in
- Get employees’ buy-in
- Engage all employees in daily conversations
- Focus on your communication strategy
- Build an efficient change management process
- Set clear short and long-term goals
- Foster a sense of urgency
- Eliminate fear in the workplace
- Enable cross-departmental collaboration
- Choose carefully the communication channels you’re about to implement
- Be agile and encourage new ideas
- Close the skill gap in your organization
- Measure your employees’ engagement
. People and companies fail when they do not focus on the mind-set.
Value Creation and Leaders
Quality and price are both attributes of objects, but value is an attribute of human beings. We assign value to objects. The word “value” can mean different things depending on the context it is used in. It does not only refer to the price or quality of an object, but rather to the importance that humans assign to it.
There are two groups of people in regards to how they think about spending money. The first group is focused on getting the best value for their money, while the second group is focused on getting the best quality product regardless of price.
To put an end to all this, the Journal of Creating Value has a definition that is in use now:
Doing things that increase the overall good and wellbeing is creating value. This can be done by pro-active, conscious, inspired, or imaginative actions. It can also be done by normal actions that increase the worth of ideas, goods, services, people, or institutions. This includes society, and all stakeholders like employees, customers, partners, shareholders, and society. Creating value also means doing things that are good.
I will discuss Value waiting to happen later.
Your customers’ willingness to pay creates value. Value, in a business sense, is the worth or value of your products that make people buy them. They buy your products over competitive ones if they perceive you as creating more value, more good, and better worth. Your customers’ willingness to pay creates value.
The goal of transformation should be to improve the well-being of employees, customers, partners, society, and shareholders.
Transforming Through Value Creation
In the current climate, it is more important than ever for business leaders to be able to create value and avoid value destruction during transformation. With fears of a loss of control as technology advances, it is crucial that leaders choose transformation that will have the least negative impact and will not result in them losing control of the technology. This requires a change of thinking when it comes to Value Creation, and recognizing that it does not just mean creating profit.
In August 2019, the 300 CEOs of the largest US companies endorsed The Business Roundtable’s new purpose of a company which is to create value for all stakeholders: Employees, Customers, Suppliers/Partners, Community/Society, Environment, and Shareholders.
At Davos in 2020, it was stated that there is a supposed seriousness of purpose to create value. However, the problem is that our training and MBA schools have taught us to create shareholder wealth, and even well-meaning leaders do not know where to start.
So, to start, you have to look at your Purpose. Ask:
Why? People with purpose are happier. They are more likely to engage in healthier behaviors, such as maintaining a healthy weight, exercising more, and not smoking What is the purpose of your family or your friends? A study has found that people with a purpose live 15% longer. Why? People with a purpose are happier. They are more likely to engage in healthier behaviors, such as maintaining a healthy weight, exercising more, and not smoking.
This is a difficult question to answer. Some people would say that the purpose of a business is to make money for stakeholders, while others would say that the purpose of a business is to leave a happier world.
Since leaders can also be shareholders, they should look at creating happiness.
Almost all of the 2000 leaders surveyed could not explain why their company exists. This means that many organizations’ purpose statements don’t make much sense. Are yours one of them? However, these leaders want to change that!
Your purpose should be more than just making money and increasing shareholder wealth.
This process will help you revise and transform your vision and mission while keeping your purpose in mind.
THE PROBLEM: YOUR BUSINESS ISN’T GROWING AS FAST AS IT SHOULD!
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