- April 27, 2021
- Posted by: Kristin Smith
- Categories: Articles, Business
Especially during a downturn, maintaining focus on the growth agenda, is no easy feat, however. To deliver lasting gains for growth initiatives, they require an organization-wide alignment, clear aspiration and careful monitoring.
Company-wide programs aimed at enhancing overall corporate performance, after reviewing 60 recent growth transformations intense, they find that more than half failed to meet their targets.
So everyone looks for key elements that contribute to others success and the biggest pitfalls that tripped up promising projects.
For companies looking to reignite growth, our analysis reveals eight lessons for them to apply.
8 Salient Lessons for Small Business!
1. While focusing growth on high-margin targets, protect the margin of your base business
At the expense of margin a growth aspiration sometimes ends up becoming a push for volume. To reach more customers recipes sales teams may present ‘opportunities’ that essentially mean focusing on lower-margin offerings or lowering prices that rarely deliver profitable growth. This risk is particularly for those acute companies that lack margin controls and strict pricing.
To identify initiatives, this requires leaders that combine pricing levers and volume growth within sales.
More broadly, they should pursue ideas that are both margin-accretive and growth, such as expansion into high-margin or high-growth markets or business-model innovations.
2. To compensate for declining momentum set targets high enough in the inevitable setbacks and base business
The growth aspiration that leaders set (as noted in the research), efforts generated matters a great deal to the shareholder value.
To change the growth trajectory of their overall business yet many companies venture on what they believe to be ambitious programs only to find the results fail.
Revenue can be eroded in the base business by market factors like overtime, shifts in sales channels, product commoditization, and competitive activity.
Companies need to be realistic about their likelihood of success. All growth initiatives face changes in customer behaviour shifting the market dynamics or intrinsic risk of new competitors and some efforts are bound to fail altogether or under-deliver.
The success rate ranged between 50 to 70 per cent in the growth transformations we reviewed. Leaders should not punish failure and also foster an entrepreneurial spirit due to factors beyond project managers’ control.
3. To focus interventions where they are needed most, measure and incentivize performance at multiple levels
Managing a growth transformation requires factors that are both within and outside the management’s control, tracking numerous performance dimensions, from market demand to the progress of the initiatives to the competitive landscape themselves.
Growth performance management, at a minimum, should cover 3 levels:
a. Overall corporate goals. How the growth transformation is driving is the need of the top leadership team to understand the company’s top line.
b. Growth transformation targets.Leaders of the transformation should track financial impact, operational KPIs, execution progress, and each initiative within the program.
c. Functional performance. To incorporate and targets (such as funnel and order book) into frequent sales-performance dialogues, sales management should provide a single source of truth on backwards-looking and forward-looking sales performance so that the insights, the metrics reveal are translated into frontline action.
4. Ensure the entire organization embraces the defined few growth themes
Many companies update their strategic priorities and extensively review before launching growth transformations. This typically entails analyses of category, competitive activities, market trends and product performance.
We found these companies look into potential moves and go beyond the core in studying the practices of growth outperformers, involving market adjacency, value chain and geography to set their aspirations and priorities.
Yet growth failed to materialize, it took a lot of time for leaders to develop what they believed to be clear strategic priorities.
5. Make line managers accountable for implementing and designing growth programs
Having a critical mass of employees involved in their execution and design makes a big difference as suggested by our successful growth transformations. To drive the initiatives, companies that score in the top quartile of at least 8 per cent of their workforce growth performance, became mobilized. Deployment of 20 per cent of staff or more is scored by top performers.
Some growth opportunities require improving or establishing cross-functional collaboration. ‘Product, engineering, and sales make decisions jointly, so one does not need to fingers pointing at each other’ – put by one leading consumer-packaged-goods company.
6. Fund growth by reinvesting gains and reallocating resources
Inevitable requests for additional resources for sales, marketing, and technology will come from asking business unit leaders to come up with growth ideas. An ambitious growth transformation should be guided by a structured process of resource reallocation, which also does it require proper funding.
To support growth initiatives, top leadership needs to communicate early how the decisions about funding’s allocation and how much funding will be provided, no matter wherever the resources come from, will be made.
7. Implementation plans must be created with clear milestones
Shorter initiatives tend to produce better results – suggested after several types of research on organizational transformations are done. We found that successful transformations delivered approximately 75 per cent in the 1st year and close to 1/3 of the transformation value within the first 3 months.
Though, many growth programs are outlined to last multiple years. They are short of detailed proximate expectations and goals and often rely on high-level plans.
With a limited-time pilot, it can be useful to test the larger program. To develop and test the proposition, one electronics player is expected to become a sizable business that was working on a new direct-to-consumer proposition, 1st spent six months running a small-scale study with selected users.
8. Replenish and continuously prune the pipeline of initiatives
The cycle that will never stop if done well is ideate, refine, renew, and repeat. However, it will require that companies adopting a rapid-learning approach for maintaining such a healthy pipeline of growth projects.
For more promising efforts, continuously pruning underperforming initiatives and monitoring the progress will allow scarce marketing and sales resources to be redistributed.
The faster it is done, the better it is!