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The Fundamentals of Companies’ Organic Growth

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There are many paths to growth, and high performers take more than one– supported by reinforcing capabilities such as advanced analytics and digital customer-experience management.

Growth is a tonic for most companies. It attracts talent and creates strategic options while generating financial resources to fund new moves– provided the growth is profitable. It’s also been harder to come by over the past decade, as a sluggish macroeconomic environment and accelerating technology-driven disruption have ratcheted up pressure on businesses.

Digital technologies and the pace of competition, however, also open new avenues to organic growth for those companies that have the capabilities and dexterity to take advantage of them. Today’s fastest growers, for example, price products in real time; they create meaningful and positive customer experiences with digital interactions; and they refine products continually with customer feedback.

To understand the relationship between organic growth approaches, capabilities, and performance in this environment, a recent survey of approximately 600 executives at leading companies in the European Union and North America were conducted. It was found that companies exhibit three basic growth tendencies; that an approach combining two or more of these holds particular power in driving growth; that advanced analytics is an ingredient of standout growth; and that success depends on nurturing a set of reinforcing capabilities that fit the growth approach.

Three growth profiles

The corporate growth goals and behavior can be described as having three broad growth profiles.

  • Investors have a clear understanding of sources of growth from existing products and services and squeeze funds from a variety of areas, such as low-growth initiatives or unproductive costs, to reallocate capital and double down on winners.

The simplest way to grow is to put money where growth is already happening in existing products, services, or business models. Investing more in existing growth environment requires money, of course. Activating the Investor dimension is based first on a relentless search for efficiencies to unlock funds for growth priorities.

Those efficiencies can come from paring down administrative costs, renegotiating agency contracts, or moving funds from poor-performing areas of the business. For this approach to be effective, companies need to accurately identify where the growth is occurring within their existing portfolio and aggressively reallocate.

Improving the allocation process is about speed as well. Annual budget cycles aren’t good enough anymore. Fast growers actively track the performance of their spending and rebalance allocations monthly or even weekly.

  • Creators build value by developing new products, services, or business models.

Companies’ that are strong on the Creator dimension work at the frontiers of change to develop new business models or identify white spaces, whether they’re in emerging customer needs, unserved segments, or adjacent markets. They analyze data and extract customer insights that will help them to identify new opportunities.

Top growers excel at product and service development, aligning innovation with strategy, and applying design principles. Creators don’t just rely on data, of course. To really understand their customers, they use design thinking– customer empathy, ethnography, in-person observation– to identify and act on unmet needs.

Notably, companies that are strong Creators are more agile than their peers, with 58 percent of the best growers adept at collaborating across functions and 54 percent continuously innovating to cut down time to market. They embrace digital, which has made testing and learning quick, inexpensive, and much less risky.

Rapid prototyping targeted to a specific audience can test the viability of a product or service before significant resources are committed. This capability allows companies to “pull forward” their portfolio of initiatives and make better-informed bets.

Agile practices are enabled by “war rooms,” small teams of people across the business (including a campaign manager and people from creative, digital media, analytics, operations, and IT) who collaborate to address specific customer segments or opportunities.

  • Performers grow by constantly optimizing core commercial capabilities in sales, pricing, and marketing.

Those businesses that best activate the Performer dimension build competitive advantage by continuously optimizing their commercial operating model. Advanced analytics has opened up new opportunities for improving commercial performance in almost every area, simply by providing ways to analyze more data faster and speeding up decision making.

Standard market-research processes that often take weeks or months are giving way to near real-time dashboards that allow leaders to understand if an investment is working as opposed to whether it has worked. Some 73 percent of high-growth companies focusing on the Performer dimension, in fact, distinguish themselves by making it easy to act on insights generated from analytics.

They also outpace their peers in sales and pricing capabilities, particularly when it comes to acting quickly and at a granular level.

The scale of data and the analytics tools to process it have opened the door to advanced automation. Effective automation isn’t just about processing things better or more quickly, of course. When done well, it can greatly improve customer experience, a core capability along the Performer dimension.

In fact, those companies with customer experience capabilities are twice as likely to be top growers. While there is no single formula for delivering growth, there is a single overarching trait: having a growth mind-set and pursuing it with vigor.

Understanding each profile is helpful because leaders tend to fall back on what has worked for them in the past, and this can often blind them to new growth opportunities. Companies that carefully evaluate each growth profile, and make choices based on the strategic fit, will increase their chances of achieving above-market growth rates.

The power of the diversified approach

While 60 percent of those surveyed identified one of the approaches as their primary source of growth, the largest group in the sample– representing about 40 percent of companies surveyed– were those that diversified their organic growth portfolio.

A disproportionate number of the companies that grew significantly– at 4 percent greater than the rate of their sector’s over the past three years– were in this group.

Exhibit 1

These results make intuitive sense: companies creating new products or services frequently need to reallocate capital so they can place their bets, while an exceptional sales force or top-flight marketing team can accelerate a variety of new product or service initiatives.

The analysis further showed that companies exhibiting strong investor and creator tendencies particularly benefited from a diversified approach to changing their growth trajectory (Exhibit 1).

The potential of advanced analytics

Across all the growth lenses, a significant potential for an upside in advanced analytics was found. As Exhibit 2 shows, even at today’s low levels of penetration, advanced￾analytics capabilities were strongly associated with the highest levels of growth, suggesting they will be a critical platform for the next generation of performance.

Exhibit 2

Building the capabilities that drive growth

Capturing those growth opportunities, of course, requires specific capabilities, and the best growers are clear and purposeful in developing them.

Results of the survey revealed some common themes:

  • All growers need a set of ‘table stakes’ capabilities. The survey showed that top growers, regardless of their profile, had to hone a handful of capabilities just to be in the game. These table-stakes capabilities include resource allocation, branding, and mind-set.
  • There are also differentiators needed to excel, which vary by growth dimension. The best growers beat their peers by differentiating themselves through their capabilities. Distinctive Performer capabilities include sales and pricing as well as customer experience; for the Creator, it is data, analytics, product/service design, and customer insights; the Investor outperforms on data and analytics as well as customer experience. Across all dimensions, the most significant gaps between top growers and their peers were in data and analytics (81 percent of growers have them), developing products and services (75 percent), and company processes, such as agile work environments, cross-functional collaboration, and collocated teams (71 percent). While adoption of advanced analytics is limited, those companies that use it outgrow their peers.
  • Companies are looking to creation of new products or services to drive future growth. Regardless of where their growth came from in the previous three years, companies expect creation strategies to be a major contributor to growth over the next three years.

As companies consider driving growth across each dimension, they need to be clear and purposeful about building the capabilities and practices that will help them move with greater speed and precision.

The importance of reinforcing capabilities

Like a triathlete who needs to develop different sets of muscles to effectively compete, delivering on a diversified growth strategy requires building the right reinforcing capabilities.

Research indicates that there are table stakes for growers across all dimensions:

  • nimble resource reallocation
  • effective branding and
  • growth-oriented organizational culture.

There were other areas that, predictably, seemed more tightly linked with individual strategies. Sales and pricing were vital to faster-growing performers while the ability to develop products and services differentiated investors and creators.

These capabilities, combined with an understanding of the options for activating growth, are fundamental to building up a company’s growth DNA. And, as the research shows, a purposeful approach across a diverse portfolio of growth strategies increases the odds of success.

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Growth-leadership mind-set needed to capture growth

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Everyone may be born a winner, but only few (if not none) are born leaders. Hence Leadership, like cooking, painting or any other skill must be developed and enhanced to the fullest potential. While growth is needed, the will to grow which first develops in the mind, takes precedence. Mind-set, curiosity, and a willingness to adapt to client needs and industry trends form the three core capabilities needed to succeed in any given business environment. A good business leader then, is mandated to harness these core capabilities to transform the business to higher heights; leadership delivered with a growth mind-set will absolutely birth the full potential of the business.

Growth-leadership mind-set offers a vast room for a leader to try so many strategies aimed at growing the business. There is room to try, fail, learn from it and do a better job and this, by extension gives the leader the ability to move at a steady pace yielding faster and better results on projects.

Having the growth-leadership mind-set is really critical. The end product presented to a client or customer reflects the kind of work flow and leadership present in the business, how teams/employees behave, how they act, collaborate, what they take to clients and even how they deal with failure shows in the final product that goes in front of the client. This is a feat consistent with leadership that is growth oriented. A leader whose sole focus is growth; A lack of these elements, a loss of clients/customers.

With a growth-leadership mindset, a business lead is driven Everyone may be born a winner, but only few (if not none) are born leaders. Hence Leadership, like cooking, painting or any other skill must be developed and enhanced to the fullest potential. While growth is needed, the will to grow which first develops in the mind, takes precedence.

Mind-set, curiosity, and a willingness to adapt to client needs and industry trends form the three core capabilities needed to succeed in any given business environment. A good business leader then, is mandated to harness these core capabilities to transform the business to higher heights; leadership delivered with a growth mind-set will absolutely birth the full potential of the business. Insights Insights to focus solely on making sure the business grows; trying new strategies that can move the business and not just limiting one to accepting what works and sticking to it.

Here growth is the focus and things must move forward in that direction, there is no room for stagnation. Thinking about how things can happen rather than thinking about how things cannot be changed. In other words; this mind-set allows a leader to step out of the business’s comfort zone and make impact while overcoming obstacles. That is the kind of leadership mind-set people in top positions must adopt in the various business settings.

It begins in the mind

Capita Chief Growth Officer, Ismail Amla, in an interview with McKinsey’s Biljana Cvetanovsk mentioned that when he was growing up, his dad used to tell him, “If you think you’re going to do it, you’re going to be right. If you think you’re not going to do it, you’re going to be right.” A growth-leadership mindset, for him, therefore, is the neuroscience confirming the hypothesis that how one thinks determines how they feel and how they behave, and how one behaves determines the outcome.

If the mind’s eye does not see growth and the prospects thereof, it will not happen. The team lead’s responsibility then becomes to see the growth ahead, map out a strategy to achieve that goal and drive the team to collectively hit the mark and scale higher. Else, the business may do well with what it knows to do and remain stagnant like it knows to be, but never higher than it could be.

Curiosity

A team lead needs to really understand what clients/ customers want. This has been termed in the market as “consultative selling” where the focus is on value and trust and exploring the client’s needs before offering a solution. This definitely gets one to understand the better what really people want or need.

Learning agility

It is not enough just knowing about something; a team lead has to go the extra mile to learn everything. It is important to learn what the problems are and how to solve them. Limiting oneself to just working by what you already know can only lead to failure. In addition to being curious and having a ready to learn attitude, a team lead should ultimately have a growth mind-set.

These are three core capabilities required to drive growth. People may sometimes attribute doing what they want to do at any time as a leader as growthleadership, but that is not the case; to get up, doing what needs to be done and adding the importance of time to task is what growth-leadership is. This leads to the next point, Take Action!

Take Action; do!

Further from the mind, the leader must then, walk the talk. Like the age old adage goes, talk is cheap. The strategies put on paper or mentioned orally must be fully executed to bring to full fruition what has been in mind. This is what will actually make the business growth happen.

Steps like delivering the best, meeting customer/client demands on time, maintaining consistency in delivery, making upward adjustments in the quality of work based on market demands and keeping a great client-agency relationship charts the business on the growth path. Taking all these steps, moving high mountains and deeper valleys to realize all the goals in the growth plan leads to the ultimate realisation of an elevation in the business structure, process and yield. A dive in the doing waters takes one beyond the mind to the actions of primarily the head.

The team lead with the growthleadership mind-set must first begin with improving on himself or herself and his/ her innate leadership qualities. Managers who show great leadership qualities can inspire their teams to accomplish amazing things. The other arm of the branch is the team. Accomplishing pragmatic coups also relies heavily on the efforts of a team; a team sharing the leader’s vision and possibly having the growth of the business at heart.

Against this backdrop, there must be a conscious effort to build a solid team. It is said that one is as good as his/her team. Therefore, a growth-leader must bear in mind to grow his team. The collective powers of the team under the effective supervision of the leader results in high performance which steers the growth wheel, thus, it is paramount to invest largely in developing the team.

This ranges from helping them develop their skill set, expanding their knowledge scope in their respective fields to providing little things like increasing their vocabulary. How? Small or big steps like enrolling the team is training programs, pay for them to attend seminars, buy books and share weekly reads with them. One cannot give what one doesn’t have.

The team can only reproduce what they know, make sure their pool of knowledge is so large and deep and they would draw when needed to always over-deliver set targets – pleasing the clients and accruing more business as a result; more deals, more profit. Again, the leader who grows his team also breeds a sense of trust and loyalty from his or her team. On average, after graduating from college, a millennial will change jobs four times before they are 32.

Most of them also don’t feel empowered on their current jobs. There is therefore the need for the team lead to consciously spend time and energy in developing the capacity and general ability of his team mates. For instance, a team’s social media manager in a team whose leader sets him or her up to be a Google certified digital marketer not only now has the capacity to take on more responsibilities for the team and add value to the team, but also appreciates his/her leader by remaining loyal to both the business and the leader; more value for less.

A great leader and a great team need a great structure to realize the business’ full potential. A business structure that works; one that eliminates time wasters like micromanaging, red taping and unnecessary bureaucracy. A system that is designed to work its best with little or no supervision. For instance, in a business operating system where productivity depends on 50% of the man power or human resources, outputs are likely to be higher than one relying on 80% of man power.

Automating systems eliminate chances of human errors and ensure that the best work is delivered to a client each time. Adopt modern technology to set targets, reminders, achievement scale, simplify the system, have a tracking and reporting framework that shows what is happening when it’s happening and who is responsible for what. This gives the opportunity to weed out non performing team members, reward performing once and modify strategies in order to meet set goals.

The time a leader spends in micromanaging his team could be used more productively in ventures like research into trends and better ways of exceeding client expectations. While it is true that people do the things you inspect and not those you expect, it is also imperative that one creates a system that does the monitoring on behalf of the leader to churn out great results and total progress on the growth ladder.

Achieve Set Goals and targets

The growth mind-set is backed strongly by the will to achieve and over achieve. This phenomenon also rests in the mind; that every challenge has a solution and that no mountain is too tall to climb, forms the mind-set an achiever. With an excellence-driven team under a growth mind-set leadership utilizing an efficient business model or procedure, consistently achieving is inevitable and more importantly business growth is not far from reach.

Growth-leadership mind-set incorporates the use of one’s mind-set to grow, taking productive action that is result oriented and finally achieving set goals and targets. In these disruptive times where new technology and innovations are springing up, one needs to be abreast with everything.

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