Growing Faster Than the Market: 3 Questions CEOs Should Ask
The growth game has changed. Rising consumer expectations, increasing competition, and digital disruption have created new challenges, forcing businesses to develop new strategies and capabilities.
Here CEO Today hears from Biljana Cvetanovski, Senior Expert in Marketing & Sales Practice of McKinsey & Company, who discusses 3 key points all C-level executives should consider.
Businesses that win in this digital environment can spot opportunities at hyper-granular levels and then capture them quickly.
Most business leaders understand the need to change, but making it happen is easier said than done. In our experience, growth leaders are deliberate, persistent and disciplined in the way they go after growth. Becoming a growth leader starts with being methodical in asking and answering three crucial questions:
- Where is my growth going to come from?
- How do I grow now and tomorrow?
- How do I set up my growth engine?
1. Where is my growth going to come from?
Be clear on the opportunities you are going after – and not going after. Start with a realistic picture of your company’s growth situation, and make sure you have a clear vision and mission to guide your decision making. Get granular and work out where to play by understanding customer trends, current and future value pools in your current and adjacent categories, segments, and markets.
2. How do I grow now and tomorrow?
Every growth journey is different, but the best companies use a combination of three approaches to drive rapid growth.
Invest – Put your money where the growth is
Investing in growth requires relentlessly squeezing funds from existing programs and reallocating them to the right opportunities. When done well, companies can fund their own growth in this way.
Companies can release tens or even hundreds of millions of pounds for reinvestment in a matter of weeks or months, and savings can be captured from a wide range of sources. For example, oftentimes marketing can create up to 10-20% budget savings by making processes leaner and more efficient, breaking open the black box around agency fees, or optimizing consumer promotions through simpler programs and better targeting and measurement.
Perform – Optimise your commercial capabilities
Growth leaders constantly optimise their commercial capabilities in marketing, sales, pricing, and promotions to get much more growth from existing capabilities.
Customer experience enhancement is one potent driver of growth that can boost revenues by as much as 15 to 20%. One large European bank digitised its credit processes to slash its approval times for small and medium-sized enterprises (SMEs) lending from 20 days to less than ten minutes, far outpacing competitors and increasing win rates by a third and improving average margins by more than 50%.
Create – Innovate by design with the customer at the centre
Growth leaders out-innovate competitors—not just uncovering unmet customer needs to find profitable white spaces but also entering new markets or going to market in new ways. Despite its importance, a recent McKinsey survey found that just 27% of companies systematically scan for opportunities to expand beyond their core business.
New sources of growth come from redesigning business models, creating something new, and exploring disruptive services. New business models don’t have to be complex; they could involve tapping into new sales channels to reach different customers, for instance, or introducing new services to support an existing product.
3. How do I set up my growth engine?
To continuously find new growth, organisations need an operating model underpinned by analytics, top talent, organization-wide alignment, focused capability building, an agile culture, and a leadership mind-set.
Making this happen requires a growth transformation program that is as rigorous as a cost-cutting initiative. A core component of this effort is putting in place a growth-transformation office to rigorously track and manage the transformation.
In the end, the leadership mindset is critical. Growth leaders are obsessed with growth and committed to keeping their business on a growth trajectory. They develop a well-crafted story, set the pace/ cadence, incentives risk taking, make tough decisions and bring external perspectives.
Growth today drives not just performance, but survival itself. The companies with the brightest prospects are those that know where to find pockets of growth, how to capture that growth now and in the future, and how to build a growth engine for sustainable success.
The author would like to thank Jesko Perrey, Eric Hazan and Dennis Spillecke for their contributions to this article.