You survived the financial crisis. Now what ? : Next Growth path | by: Cesare Mainardi | Fortune

“As the economy recovers, here are “FIVE Ways” to steer your company on the path toward Long-term Growth”…

As the fog of Economic uncertainty is finally lifting, many companies are approaching a critical turning point. Unfortunately, the fight to survive the Great Recession brought out the worst in far too many boardrooms…

Companies slashed costs and cut head count. Investments in new employees and equipment slowed to a trickle OR stopped altogether. “Agile strategy” and “dynamic resilience” became the new buzzwords, and they were code for : Throw out your strategy and chase whatever you think might work.!!”

In any kind of economic, political, or corporate crisis, it’s doubly difficult to resist the urge to fight fires. But the reality is that managing for the short-term never breeds greatness. And doing so has left a lot of companies in a tough spot. They survived the crisis, but they don’t have the headroom or resources to fuel long-term growth. Our most recent global survey of almost 4,000 executives found that 60% don’t believe their own business strategy will actually succeed. That’s an astounding lack of confidence—no doubt colored by the roller-coaster ride of the past several years.

So what now ? One thing is certain—the much-talked-about agility is not the answer. Succeeding is not moving rapidly. It’s strategically deciding where to move. That’s how you win in a chaotic market. And there are some legendary companies—Apple (AAPL), Danaher (DHR), Ikea, Haier, Natura, and Toyota (TM) —that seem to win no matter what. Our research found that all of these super-competitors consistently made five particular choices. Here’s a formula to fuel “good growth” that lasts :

1. Stay true to who you are and resist the urge to chase others:

The things that make companies truly great are slow to develop; they can’t be built overnight. If they could, they wouldn’t be worth very much, because anyone could copy them. The most capable companies know who they are and understand the job they are uniquely qualified to do in the market. They clearly define how they add value to their customers and use their identity to drive growth over the long-term. Look at how Wal-Mart (WMT) built a winning supply chain focused on four things: Aggressively managing vendors to keep prices low; analyzing sales data at the store level to understand what sells, what doesn’t and where; superior logistics to get products to the stores seamlessly; and rigorous working-capital management. The company then faced the “problem” of maxing out at $250 billion in revenue. To fix it, they took a fresh look at what they already did well—their superior supply chain capability—and how they could refine it. For example, their analytics found that the items that sold at stores near freshwater were quite different than what sold at stores near saltwater. So they changed the assortment of products on the shelves to suit these geographies. Smart and targeted changes like these helped them grow revenues to more than $400 billion.

2. Don’t wait for customers to tell you what they want—influence them :

Instead of chasing growth by responding rapidly to what consumers say they want or need, change the game. Proactively create demand by getting out in front, shaping the wants and redefining the needs of your customers. Think about how brilliantly Ikea does this by focusing on how to make a better life for people, ultimately creating global demand for its affordable Scandinavian design. Ikea insists on managers conducting home visits to understand how people live at home, what challenges they’re facing, and what frustrates them (like the tangles of wires that surround most people’s TVs and DVD players). Their founder, Ingvar Kamprad, is also famous for having spent a lot of time in the store asking customers “how did we disappoint you today?” This privileged access to customers allows Ikea, like few other companies, to shape what their customers want and to redefine their needs.

3. Trade bench-marking and best practices for capabilities : 

If every company focuses on bench-marking and functional excellence (doing the same things better and better), they’ll all end up in the same place—fighting for an ever-smaller share of the same market. Instead, spend your efforts building the handful of distinctive capabilities that your company does better than anyone else. Take Apple. No matter what product, what market, the company approaches it “the Apple way.” It spots a consumer need, brings technology to it, makes it intuitive and easy to use, and aggressively markets it. But this wasn’t always the case. At one point, Apple was pitted in a destructive competition with Microsoft (MSFT) and was in serious trouble. According to Steve Jobs, things improved only after company leaders realized that “Apple didn’t have to beat Microsoft. Apple had to remember who Apple was.”

4. Stop restructuring and put your culture to work : 

There were a raft of reorganizations during the downturn. All too often, a re-org is really a backdoor attempt to solve a culture problem and re-engineer success. Unfortunately, it rarely works because corporate culture is notoriously sticky. Culture always wins when you try to restructure it away or execute strategies that run against it. Instead of fighting your culture, leverage what’s great about it and the unique way you get work done and create value for your customers. Don’t just move the boxes on your org chart; instead, invest time in aligning your strategy and your culture to fuel change. Consider healthcare company Aetna (AET). In the mid-2000s, it went from losing about $1 million a day to making $5 million a day, after new leaders leveraged the strengths of their culture to build what then CEO John W. Rowe called “the New Aetna.” The strategy focused on energizing the organization’s culture while drawing on what was already working for it: Employee pride in the company’s 150-year history; deep-rooted concern about customers; and a team of committed professionals. For example, the New Aetna was designed to support employees’ dedication to providing premium service to patients, providers, and employers. Under the New Aetna, employee loyalty and satisfaction skyrocketed—along with the company’s stock prices, climbing from $5.84 (split adjusted) to $48.40 a share.

5. Invest no matter what—but funnel money where it matters most :

Companies make THREE classic mistakes in their investments – “They relentlessly take out costs across the board to improve profitability”. “They dilute their investment dollars by making bets on dozens of new projects, hoping that one will win”. Or “they stop investing completely when times get tough”..None of these work.

The approach that really pays off is to surgically and strategically cut costs. And then redirect money to invest more in the core capabilities that drive your profits. This allows you to cut costs and grow stronger at the same time.. 

Until you take the CEO seat, it’s difficult to understand just how tough it is to make the right decision at the right time, particularly when markets are volatile and shareholders are screaming.  It takes extraordinary discipline—sometimes, even bravery. But that’s exactly the kind of leadership that’s required to switch from limping out of the recession to growing your way into the ranks of the super-competitors…

Leave a Comment:

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s