Transforming for Growth: An Evidence-Based Guide

As the spread and far-reaching economic impacts of Covid-19 dominate the world news, we have all been witnessing and experiencing the parallel spread of worry, anxiety, and instability in business.

Indeed In a crisis, our mental state often seems only to exacerbate an already extremely challenging situation, becoming a major obstacle in itself.

Why is this? and how can we change it?

As the CEO of a firm, i’ll bring mindfulness to companies to unlock new ways of thinking and working. Is survival of Business this year enough or we have to navigate business for longer term with enough resilience? Most of the business will survive automatically this year as most of them have slashed costs but will they survive in near future? Long term planning has become absolutely unviable in this VUCA world. Moore’s law has become the norm not only for technology companies but for Traditional Businesses also.

Let’s see what’s happening in the real world out there.

First quarter of the year 2020-21 has ended with Nil Revenues for most of the companies. Companies have incurred production costs & expenses to start the momentum and business. Cash flows are not to be seen anywhere in near future. So what is that which may heal company’s losses to minimum this year or even break? What is required which shall turnaround companies structure in future.

Is it Economy Turnaround, Leadership Skills, Team Management, Innovation Management, Execution Capability, Technology Investment or Business Model? Which Tool Shall be used? When and How to implement the right strategies for this year for business?

Most ‘turnarounds’ are hype, so let’s be careful what we mean by that. Do you mean improving company effectiveness? Bringing back innovation to a group that has lost its creativity? Changing impact on the environment? Changing Business Model? Raised profits? Turning around an organization means more than improving the numbers. Everything needs fixing. Never again will the turnaround leader assume that customers always buy, vendors always ship, bankers always lend.

This is an unprecedented times where we cannot draw parallel example turnaround strategies. But what we can actually do today is learn and adopt from different successful growth transformation examples adopted in this adversity times.

FIVE WAYS TO INCREASE YOUR CHANCE OF SUCCESS

We believe that all the above functions may be necessary from time to time for any entrepreneur to survive. Given the long odds of success for growth transformations, it is important to understand what can be done to improve them. The Five factors that we identified as characterizing successful growth transformations in a measurable way span the categories of leadership, strategy, and culture.

• Leadership

CEOs play an important role in a transformation’s success. They can bridge business silos, allocate resources, and serve as role models for the necessary cultural changes. This is particularly important for growth transformations, which often can take companies into unfamiliar territory in the pursuit of new revenue opportunities.

1.  Take a fresh look at your business.

Incumbent CEOs who want to add an outsider’s perspective to their toolbox can break free of their traditional processes and mental models by using strategy games to explore a more expanded range of possibilities.

For example,  Satya Nadella, who was hired as Microsoft’s CEO in 2014, described himself as an “insider-outsider” because of his background in the company’s Cloud & Enterprise Division rather than the then-dominant Windows division. 

• Strategy

Strategy is very much relevant in today VUCA world also, but it has be constantly reviewed and changed as per time to time. To create successful growth strategies, ideation capabilities bring together a rigorous analysis of consumers, customers, and trends within a proven framework.

Strategies need to be developed now for short term and long term goals both.

2. Take a long-term perspective on strategy. 

For example, in 2008 most major Indian computer game companies used a cyclical business model: they developed a game, sold it to customers for a one-time fee, and worked toward their next launch. Activision saw an opportunity to grow customer lifetime value by switching to a subscription model based around smaller monthly payments and more frequent, incremental, updates to games from their main franchises. SaaS Business based softwares have turned from one time installation fees to Subscription based fees per user per month.

3. Prioritize exploration over exploitation.

We found that growth transformations accompanied by high CAPEX & high R&D spend versus industry averages are 29 percentage points more likely to succeed. That suggests that a growth-oriented company should think beyond increasing sales of existing products and invest in developing new offerings, finding ways to continually reinvent themselves. Though exploration can seem riskier than exploitation, companies willing to explore can reap significant rewards.4.

4. Treat transformation as an ongoing capability.

Companies should lay the groundwork for future transformations by developing an adaptive firm with capabilities to change and respond quickly to new opportunities as they emerge—embracing an ““always-on”” approach to transformation. Firms also should build their knowledge base of successful change strategies, with the emerging science of organizational change.

• Culture

Culture shapes companies’ abilities to respond to change by influencing how individual employees handle decisions. Cultures that instill a sense of purpose and think holistically about change increase the odds of a successful growth transformation.

5. Become a purposeful organization.

Our analysis suggests that companies that have a stronger sense of purpose are 17 percentage points more likely to transform for growth successfully. Asian Paints and Uniliver companies has become Business Institutions rather than successful entities with their goal of equitable growth to all stakeholders.

Conclusion

To lead a successful growth transformation, a leader must have a clear understanding of his/her values and priorities, as well as the motivation for taking on such a herculean task. Leaders need to communicate, communicate, and communicate more and more with all stakeholders for opinion, criticism and new ideas.

Survival = (speed of your understanding of the situation) x (the magnitude of the pivots/cuts/lifeboat choices you make) x (the speed of your time to make those changes)