Growth is back on the agenda in a big way for company boards. Fuelled by unprecedented, synchronised pickups across the globe, the International Monetary Fund is forecasting 3.9% growth this year. And they are not alone.
For example, EY’s Growth Barometer provides a fascinating insight into the drivers and ambitions of the private middle market companies that make up 80% of 2,700 C-suite execs they survey. And it’s reinforced by research undertaken by GrowthOps, together with our own experience helping our clients scale up or launch new products.
Predictably, countries such as China, India, and Russia fill the top slots. Australia makes the top 12 along with Singapore as the fastest growing countries for the survey sample.
Across the board, a quarter of businesses surveyed see their growth coming from overseas and a fifth expect it to come from adjacent business sectors.
Here are five key factors critical to growth prospects and growth plans in the current environment.
1. Demographic Disruption
Interestingly the biggest disrupter private companies see isn’t from digital or geo-economic influences. It’s demographic shifts (34%), which might seem surprising. Not so, according to marketing academic Mark Ritson. In a recent article in Marketing Week he described something he called ‘the Knopfler Effect’, which points to the fact that demographic groups have a propensity to behave in often contradictory and unpredictable ways when it comes to habits like TV viewing and choices for music.
Although EY’s data doesn’t put customer experience as the number one driver for consistent growth — profitability holds that title — there is little doubt maintaining a laser focus on customers and differentiating on service is often the most successful source of competitive advantage. Even Apple, renowned for its stable of cool products and customer fan-base, is conscious that great customer service is critical to its success. Their Apple Care and Apple Music ventures have been two of their most successful business units over the past two years, contributing almost $10bn in revenue in the last quarter.
And in spite of the evidence that global growth prospects look strong, the possibility of a slowdown is still seen as a major risk factor (26%). The IMF’s forecast backs up this concern, pointing to the fact there is still uncertainty when it comes to tariffs and trade agreements, which could cause a slowdown while markets readjust.
2. Leadership Development
Companies planning to grow expect to hire more people and train more of their own staff. Developing attraction and retention strategies (42%) as well as investing in training (29%), underpin any growth strategy.
The amount being allocated to leadership development is increasing year-on-year. According to media publication Chief Leadership Officer, almost 50% of their cohort of 26,000 business leaders plan to increase investment in leadership training in the next 12 months.
GrowthOps’ Institute of Executive Coaching and Leadership has seen a marked increase in organisations investing in leadership coaching over the last 20 years, particularly among those with a strong growth agenda. They call out the clarity of purpose as the Number 1 factor leaders need to define for success in growth-oriented organisations.
3. Digital Acceleration
For the past ten years there’s undoubtedly been more ‘talk’ than ‘do’ when it comes to digitisation in mid-market companies. That’s changing fast. According to the research firm IDC, spend on digital transformation and innovation will rise almost 17% in the next 12 months to $US1.1trillion. Manufacturing companies are the big spenders, followed by construction and retail, with the emphasis on supply chain, customer experience, omnichannel growth and accelerating innovation.
In addition, there is now considerable evidence that sophisticated analytics and machine learning are being applied widely across middle market companies. Artificial intelligence is within reach of a growing number of companies seeking to automate manual, repetitive processes and interactions: 65% of the sample say they will be deploying AI in the next 24 months.
GrowthOps has seen a marked increase in the number of projects we deliver for clients building digital front-ends to their enterprise platforms. The total cost of ownership for these core platforms is beginning to bite, and cheaper, more flexible solutions are being sought. In one instance, a client spending $2.5m per annum on its ERP platform saved $500,000 per annum in support and license costs simply by having GrowthOps build a user-friendly digital front-end. They also saved time: the equivalent platform extension would have taken 9 months to build, the digital front-end took just 10 weeks to go live.
4. Customer Engagement
Our own research reveals how companies adopting a data-driven, customer-centric growth path are being rewarded by consumers. We have been tracking consumer sentiment related to brands with the GrowthOps Brand Momentum Index. This asks consumers to rate brands as either ‘right’ or ‘wrong’ for the times. Over 7,000 consumer responses reveal a seemingly disparate group of companies at the top of the list: Bunnings, Netflix, Afterpay, Coles and Google. Digging deeper, however, the one thing these companies have in common is that they’re incorporating a high degree of customer centricity in their business models.
For example, Bunnings has put community engagement front and centre of its customer engagement strategy, and building ties with local communities through the charitable sausage sizzles. They are also taking a progressive approach when it comes to data analytics — perhaps more common with online brands — to drive loyalty, click-and-collect as well as repeat purchases. It goes without saying that Netflix and Google are using customer data in a smart way to deliver bespoke content to users, while Afterpay is following in their footsteps by providing customers with the ability to purchase what they want, how they want.
5. 3 R’s for Cloud
Growth could happen a great deal faster if more organisations accelerated their move to the cloud. In a recent article in CIO magazine our CTO, Dave Kuhn reminded us that only 10% of today’s data and workloads are in the cloud, meaning the rest is resident as legacy in enterprise data centres. Applying what Dave described as “…the 3 R’s: Ringfence, Refactor and Rewrite” is a powerful lever for enabling Hyper-Growth in most enterprises.
There’s no magic formula for growth — or hyper-growth for that matter — but one thing’s for sure: nothing in our world is slowing down, and for the foreseeable future growth is imperative to both survival and prosperity. A focus on understanding customers behaviours, wants and needs coupled with a progressive technology strategy and continual investment in people definitely provides a better than average chance of success. And in such a complex and dynamic environment, that’s a very good outcome.
By Paul Scott, Portfolio Director.
Transforming organisational performance
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