Are You Fit For Growth?

As we talk to current, past and prospective clients, they readily share their concern regarding achieving profitable growth. Their concerns center on the uncertainty surrounding economic policy that is creating business uncertainty and dampening economic growth. They are also finding it challenging to shift their focus from reducing costs (for the past 5 years to survive the recession) to driving sales growth. Yet, these same leaders realize their organizations will be facing headwinds for some time and need to move forward with a growth agenda.

The companies we spoke with are not alone in their concern in achieving profitable growth. According to a recent Booze & Company survey Fit for Growth (Survey) – only 17% of the 197 companies surveyed are prepared to achieve sustained profitable growth. The realization that most companies are struggling, represents an opportunity for those willing to prepare for growth by taking a more deliberate approach to developing and implementing their agenda. The Survey created an index based on assessing companies in three key areas:

1. Strategic clarity – clear set of strategic priorities supported by strong capabilities, a product portfolio aligned to the strategy, and a presence in critical markets.

2. Resource alignment – investment in key capabilities, targeted cost reduction, and continuous improvement initiatives aligned to strategy.

3. Supportive organization – Effective and timely decision making, strong leadership, and a supportive culture.

The first area addresses strategy, and areas two and three capture a company’s execution capability. Strategy and execution were given equal weights in the index to acknowledge their shared impact on performance.  In addition, the Survey compared index values to total shareholder returns (TSR) and found that companies with high index scores generally scored higher in TSR performance. Essential to a company having a high index value was scoring well in all three areas, highlighting how these three areas reinforce one another, resulting in higher overall performance.

The evidence is compelling. Being Fit for Growth can lead to sustained profitable growth. So how do you go about determining if you are Fit for Growth? Booze & Company suggests starting by answering these three questions:

1. Do you have clear priorities, focused on strategic growth, that drive your investments? You might not have clear growth priorities if you feel you have too many conflicting priorities, or your leadership team is not aligned when asked what things the company does well.

2. Do your costs line up with your priorities? Are you allocating resources to priorities effectively and efficiently? You may be able to improve your allocation of resources if high-priority projects are missing milestones because they do not get appropriate attention, or department annual budgets are only based on prior year.

3. Is your organization set up to enable you to achieve your priorities? Your organization may not be fully supporting your growth agenda if incentives are motivating people in ways that actually undermine the behaviors needed to achieve growth priorities, or most suggestions are being rejected causing people to be afraid to take calculated risks.

Get Fit for profitable growth by answering the above questions and take steps to get better in the three areas of Strategic Clarity, Resource Alignment, and a Supportive Organization.

Is your organization Fit for Growth?  We would be interested in hearing about your experience. Give us a call.