Growing Revenue and Profits
Talent Capital Partners worked closely with McKinsey & Company to develop a turbo-charged version of our already highly successful Account Planning Workshops to help Cisco Systems achieve extraordinary revenue growth. The need to move beyond a reactive business development strategy to a proactive approach based on a clear understanding of the customer’s business priorities was encapsulated by contrasting the language of value added with that of value creation.
The creative process to develop a “transformational proposition” for each customer was coupled with our trademark rigorous and pragmatic action planning and execution focus, and we called these Value Creation Workshops. These workshops have since been run all over the world adding hundreds of millions of dollars of revenue growth, one account at a time.
A subsequent empirical McKinsey study regarding sources of revenue growth for large corporations showed that the choice of markets (through new products, new sales focus, new teams) is 4 times more important than outperforming in existing markets. The authors wrote;
“This finding comes as something of a surprise, since many management teams focus on gaining share organically through superior execution and often factor that goal into their business plans.
Not that managers can afford to neglect execution. On the contrary, catching the tailwind of portfolio momentum requires a company to maintain its position in the segment, and this in turn hinges on good or even great execution—particularly in fast-growing segments that tend to attract innovative or low-cost entrants.”
The McKinsey study concludes:
“As a company becomes larger, the question of where it should compete becomes more critical. Choosing the right battlegrounds means matching its distinctive capabilities to the businesses, customers, products, and geographies where profitable revenue growth is most likely to occur and acting on those insights before it’s too late. “
So execution remains the bedrock, but choosing new, fast growing markets and addressing them efficiently is the key. This requires a creative process and transformational journey which may result in M&A, new product development, a new customer engagement model or a new sector focus. In each case it is imperative that the sales teams have have the right structure, support, knowledge and method to address the new opportunity. This in turn means doing things differently, copying good ideas and defining and implementing best practice across all teams.
Enriching the Talent Capital
It is at this point in the journey that we are often called upon to identify the skills and experience required and to recruit new management talent, perhaps even a new CEO, to lead the enterprise forward. But which direction is forward? If this has not been decided then we can (and do) recruit leaders with proven ability to navigate through the uncertainty and lead throughout the transformational journey, but our advice is usually to recruit to execute the defined strategy, not just for the defining process. External facilitation and the experience of consultants who are expert in the innovation and transformation process is the best solution. The innovation process invariably reveals hidden depths in the existing talent pool, as well as troubling shallows in key areas. When the dust has settled those who have been involved throughout the creative process will have a clear, shared vision of the direction and the requirements, the hiring specifications are quickly agreed and the hiring process is linear and highly successful.
See our Executive Search solutions.
Finding new markets – innovation
Understanding which markets to compete in is often not immediately obvious and requires insight from various disciplines and the open-minded consideration of multiple points of view and analysis. Brutal, honest feedback from customers and a fresh, external view of market dynamics can be crucial to find a new source of revenue growth. Once the market strategy is defined, organisational changes are required to address the market opportunity; new roles, new teams, new engagement models.
Since by definition thinking about new markets requires thinking outside & beyond the limits of current corporate activity it is normal to seek outside help.
A common approach is for the CEO to hire strategy consultants to define the strategy on the basis that they have the intelligence and wisdom which is otherwise missing.
In practice however consultants act primarily as conduits of best practice, seeing what works well in most companies and proposing changes to adopt that best practice. This works against fostering any “break-through” new and untested ideas and ignores the wealth of knowledge, wisdom and insight that is inside the organisation. Crucially any strategy must be executed by the employees and within the limits of the corporate culture and ignoring this or failing to win the approval and support of employees is the primary reason for failure. Enron, Global Crossing, Time Warner / AOL, Kmart and Swissair all made terminal strategic blunders on the advice of strategy consultants.
Studies show that broad participation to such strategic decision-making is more robust and more successful and ultimately more efficient than top-down executive or strategy consultant-led planning. When the team that must drive the implementation is the team that discussed and agreed the design, things happen much faster.
In large corporations, formal, calendar-driven Strategy Review Meetings help to forge a common understanding of the environment, challenges, opportunities and economics amongst the management team but tend to produce “in-the-box” strategies. Smaller companies lack such formal processes and are often founded on one good idea with the expectation that any change or new idea will come from the founder.
Studies into the creative process and group interaction led MG Taylor to develop a methodology of “Collaborative Innovation” more than 25 years ago. A key component is the purpose-built “Collaborative Workspace” (or DesignShop or Accelerated Solution Environment ASE) – an open, flexible work environment, designed to foster creativity and support an iterative solution design. This methodology has been continuously developed and used in most of the Fortune 500 and FTSE 100 companies and organisations across the world to generate new ideas and identify new models, markets and sources of revenue growth.
In particular it is famously employed each year at the World Economic Forum in Davos to bring attendees together to develop innovative solutions to major issues in what has become known as the Davos “Workspace” (“the highest value aspect of the entire World Economic Forum event”). Creativity cannot be forced, but it can be facilitated with the right tools and methodology.
Collaborative Innovation doesn’t stop with the identification of a new market strategy, but includes the definition of the “Roadmap” – how to get there from here. This may include new reporting structures and new roles and will always include a new narrative with the customer, a new way of engaging with new virtual teams. The team may not have all the answers, but they can identify the questions and a process for answering them. Whatever the industry, we bring highly skilled practitioners to take your team through this journey – they have facilitated Collaborative Design workshops for the World Economic Forum in Davos and China for the past 7 years, and for organisations across Europe, the US, Africa , Middle East, India and China over the past 15 years. See our Collaborative Innovation solutions.
Once the strategy and roadmap are defined and new organisational structures and teams in place, each sales unit or account team must now engage with their customer in a coordinated and prescribed way, and management must measure results and identify best practice and replicate it in an efficient manner. Especially in the early days, account teams must plan their actions carefully, review and revise them and monitor customer feedback. External facilitation ensures a consistent implementation of the (new) engagement model and the consultant can challenge assumptions and habits and as an independent is the ideal conduit for customer input and the identification and replication of best practice. See our Account Planning solutions.