Growth Insights for CEOs

Why Growing a Business is Harder Than Ever

Posted by Brian Ricci



 

growing-a-businessOne of my daughters recently read Of Mice and Men in English class. Since I also read it in high school, it was fun to chat about the story as she progressed through the book. I wondered how Steinbeck came up with the title. It turns out he used a quote from a poem written by Robert Burns in 1785. The contemporary translation is, “the best-laid plans of mice and men.” The two main characters, Lennie and George, have a plan for a new life. Unfortunately, their reality ends up being far from what they hoped.

of-mice-and-menWe have all experienced situations in which reality did not match our expectations. We put substantial effort into developing a business plan, only to have the execution fall short of the desired outcome. Execution issues are particularly painful for companies diligently working to accelerate their growth. Often, these organizations go through a painstaking process to develop a sound strategy, only to have sales performance fall short of the target.

The hardest part of driving growth is not developing a business growth strategy or execution plan; it’s the effective implementation of the plan. A recent study by the Economist Intelligence Unit found the number one challenge facing corporate leaders is execution excellence. Approximately 90 percent of business leaders claim their company fails to reach strategic goals due to poor implementation, and 53 percent of respondents believe execution challenges unnecessarily hampered their ability to compete in their marketplace.

Nearly 90 percent of business leaders claim their company fails to reach strategic goals due to poor implementation.

Why is the effective execution of a business growth plan so difficult? First, let’s clarify what execution is. Simply put, execution includes the daily decisions and actions made by employees. A company’s growth plan provides staff with the framework and guiding principles to help them make the best decisions while taking the right actions to maximize company growth. Growth plans often contain a lot of detail, but even the most comprehensive plan will have missing elements that employees will need to use their best judgment to fill.

Execution begins to falter when day-to-day employee decision making is out of line with the company’s growth strategy. Several factors cause this to happen. First, the inefficient flow of information results in employees making incorrect or outdated judgments and decisions. Similarly, poor data flow may hinder alignment of decisions and activities across functional groups. Another issue involves roles, responsibilities, and authority. Misunderstanding in this area can delay important decisions or result in the wrong individuals making key decisions. Lastly, employee incentives may not be aligned to drive desired behaviors and outcomes.

Execution challenges facing companies today are more daunting than ever. In Of Mice and Men, unexpected events ultimately spoil the main characters’ dreams. In today’s business environment, the pace of change is faster than ever before. Examples include changes in consumer preferences, the speed of technological advancements, and geopolitical instability. For today’s companies, effectively managing change is one more obstacle standing in the way of effective execution.

agility

How can companies effectively react to changes in their marketplace and keep growth plans on course? For many years, the best business minds in the world have emphasized the need for companies to become more agile. When executives think about agile business practices, they may first consider agile project management principles proven successful in software and product development. While achieving business agility may include leveraging the specific tools and processes for agile project management, it is a much broader concept. Business agility is a mindset and encompasses a wide range of processes, tools, and approaches – all with the intent of improving every aspect of a company’s operations to respond more quickly and effectively to changes in their marketplace.

 

The importance of managing change is not a new business concept. Companies have always needed to effectively react to change to be successful over a sustained period. Successful enterprises adapt to their business environment and continuously improve to meet the ever-increasing expectations of their customers. Today, the pace of change is much faster and more impactful than ever before. Therefore, companies must accelerate their change management efforts to ensure sustained success.

Companies that improve their agility will not only increase the likelihood of effectively executing their growth plan; they can also create a competitive advantage. A recent McKinsey survey revealed that while most business leaders acknowledge the need to improve agility, only about a third of the companies had a substantial program in progress, and less than five percent had achieved their business agility goals. The companies that commit and take material steps toward improvement will position themselves to outperform their competitors. 

business-change

To improve execution of growth plans and achieve revenue and profit goals, there are three key areas for companies to focus on:

  • Organizational agility - This involves making changes to the company’s foundational mindsets and processes while preparing the organization and its employees to quickly identify high priority opportunity areas and implement necessary changes.
  • Marketing agility – Since the marketing team is at the heart of executing the growth plan, it must be at the center of the company’s focus on agility. Key components of marketing agility include improving access to market data, enhancing speed and quality of data analysis, and reducing marketing campaign execution timelines. It also includes embracing a continuous testing approach while refining and optimizing marketing programs and effective evaluation of marketing technology. 
  • Learning agility – Market insights and data need to be at the heart of a company’s business agility efforts. Data and insights are critical for identifying new opportunities and risk. The company must revamp its data and insight gathering and analysis approach to ensure that it has the right information at the right time.

In the coming months, I will be publishing a series of blogs detailing how companies can improve their agility by focusing on the above three areas. In the meantime, if you have any questions or comments about this article or would like to discuss how to improve the execution of your growth plans, please give me a call or send me an email – I’d be happy to speak with you. 

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Topics: Business Growth Strategy, Revenue Growth

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