Try a Focused Approach to Growth

CUNA’s E-Scan Newsletter
August 5, 2010 | COMMENTS

Faced with economic headwinds, many firms are struggling to grow their businesses profitably. Many business leaders continue to seek growth by extending their existing product lines and brands. After all, growth is supposed to be about “more”—more products, more categories, more brands, and more markets.

But this is exactly the opposite of what business leaders should do to drive increased revenues and profits, says management journal strategy+business.com (S&B), from international consulting firm Booz & Company. A typical “growth through more” strategy diffuses efforts and complicates your operations. Instead, S&B recommends a simplified “growth through focus” approach, regardless of the economic environment.

Growth through focus requires the leadership team to follow a systematic approach that spans everything from strategy and vision to execution and measurement.

While growth initiatives frequently receive money and leadership attention, they often result in lots of activity and a large number of projects that don't always correlate with outcomes. Quantity does not mean quality. To improve the quality of growth, leaders need to cut back on marginal products, brands, and markets so they have a better chance of winning in their chosen areas of focus.

Growth through focus also takes a different view on planning and leadership. Many companies tend to make long-term strategic plans, but they often have a short attention span in execution. CEOs and business leaders get seduced by doing something new and different well before the strategy has had time to play out.

S&B recommends the reverse: Plan quickly and then stay the course for as long as five years. Resist the temptation to change strategies too often.

Seven steps to growth

Together, these seven steps represent a powerful formula for driving profitable growth:

1. Discovery: Identify what works. The first step in the growth journey is to discover what's working well and where your organization is already winning. These pockets of excellence help identify areas for growth, resulting in a set of “success themes.”

An effective way to uncover what works is to conduct a series of workshops with internal personnel. The discovery process should be inclusive and democratic, and it must involve key stakeholders, particularly those who have the influence to get employees behind them. It's also important to listen to people who push back.

2. Strategy: Focus through lenses. Themes revealed in the discovery process need to be clustered and prioritized to define the focused bets your credit union should make. Narrowing the focus is essential to concentrate resources on areas where you have the best chances of winning.

Strategic focus requires lenses through which you can look at your business lines. Lenses can be categories that you perform well in, products that are performing well, and platforms (for example, “wellness” in health care or “trust” in financial services) that can serve to unify your product lines.

Each lens may produce several possible opportunities. These opportunities should be prioritized according to their expected impact and the effort required. The next step should result in a brief preliminary plan that lists priorities for each lens, and key stakeholders should then review the plan.

3. Vision: Find a simple hook. Once the focus areas have been defined, the findings need to be summarized in a simple, compelling vision. The vision serves as a rallying cry for the organization to align its efforts behind a clearly understood goal. To get everyone behind the strategy, it's vital to communicate the strategy across all levels and functions in your credit union.

S&B recommends creating a “hook”—a symbol, phrase, or acronym that is kept consistent over time and that depicts the “from–to” journey. Once you choose your vision, it needs to be launched with a bang through an event designed to inspire your team.

4. People: Unleash their potential. The next step is to find the right people and place them in functions from research to marketing and sales. Selecting those people requires a rigorous process of matching skills with the needs of the business.

New leaders need to be given the freedom to operate within the strategic framework. Leaders should be challenged to act as entrepreneurs within companies that have traditionally been perceived as process-driven and bureaucratic.

To liberate the newly appointed from routine constraints, S&B recommends “giving people huge targets and empowering them with virtually unlimited resources.” The targets should represent a quantum leap from historical results.

5. Execution: Clarify and delegate. Execution is the most important—and most difficult—step in the journey, involving two key elements. First, everyone needs to be clear about who will do what, to avoid ambiguity about roles and responsibilities. Second, decision making needs to be moved down through the ranks so that the people responsible for results have the operating freedom they need.

Most organizations have a mistaken belief that the leadership team has superior knowledge on every subject. This conditions managers to believe that success lies in pleasing the leadership team rather than in winning in the market.

To accelerate execution, S&B recommends a strong bias for action. Leaders should demand a dramatic reduction in internal documents and meetings. Instead, emphasize results, and look to the future rather than the past.

6. Organization: Build collaboration. Growth initiatives rarely fit within isolated organizational silos. They need to be managed by creating communities and networks across the company, formal as well as informal. S&B suggests “category teams” of executives drawn from different functions to manage products, innovation, and supply chains. Each team follows the approach that works best for its category, determining what needs to be done by whom.

Matching skills with priorities and creating networks to get the best mix of ideas, within a clearly defined strategy, has a powerful effect in leveraging scale and expertise.

7. Metrics: Manage numbers, tell stories. As the execution phase gets under way, it's important to keep score. Scorecards should be objective, and they should be kept simple. Overly complex metrics take attention away from the measures that really matter and can confuse priorities.

Along with a focus on numbers, storytelling is a powerful tool for promoting a culture of winning. S&B suggests a conscious effort to write up and disseminate success stories. At every internal meeting, leaders should ask successful people to share their stories with colleagues. Success stories become part of the culture, and successful people become heroes in the eyes of their peers and managers.

Finally, staying positive is vital to the success of growth through focus. It's easy to slip into a negative spiral that can destroy morale and derail the transformation. While leaders need to face facts and make difficult decisions, they also need to keep a positive tone and promote a can-do attitude.

This article originally appeared in CUNA's E-Scan Newsletter. Reprinted with permission.