Growth creation: strategies that work
How can successful businesses achieve continuous, long-lasting growth and profitability in the global marketplace? A new book highlights key strategies toward achieving this goal and refutes long-held assumptions.
In their most recent joint publication "Auf Wachstumskurs – Erfolg durch Expansion und Effizienzsteigerung" ("Toward growth: Achieving success through expansion and efficiency maximization"), Burkhard Schwenker, CEO of Roland Berger Strategy Consultants and Stefan Bötzel, Partner in the consultancy's Corporate Development Competence Center note that few companies today are realizing the dual goal of growth and profitability – but that much can be learned from those who do. The book presents proven strategies that work.
Overcoming the traditional V-curve
Authors Schwenker and Bötzel argue that the traditional V-curve of reducing costs first and initiating growth strategies later no longer applies. The challenges companies currently face are different and much more complex. In today's fast-paced global economy, the breathing space that used to allow firms to rally their troops first to regain their strength are a long-forgotten luxury. Restructuring is only one aspect of a forward-looking management strategy that is focused on growth. The authors thus advocate a dual approach built around increasing operational excellence and simultaneous restructuring to achieved long-term growth. Companies that are able to keep their foot on the gas, even in times of weakness, will be the high-performers at the end of the day.
Innovation is one of the key levers with which to boost growth and realize this dual strategy. While pin-pointing several success factors, the consultants note that creating innovation has never been easy, which makes it all the more important to continually improve a company's innovative capabilities. The book highlights a number of measures to ensure the ability for innovation within a company against the backdrop of turbulent markets, including the creation of internal knowledge 'reservoirs' through the establishment of groups of hand-picked employees.
To achieve growth, a business must be both able and willing to grow. The ability to grow necessitates capacities that can be freed up quickly, access to capital resources, a clear strategy and a market-oriented approach to innovation. Here, structural organization plays a crucial role. Decentralized organizational structures decisively boost a company's ability for growth, as these facilitate entrepreneurial advances and guarantee a greater proximity to the markets addressed.
In their most recent joint publication "Auf Wachstumskurs – Erfolg durch Expansion und Effizienzsteigerung" ("Toward growth: Achieving success through expansion and efficiency maximization"), Burkhard Schwenker, CEO of Roland Berger Strategy Consultants and Stefan Bötzel, Partner in the consultancy's Corporate Development Competence Center note that few companies today are realizing the dual goal of growth and profitability – but that much can be learned from those who do. The book presents proven strategies that work.
Overcoming the traditional V-curve
Authors Schwenker and Bötzel argue that the traditional V-curve of reducing costs first and initiating growth strategies later no longer applies. The challenges companies currently face are different and much more complex. In today's fast-paced global economy, the breathing space that used to allow firms to rally their troops first to regain their strength are a long-forgotten luxury. Restructuring is only one aspect of a forward-looking management strategy that is focused on growth. The authors thus advocate a dual approach built around increasing operational excellence and simultaneous restructuring to achieved long-term growth. Companies that are able to keep their foot on the gas, even in times of weakness, will be the high-performers at the end of the day.
Innovation is one of the key levers with which to boost growth and realize this dual strategy. While pin-pointing several success factors, the consultants note that creating innovation has never been easy, which makes it all the more important to continually improve a company's innovative capabilities. The book highlights a number of measures to ensure the ability for innovation within a company against the backdrop of turbulent markets, including the creation of internal knowledge 'reservoirs' through the establishment of groups of hand-picked employees.
To achieve growth, a business must be both able and willing to grow. The ability to grow necessitates capacities that can be freed up quickly, access to capital resources, a clear strategy and a market-oriented approach to innovation. Here, structural organization plays a crucial role. Decentralized organizational structures decisively boost a company's ability for growth, as these facilitate entrepreneurial advances and guarantee a greater proximity to the markets addressed.
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Trust-based management
The global economy forces management and employees to accept constant change and in fact use it proactively to drive growth and productivity forward. Thus, a trust-based leadership style is of great importance, as it fosters an internal willingness for growth. While trust-based elements are often characterized "soft" issues, no business can thrive without a sound strategic approach, with equal parts optimism, strategic vision, a willingness to take risks and an entrepreneurial, innovative spirit. This spirit must become part and parcel of the inner-workings of a corporation and can only be achieved if the management succeeds in instilling both a culture of trust and the right channels for open communication, Schwenker and Bötzel argue in their book. Managers must be authentic, live by, transmit and infuse their company with these values. Organizations that foster a culture of trust encourage a better quality of performance – a crucial condition of market success. If employees perceive that the company trusts their ability to perform, their performance actually improves. In addition, trust organizations have lower transaction costs. People are less likely to behave opportunistically because compliance with basic tenets is based on trust.
Another key element of contemporary business management must be flexibility, the authors stress. Without the ability to adjust to the changing business environment and recognize new trends, profitability may be at risk. Managers must have their fingers on the pulse and must have a means of translating early warnings into coherent action. Flexibility is as important for a company's business structure as it is for its organizational structure, which underpins the necessity of creating decentralized systems, staffed with the most qualified and motivated individuals.
Well-managed growth is rewarded by economies of both scale and scope, the authors highlight. Operative excellence constitutes the base for a greater generation of 'free' cash flow, which can be used to finance growth. As a result, the economies of scale and scope this generates, create further cash flow, which can then be invested in greater operational performance or growth.
The global economy forces management and employees to accept constant change and in fact use it proactively to drive growth and productivity forward. Thus, a trust-based leadership style is of great importance, as it fosters an internal willingness for growth. While trust-based elements are often characterized "soft" issues, no business can thrive without a sound strategic approach, with equal parts optimism, strategic vision, a willingness to take risks and an entrepreneurial, innovative spirit. This spirit must become part and parcel of the inner-workings of a corporation and can only be achieved if the management succeeds in instilling both a culture of trust and the right channels for open communication, Schwenker and Bötzel argue in their book. Managers must be authentic, live by, transmit and infuse their company with these values. Organizations that foster a culture of trust encourage a better quality of performance – a crucial condition of market success. If employees perceive that the company trusts their ability to perform, their performance actually improves. In addition, trust organizations have lower transaction costs. People are less likely to behave opportunistically because compliance with basic tenets is based on trust.
Another key element of contemporary business management must be flexibility, the authors stress. Without the ability to adjust to the changing business environment and recognize new trends, profitability may be at risk. Managers must have their fingers on the pulse and must have a means of translating early warnings into coherent action. Flexibility is as important for a company's business structure as it is for its organizational structure, which underpins the necessity of creating decentralized systems, staffed with the most qualified and motivated individuals.
Well-managed growth is rewarded by economies of both scale and scope, the authors highlight. Operative excellence constitutes the base for a greater generation of 'free' cash flow, which can be used to finance growth. As a result, the economies of scale and scope this generates, create further cash flow, which can then be invested in greater operational performance or growth.
Order the book at amazon.de www.amazon.de
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