Here is an excerpt from an article written by Biljana Cvetanovski, Eric Hazan, Jesko Perrey, and Dennis Spillecke for the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out others, learn more about the firm, and sign up for email alerts, please click here.
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1. I am all in.
Always put growth first. Growth leaders put growth at the top of every agenda, from board meetings to performance reviews. As the president of a global consumer goods company put it, “Growth is priority number one, two, and three.” This disciplined focus on growth is reflected in a profound belief that “growth is everywhere” and opportunities to outgrow peers can be found in every industry.
That mind-set is supported by our research. From other McKinsey analysis, our findings show that there is a growth-capability gap of 20 to 46 percentage points between top and bottom performers. This indicates that growth is possible in any industry when growth leaders back up their faith with committed action.
Growth leaders also demonstrate this kind of commitment by constantly scouring for funds to invest in growth. They have a clear vision of where every incremental dollar they find should be invested, and they actively manage that allocation by helping those affected (shareholders, owners) understand why.
Keep raising the bar. No matter how ambitious growth targets are, the legacy business will revert to business as usual unless constantly challenged to be more aspirational. Growth leaders do this by setting targets that seem almost impossible to reach, forcing teams to strive for greater impact. The CMO at one tech company told us that the CEO set growth targets at three times the market rate, adding, “We exceeded two-and-a-half times market growth. We were rewarded for pushing hard and not hurt if we failed.”
Growth leaders are 50% more likely to treat growth as the first or second item on the agenda when speaking to the board
Unite the business around growth. Growth leaders make growth the central focus of everyone in the business by creating a common belief and language. For example, they cocreate growth goals and metrics with their leadership teams and then help translate them into metrics for every individual at every level. Establishing this kind of shared and cocreated language binds employees together to think about how they can contribute to top-line growth. One technology-company leader created a single set of growth targets that tied directly to the incentives of 250 managers across the business: “Whether you’re in legal, marketing, sales, or service, you’re bound by the same aspirations.”
2. I am willing to fail.
Make plenty of bets. Growth leaders make more growth bets than their peers. They create a portfolio of initiatives, protecting the necessary resources and funding. In fact, growth leaders in Europe are 70 percent more likely to make multiple growth bets rather than just a couple. By managing a scaled portfolio of growth bets, they improve their probabilities of success while diversifying risk. A former tech-company board member explained, “Winning big has such huge rewards that it’s more important than how often you lose.”
Growth leaders are 70% more likely to make multiple long-term growth bets rather than just a few (in the European Union)
Back the risk takers. Effective leaders have always been good at delegating, but growth leaders go a step further by instilling a culture that empowers people to make decisions. Some 40 percent of growth leaders in North America, for example, are more likely to be comfortable with middle managers and frontline employees making important decisions.
Growth leaders are 70% more likely to protect or set aside money in the budget to fund growth initiatives, teams, and capabilities (in North America)
Growth leaders set clear and ambitious goals (#1) and communicate progress effectively to the business (#6), but then they step out of the way so that people in the business can iterate on solutions to deliver on the growth aspirations. That starts by encouraging risk taking even at the smallest level and celebrating rather than punishing people for trying. As a former CMO of a technology company put it, “If you want people to lead your business into growth, things will go wrong. Having support helps people become risk takers.” EU growth leaders are 40 percent more likely to have explicit incentives to reward risk taking in their teams.
3. I know my customer as a person, not as a data point.
Growth leaders are 70% more likely to build an understanding of customers’ needs through formal and informal methods (ethnography, surveys, in-store visits, etc)
Take the customer’s side. Most business leaders believe they put the customer first. But the truth is that the pressures of leading a large business—shareholder relations, risk management, and so on—mean that the customer too often becomes an afterthought. Growth leaders are resolute, however, in putting the customer at the center of all their decisions. An executive at a global apparel brand admitted, “Whenever I’m in meetings and being presented with options to decide on, my first question is, ‘What’s in it for the customer?’”
Growth leaders are 50% more likely to build an organization that puts the customer first (in North America)
Make it personal. Many of the best companies have strong customer-insights organizations. Customer insights and analytics are crucial to supporting growth. But growth leaders go the extra mile by embracing design thinking and taking the time to build empathy with the customer. As the executive at a manufacturing company, who spent a whole day shadowing one customer, put it: “I followed this customer from 6:30 in the morning until he went home at the end of the day. That gave me so much insight into what he needed, what his fears were, and what we could do as a company.”
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Here is a direct link to the complete article.