Mon, Jul 8, 2013
What happened to growth? We can’t keep increasing profit by cutting cost any more. Here is how some leaders think and what they are doing.
Exports disappointing? European business in the doldrums or worse? Domestic spending stilll sluggish and demand off? What are leaders doing about flat sales and not so great profits? Buy it or innovate it. If your pipeline has 100 ideas in various stages and if it is gated for which ideas get how much resources, you can take a breath. If you are in a position to acquire growth, perhaps ok. But if not, …..
ACTIONS BY MY CLIENTS NOW
The CEOs in my Vistage peer advisory group battened down the hatches just before the financial debacle, Today is different: taking new products to market, buying new products from small businesses, acquiring distressed competitors and — new to some — working closely with customers to find out what needs are unmet, what services costier than valued and what defects are worth curing even if the customer has to change a process as well as the supplier. .
One private client is using this period of “unattractive comps” to place a few bets on new products with the earliest chance of success. And setting up a gated process in which a hundred ideas are generated throughyout the company, then subjected to gates that set milestones to stayin the game and get resources. And they are involving customers and
suppliers at various points in the process.
PUBLIC SOURCES OF INSPIRATION
Ivan Seidenberg navigated his company (verizon) through a period that could have led to being sold, shrinking or preparing to be the dominant force they are today. He expains the growth strategy in his video on youtube:
Finally, there was a good article in the HBR years ago that spoke of “profit pools:” areas adjacent to your current business where significant profits may lie. U-haul figured out that packing and moving suppliers were a profit pool and soon they made more money from these peripherals than the basic rental./
ThE BOTTOM LINE
This is no a period to be counting the pennies. Sure, look for step changes in process efficiency. But devote real effort to changes in services and products, new products and new ways to make money.
That’s just my view/. What’s yours?