Growth Management: Two Hats are Better than One

Growth Management Two Hats Are Better Than One

Andrew Lester

Growth Management

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Growth Management Two Hats Are Better Than One

Andrew Lester

© Andrew Lester 2009 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6-10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2009 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries ISBN-13: 978–0–230–57750–3 ISBN-10: 0–230–57750–4 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. 10 9 8 7 6 5 4 3 2 1 18 17 16 15 14 13 12 11 10 09 Printed and bound in Great Britain by CPI Antony Rowe, Chippenham and Eastbourne

CONTENTS

List of figures List of tables Preface Acknowledgements Part 1

ix xi xii xv

The Business Perspective

Chapter 1 The Case for Growth Management So what’s new? This book “Two Hats” in practice

3 5 15 16

Chapter 2 Defining Growth Objectives Defining growth Definitions of growth and growth management

19 19 19 20

Part 2 Growth Management Chapter 3 Organizing for Growth Objectives Getting focus and balance Who should work on what Different requirements in managing day to day operations versus growth Summary

25 25 25 26

Chapter 4 Implementing Sustainable Growth Management Objectives Getting started Summary

39 39 39 48

31 38

v

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Contents Chapter 5 Identifying Growth Opportunities Objectives Identifying growth opportunities Barriers to entry and exit Competitor strategies and “war gaming” Simple mapping Summary

50 50 50 61 62 62 65

Chapter 6 Prioritizing Opportunities Objectives This is not just another simple prioritization task Consistent criteria Summary

67 67 67 70 72

Chapter 7 Controlled Creativity Objectives Structured timetable Test assumptions and scoping Controlled creativity Some tools and techniques Summary

73 73 73 75 75 82 84

Chapter 8 Proposition Plan Objectives Definition What does a proposition plan do? Constructing the plan Working tool not shelf fodder Formal review Summary

85 85 85 85 86 93 93 94

Chapter 9 Take It To Market Plan Objectives Definition Purpose of a Take It To Market Plan The three key phases Phase one: set up continued – translating the proposition plan into activities Phase one: set up continued – the Take It To Market timetable

95 95 95 95 99 101 104

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Contents Phase one: set up continued – selecting the implementation team Phase one: set up continued – avoiding the “Not Invented Here” (NIH) syndrome Phase two: internal launch – establishing the implementation team Phase two: internal launch – what is the objective of the internal launch? Phase three: do it Rules of engagement Measuring success Summary

106 107 108 109 110 117 119 120

Chapter 10 Growth Project Integration Objectives When to transition The project itself Mainstream business External factors So what is the problem here? Getting started Defining the integration activities and team Managing customer expectations Communication – at the start of the Integration Project Managing the actual integration – KPIs, controls and measurements Post integration – feedback, learning and communication Summary

123 123 123 123 124 124 125 128 130 137 138

Chapter 11 Embedding Growth Management Objectives The problem to be solved Sustaining growth Business emotional intelligence Build from the Pilot: before defining new projects Commercial feedback Customer feedback Competitor reaction Communications feedback Team dynamics

143 143 143 143 145 147 148 149 150 151 152

139 140 142

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Contents Organization feedback Strategic fit Celebrating success Selecting follow-on growth projects Tailoring and refinement of the tools and techniques Ongoing growth management Realizing shareholder value Summary

154 155 158 160 162 163 164 166

Part 3 No Excuses Chapter 12 Growth in a Recession Objectives Definition The changed context: market and competitor economics The changed context: psychology Action: what to do differently with growth management Why are recessions and tough times great for growth? Summary

169 169 169 173 181 183 185 188

Chapter 13 You, Your “Two Hats” and Growth Management Objectives Definition Complexity at work You and your Two Hats Your future value Summary

189 189 189 190 192 194 197

Bibliography Index

198 199

FIGURES

1.1 1.2 3.1 3.2 3.3 3.4 3.5 3.6 4.1 4.2 5.1 5.2 5.3 5.4 5.5 7.1 7.2 7.3 7.4 8.1 8.2 8.3 9.1 9.2 10.1 10.2 10.3

The Two Hats: operations and growth Cohort groups timeline Split of who works on operations and growth Timeframes: theoretical focus of work Theoretical focus of work overlaid with what happens in practice Who works on what Example: simple mapping of decision taking – current operations Example: simple mapping of decision taking – growth Getting started: implementing growth management Setting the scene internally: key steps in growth management Identifying growth opportunities Ansoff Matrix Relative competency matrix Diagnostic Matrix: identifies gaps and opportunities in current business Competitor positionings Developing ideas: 3 stages Controlled creativity process stages Supporting creativity Controlled creativity – established tools and techniques Proposition plan: example layout UK Widget Market Responsibilities by element of a proposition plan Take It To Market Plan Take It To Market: timetable Existing mainstream business scale compared to growth project scale Dynamic view: mainstream business scale compared to growth project scale Initial actions: integrating the proposition

4 6 26 27 27 29 36 37 41 43 51 52 55 59 65 74 74 77 83 88 90 92 96 105 126 127 129 ix

x

Figures 10.4 10.5 10.6 11.1 11.2 11.3 11.4 11.5 11.6 11.7

Defining the integration activities “Mainstream business” “New growth project” Getting started: implementing growth management Growth management increases competitiveness Pilot feedback and learning Customer feedback Team member feedback Strategic fit phase 1 Strategic fit phase 2

131 134 134 144 146 148 150 153 156 157

TABLES

3.1 The different context and nature of operations and growth work 3.2 The different needs of running operations and delivering growth 4.1 Support team roles 4.2 Growth project team roles 5.1 Sources of quality back up information 5.2 Sources of quality information on competitors 6.1 Prioritization meeting 6.2 Growth opportunities identified 7.1 Scoping the project 7.2 Additional contributors for ideas 9.1 Translating the proposition plan into a Take It To Market Plan 9.2 Internal launch: audiences and considerations 9.3 Defining “quality” hand offs 9.4 Measuring commercial success 9.5 Measuring the success of the proposition 9.6 Measuring success of the process 10.1 Measuring integration effectiveness 11.1 Internal feedback on communications surrounding the growth management process 11.2 Employee and shareholder value 12.1 Data sources for market growth rates 12.2 Common actions in a recession 12.3 Be positive in a recession 13.1 Potential roles for you in managing growth

32 35 46 47 61 63 69 70 76 79 102 111 116 119 121 122 141 152 165 176 184 186 193

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PREFACE

Growth Management This book is about the “natural” conflict in business: the urgent getting in the way of the important. People generally like to work on things they are comfortable with doing, putting off things that are outside their comfort zones or which take time to think through. The book is also about the natural difference between entrepreneurial spirit and business efficiency. Many great and successful entrepreneurs have great business process people at their shoulders – unsuccessful entrepreneurs do not. In business this natural conflict between entrepreneurial spirit and operational efficiency can create tensions, politics and “friction costs” that undermine a company’s ability to optimize performance. The book provides a structure to encourage organizations to reduce this conflict. Two Hats Are Better Than One refers to the fact that any business that routinely focuses on one aspect (day to day operations or delivering growth) at the expense of the other is likely to be overtaken by competitors that routinely wear both hats. One “hat” is the day job: operational efficiency and effectiveness on the current customer offers. The other “hat” is delivering sustainable growth: through new business. The book is intended as a thought starter for you to develop your own Two Hats approach, both as an individual, and as part of a business team. Consequently the tools, techniques and processes discussed should be adjusted and “fettled” to you own circumstances. The approach is applicable to all companies and organizations. However you may need to consider what “products” you work with – are they physical or are they services? Either way they are propositions which customers “buy” either with their own or someone else’s money (e.g., NHS services are paid for by government funding). Additionally, “products” should include the total proposition that you offer to meet your customers’ real and perceived needs: the product or service itself, the delivery support, brand benefits, service support, technical support, warranty, customer handling etc. I have used the Two Hats approach successfully in manufacturing, retailing and services businesses, in start-ups and in substantial multi-national xii

Preface companies. The principles are not difficult. The difficult piece is the consistent and continuous commitment to operate with Two Hats and to embed the principles and processes into your thinking and organizational behaviour. The book explains why a structured approach is needed and how to implement it over time. Operating with Two Hats helps reduce friction and cost for companies that need to grow to stay alive: and in my experience no one can stand still anymore. You either grow or you decline. Markets and customer choice are ruthless taskmasters. Markets and economies have been changing significantly. Following a long period of economic global growth the world has entered its first major recession for over fifteen years. The structural changes are well documented: the global interconnectivity of the financial markets, with complex and high risk instruments traded widely. Banks are not banks as we once knew them. They are less independent businesses and more cogs in a global machine whose risk and reward is generated in markets and sectors beyond their direct control. Major new economies have grown up. China, India, Eastern Europe and South America have emerged and are emerging as major forces. Volatile fuel prices dramatically affect the opportunities for global sourcing. Customers demand more at lower cost. Product proliferation and “vanity” differentiation (I want it just because it is different) produced customer choice of biblical proportions. I never knew I needed that but I bought it! ... Customers know their rights. Their rights as buyers, as consumers, as operators; they are more demanding in what they want and in how they go about getting it. And guess what, the very people who are customers are also employees. Some of them translate their “rights” into how they work and what they do. Increasingly people want more of everything. I want it all! The ebullient global growth of the late nineties and early twentyfirst century has some key new issues: the height of the growth from the last recession is scarily high compared to other economic cycles, many people in work have never experienced a recession, many smaller and even some major companies have not been through a recession (Google as a company was founded in 1998, five years or more after the last recession). What does this all mean? Simply put it means that in many walks of life we reach the stratosphere where the air is thin, and the world a very different place. But we have been here before – relatively. The devastation of the Second World War gave birth to a major global restructuring and rapidly changing expectations. From early postwar austerity and rationing to the heady days of the late fifties and sixties and major growth.

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Preface It is interesting to go back and revisit one of the greatest speeches of the twentieth century. It is very relevant today, albeit the drivers of change are different. Two generations ago, on January 21, 1961 in his inaugural address, John F. Kennedy, President of the United States of America, posed one of the most provocative thoughts in history in addressing his fellow Americans: “ask not what your country can do for you – ask what you can do for your country”. Many people know this famous phrase and the power within it. But the context of the speech reveals equally relevant and probing thoughts to today’s business environment. He started the speech by observing that the “world is very different now”. The same is true for us today compared to ten years ago let alone almost fifty. He talked of adversaries in the shape of countries that at the time could threaten dark powers of destruction. With no wish to trivialize his powerful comments or the original context by mere reference to the business world, he went on to make two statements that ring out to me: “let us never negotiate out of fear. But let us never fear to negotiate”; and “if a beachhead of cooperation may push back the jungle of suspicion, let both sides join in creating a new endeavour”. To me these statements are powerful also for the business world. In growing and developing new business knowledge and understanding of trends and opportunities we should avoid the need to negotiate out of fear. In developing and bringing to market new business that is ultimately integrated with the core business, cooperation and mutual respect are critical to overcome (the jungle of) internal politics and skepticism. Too often it seems to me I have conversations that refer to companies and employees that will not or can’t take responsibility for fixing something or making something better. Moving forward from John F. Kennedy to the inaugural speech of Barack Obama on 20 January 2009 we see consistent themes. For the 2009 global recession Obama insisted that solutions could only be achieved by working together at personal, local, regional, national and international levels. This requires us all to take personal responsibility and accountability for both the short term and the long term. We need to deliver a sustainable future for ourselves and by definition that means us all. Co-ordinated actions are needed to overcome the ills of excessive capitalism. Self control has been lacking so regulation will step in. But in addition to regulation, individuals, teams and organisations need tools and processes to help change behaviours and cultures. Regulation by itself is insufficient. As part of a concerted effort, Growth Management could be one of many tools that you will use to help rebalance organisations to help build sustainable long term businesses.

ACKNOWLEDGEMENTS

This book started as a simple set of ideas about what had worked for me in delivering business growth. It was originally a collection of tools and techniques that worked. With the unswerving support of David Robertson, I translated the tools and techniques from “corporate land” to “local business owner” to make sure they were relevant and effective. David has been a great help, encouraging me throughout the process. During the development of the book I was working with John Kiff and David Brunt of the Lean Enterprise Academy, both of whom had previously published works and both of whom encouraged me to formally set down what at the time was a rough set of notes in a binder. I would like to thank both David and John for their guidance and encouragement. If there is one catalyst, however, it has to be John Simlett of Corporate Value Associates. In business our paths have crossed a few times, and on each occasion he has been a great help. In March 2008 we were talking about Growth Management, following up on a prior conversation before Christmas. John made it plain: get on with it or forget it! During the development of the book Palgrave Macmillan has been extremely helpful and offered significant guidance, advice and professionalism. As this is my first book I am indebted to the whole team: Stephen Rutt, Paul Cooper, Eleanor Davey-Corrigan and Ria Purser. I would like to thank the reviewers who provided such helpful feedback and support on the final draft: Sir Nick Scheele, Matthew Taylor, Barry Gamble, John Neill, Alexei Orlov, Jim O’Donnell, Elizabeth Jackson and David Stevens. It is a privilege to have friends who take time out of their very busy schedules to read the draft and give me helpful criticism. Thank you for your support. Additionally, I have worked with a great many brilliant people who have shared their views openly and encouraged everyone around them. There are far too many to mention here but they are also behind this book. Thankfully we remain in touch on an infrequent but regular basis. Thank you to all those people. The seeds of this book started around the pool at a villa in the South of France in the summer of 2007. Against the sounds of splashing and xv

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Acknowledgements sizzling flesh, I typed away under a sun shade as my family and friends shook their heads in disbelief at the sad man by the pool. Over the subsequent months and particularly during 2008 they have been a great help and support. My wife Elaine proof read and corrected my grammar, checked the logic and told me what worked and what didn’t. I am very grateful for her professional advice and long suffering support! My daughters also encouraged me throughout, from the poolside on holiday to the study at home and the long hours at the laptop. Their stoicism in the face of ample opportunity to take the rise goes down in our family history.

PART 1

The Business Perspective

1

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CHAPTER 1

The Case for Growth Management Some companies continue to do well in good times and bad. They not only withstand the onslaught of economic recession but they emerge stronger and fitter. Unsurprisingly they also make sure they take the right choices from the numerous options available when economies are growing. How do they do it? Irrespective of the state of the economy, companies which regularly beat the competition have an ingrained ability to do two conflicting things at the same time: they run the day job effectively and efficiently, AND they make the right choices on how to grow. These require different (conflicting) management styles: relentless detailed operational control as well as having an eye for the main chance. Being great at both things is essential to long term managed success. However, without clear growth management, companies often end up doing the urgent and forgetting the important. This is most true in a recession when the extra focus on cash drives aggressive behaviours on cost control and revenue chasing. In recessions, most company managers know what to do: keep it simple, cut costs and stay alive! The trick is to know how, when and what to cut. But whilst there is a major focus on running the day job, successful companies also know how to build for the future – even in recessions. As a boy I remember hearing a story attributed to the great racing driver JM Fangio. After a Grand Prix in which some of the drivers had horrific accidents, he was asked whether he slowed down because of the crashes. “No” the great man replied, “I speed up ... because I know everyone else is slowing down”. In business we are too often impressed by stellar performance in the good times. Retaining an eye for the opportunity in the good times is relatively easy. Keeping it when it gets rough is exponentially more difficult. Some, like Fangio, do it naturally but even he needed clear thinking, discipline and the strength of a whole team working with him to allow him to make those critical decisions that beat the competition. He was acutely aware of his total environment, not just the dangers on the road, but the likely reactions of competitors, how and when to take advantage, and critically the capability of the car, himself and the team to deliver. 3

4

Growth Management In business, successful companies know how to run the day job and grow at the same time, irrespective of the economic environment. They operate, in effect, with “Two Hats”, as shown in Figure 1.1. The bowler hat focuses on delivering the day job – driving revenues, costs and margins to meet cash and profit needs. The focus is on the “known”: we know what the market is, what customers want, what competitors offer, our paradigms are largely set. It’s a case of “Don’t give me excuses – deliver despite the problems”. The baseball cap focuses on growth, driving long term sustainable business that predicts and responds to customer trends and opportunities. Here the management style tends to openness and analysis of opportunities where paradigms are flexible and need refining. Critically running the day job and delivering sustainable growth requires that these different styles of capability, competence and management co-exist in the same organization. More importantly, not only must they coexist – each one must be understood and mutually respected by everyone. In essence the organization must be able to wear “Two Hats” comfortably. Who wears which hat, when, in what circumstances and for what specific purposes are the responsibility of the senior management team. Some employees will need to focus over ninety percent of their time and thought on the day job, others the reverse. But every team player needs to understand their roles in delivering both the day job and separately sustainable growth. People that focus on the day job tend to have little time for work spent on growth: “Don’t they know we’re burning in here”? Those working on growth can tend to dismiss the day jobbers as lacking flair: they “just run operations”. It is not hard to visualize the following scene in many businesses. During the morning there is an Operations Meeting reviewing sales and manufacturing performance. Let’s assume that the sales objectives were not met for the month, and that manufacturing decided to over build because they could! The tension and “blame culture” of the meeting is easy to imagine and resonates with many of us. I’ve certainly been there – failure to hit a

Operations

Growth

Figure 1.1 The Two Hats: operations and growth

The Case for Growth Management target is not good news and brings with it pain for all. Now let’s also assume that two hours after the Operations Meeting the company has a Growth Meeting which many of the same people attend. The ability of employees to switch between the grilling of the Operations Meeting and the open creativity of the Growth Meeting is questionable. Who is going to stick their necks out and be creative following the drubbing of the earlier session? Providing a balanced organization that delivers on both running the day job and sustainable growth aspects is difficult ... but is achieved by those that win.

So what’s new? Employees, directors and shareholders in many businesses continue to say things that highlight the need to use a “Two Hats” approach. Regularly they say things like: • • • • • • • • •

“The company is too slow to react” “We’re not trusted to make decisions: everything goes upstairs” “People take things too literally: they don’t think and interpret” “Lack of joined-up thinking” “That’s the latest flavour of the month: we just rush into stuff without thinking” “Decreasing experience and knowledge in the company” “Making too many wrong decisions” “Just not implementing properly” “We’re just fighting fires!”

These are common comments from people at all levels in business. Their frustration is felt throughout companies, from janitors to CTOs, from accounts clerks to shareholders, and from operations teams to the Board. They are the symptoms of deeper issues. The comments appear in good times as well as recession. So what is happening and why does it mean that running a “Two Hats” organization is the right answer?

Trends and observations The above comments reflect a number of trends that demonstrate the need to implement and sustain a “Two Hats” approach to drive success. In no particular order, we have observed the following. Employee values and attitudes Most companies are a mixture of people with different values and attitudes. Employees’ attitudes to work tend to reflect when they grew up

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Growth Management and their experiences in life. Older employees (over 40) are more likely to have seen a career for life, and had bosses in their early working life that coached and developed them, handing down the received wisdom of the company and the industry. Younger employees are more likely to have a “contract” approach to working: moving between companies, increasing their capability through specific projects and having a less structured career. The reasons for this include changes in legislation, less “blind acceptance” of authority, and a desire to “have it all” (working to live as opposed to living to work). Many younger employees in their early working life want to take time out to travel and enjoy the world, putting off long term career commitments, in contrast to the older age group. The result is employees who are potentially more flexible and adaptable, but who may not have deep sector experience. This significant change in attitude to work between younger and older employees can create tension and misunderstanding, partly due to the different values each hold. These values are driven by the major influences of the times: postwar boom, cold war, Vietnam, oil crises, fall of the Berlin Wall. As the hedonistic Baby Boomers born between 1949 and 1964 (see Figure 1.2) retire, their places are taken by Generation X born between 1965 and 1985 whose attitudes reflect their rejection of free love (it gave us AIDS) and hedonistic values (you’ve raped the planet’s resources) of the Baby Boomers. Additionally the Echo Boomers (Generation Y) born after 1986 swing back in their attitudes against Generation X. They are even more hedonistic than baby boomers: “I don’t ‘do’ delayed gratification!” They are just now in 2008 starting to enter work as adults. These significant attitudinal differences need managing constructively. Even the concept of “management” has had to change. Simple boss– subordinate relationships are breaking down. Most successful managers now use the combined skills of their total teams – openly learning from them as well as directing and supporting when needed. Managers who think they know everything and expect to solve the problems themselves are (thankfully) a dying breed. Baby boomers

Generation X

Echo baby boomers

1949 to 1964

1965 to 1985

1986 to ...

Figure 1.2 Cohort groups timeline

The Case for Growth Management But the issue goes deeper than this. It is not just about the management of mixed age groups – this has been around for decades. It is the combination of factors that is causing a major change and driving a need for a “Two Hats” approach. These factors include the: i. relative shift in power between the age groups as Generation Xers move into senior positions and the Board room in rapidly increasing numbers over the next few years, ii. different value sets of each age group throughout organizations which increase the possibility of hearing the same words but taking a very different interpretation of what was said and agreed, iii. need for organizations to be more fluid and the implications that has for Baby Boomers used to hierarchical structures and iv. changing attitudes to work/life balance. These issues and the other observations noted below have to be managed proactively. This coupled with the increasing need to cope with rapidly changing market conditions (economic cycle, the rise and rise of China, India, Eastern Europe, increasing brand promiscuity ... etc) means that to run the day job and grow the business, companies must increasingly adopt a formal “Two Hats” approach. They must use the similarities and differences between the age groups in their organizations positively and consciously to deliver on both the urgent (the day job) and the important (sustainable growth). Speed of change and expectation inflation The speed of change is increasing in all walks of life and is a main reason why successful companies operate a “Two Hats” approach. The global village, cheap air travel, technological developments and mass use of the internet have radically changed our expectations. We expect more, faster, cheaper and with better service all the time both in what we buy AND in how we work. The relative impact of technology on customers and employees is well known. It is not just the use of technology that changes why, how and what people buy and how they work. It is also that different people have different expectations in applying technology and its ability to fulfill and continuously change the pace of development, how it helps add customer value and how it is used in the workplace (wherever that may be – office, home, on the move). These different expectations drive different attitudes to work and play; they also drive expectation inflation. If we have good service at a hotel

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Growth Management reception, we expect the same level of service every time, and we get irritated if we don’t get it. It also subliminally inflates our appreciation of service at every reception from the garage to the theatre, to the airline and the supermarket. But whilst the speed of change is increasing and changing our expectations, it is not consistent or uniform in its impact on different types of people – whether as customers and/or employees. This creates opportunities for differentiated (product/service) offers and requires a more fluid approach to company organizations than “conventional” management. Many markets have seen “choice overload” for customers as companies have pushed for (minor) increases in market share and volume. Minor changes made by companies to their products or services often don’t provide the added value customers are seeking. Rather than increasing brand loyalty and driving sustainable growth, a lot of business activity has actually made companies and their products more alike. As a result, customers become less brand loyal as customers want to have the “latest thing” – defeating the object of the exercise in the first place! Just think of how cars have changed over the years. No one makes a bad car anymore. Even respected car journalists find it difficult to separate the objective differences between cars competing in the same sector. They rely more and more on subjective differences. Additionally, in shifting between good times and economic recessions, customers quickly re-evaluate their expectation of “value”. As a recession approaches, value shifts to no frills, more basic propositions, often very quickly as a focus on cost cutting to balance the books takes hold. By contrast, moving from tough times to economic growth generates increased focus on a broader range of differentiated benefits. Organizations that use a “Two Hats” approach are more likely to be able to predict and respond quickly to such changes in customer expectation. They are also more likely to be able to differentiate themselves from the competition and stay ahead over time. Knowledge management Successful businesses rely on knowing more about the market and the industry than their competitors. This knowledge needs to be fresh and relevant. It also needs to be available when and where decisions are taken. Well managed knowledge can help overcome declining experience in the organization but it must be used effectively and appropriately. Technology has massively increased the amount of data and information available to everyone: the company, their competitors, their suppliers and

The Case for Growth Management especially their customers. Managing this data into information and more importantly still into “insight” that sets your company apart has become a critical success factor. Most of the comments we hear relate directly to managing knowledge: • • • •

“the company is too slow to react”, “we’re not trusted to make decisions: everything goes upstairs”, “people take things too literally: they don’t think and interpret”, “lack of joined-up thinking”, “decreasing experience and knowledge in the company”.

But access to the same data, information and knowledge can still produce very different results for a company depending on how it is interpreted. Successful companies operating a “Two Hats” approach retain an open mind on how to interpret and apply “knowledge”, and can produce major growth in the face of stiff competition. An illustration: Motorbikes in the late 50s and 60s in the USA became iconic features of youth, rock and roll and rebellion. Brands such as Harley Davidson and films like Easy Rider set scenes of the times: travelling Route 66, cruising the highways and changing your greased-up jeans only when they walked off and left you naked as a jay bird. You can imagine ten years later being a manager in the American bike industry and seeing all your customers aging ... finally settling down and having kids ... selling the beloved bike and buying a station wagon and enjoying their leisure time outdoors. Bike sales were falling, times were tough, the market was moving to cars – all the stats and information told you so. Interestingly, at the same time as some motorbike manufacturers were hunkering down for tougher times, and building their brands to a heritage segment, other manufacturers looked at exactly the same data and decided to invest massively in new models, new plant and new sales capacity. These other manufacturers had a totally different mindset. They produced basic transport for emerging markets where poor roads were the norm and reliability was essential. They looked at the US data and said “Wow, let’s reinvent biking in the US”. They had no real market share to defend. They initially targeted leisure activities, targeted fun and sport for all – adults with young kids and teenagers. They succeeded in developing a major new off road/dirt track segment. They were Japanese. Knowledge management depends not only on what data and information you think you are managing and how you propose to use it. It must also include how your competitors and latent competitors are likely to interpret and use it. Retaining a set paradigm helps drive efficiency and

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Growth Management effectiveness in day to day operations, however retaining a set paradigm also constrains and stifles growth. Adopting “Two Hats” avoids this conflict, allowing organizations to think and operate differently depending on the task at hand. Technology and the curse of E-mails It is a misconception that more technically savvy individuals are more capable in modern business. Often people who are seen as computer literate are lauded for their knowledge and skill, but technological “know how” must be managed in the context of the business and its processes. Businesses are run by people, for people. Technology is a tool to help, and must be appropriate to the business need. So, technology can be both a boon and a “blocker” in business. The most notorious example is e-mails. To start with there is the obvious: e-mails are fast, efficient, instant and cheap. But on the other hand there’s too many of them and they don’t convey easily subtleties in tone and style. Simple questions can be misunderstood – but this was also the case with good old fashioned letters and memos. So let’s move on ... “e-mails are impersonal, they reduce conversations and understanding”. This is a huge issue. E-mails are sent between employees sitting at adjacent desks – why? Because they don’t want to disturb each other (partly), because it’s quicker to fire off a quick e-mail (partly), because it allows me to cover my backside by copying all and sundry (partly), because I am just not thinking (partly), and because it’s the culture of the way we work (partly). Whatever the reason(s) the root causes and unintended consequences reduce company value dramatically. Let me illustrate: A commercial buyer in a company sees that the company consistently advertises in “Trade Magazine Monthly” and thinks the advertising sucks. The buyer e-mails a colleague in Marketing and writes: “Why are we advertising in Trade Magazine Monthly? ... our advertising sucks!” The marketer replies defensively and quickly: “Thanks for your comments ... we’ve always advertised in that mag”. Sum impact of this e-mail exchange for the company and its shareholders: pretty low if not negative. Contrast this with the following face to face exchange on the same subject: Buyer: “Hello my name is Claire, I would like to know why we always advertise in Trade Magazine Monthly, and is it me or are our ads pretty ordinary?”

The Case for Growth Management Marketeer: “Hi I’m John, and I know Trade Magazine Monthly is not exactly the best title, but they actually sponsor the best trade exhibitions in the sector so to get great stand positions we put in a low cost advert each month ... it’s not ideal but it serves a purpose. By the way we’d like to work with some of our suppliers in promoting the business at the trade exhibitions – do you know any suppliers that would join us?” The difference in business value between the e-mail communication and the conversation in this example is obviously huge. E-mails are great and are vital to business. The key is to recognize the different impact they have in helping run the day job (where the business is well known and everyone understands what they need to be doing), versus managing Growth (where new paradigms and ideas are forming) which needs deep discussions and open questioning. Irrespective of the volume of e-mails we get each day, businesses must understand the context of e-mails as a tool and the social and culture dynamics that lie behind them. The deeper issue is the level of acceptance of personal accountability and responsibility in the team and in individual employees that lies behind how e-mails are used. Companies therefore need to understand how to use technology in managing the day job and separately in growing the business. Operating a Twin Hat approach can help everyone in the business use technology appropriately, depending on the context. Re-organizations Re-organizations often use “downsizing” to speed up decision taking and lower break-even points. Downsizing works effectively when the new leaner organization knows what is important and develops new streamlined processes to make sure those who are left don’t carry on doing what the larger team did before. Downsizing often means that the older experienced employees leave or retire. Those that are left often try to retain the old methods, using informal processes to cover the gaps in the new streamlined process. This can work for a while ... until the next downsizing when the informal processes start to creak and fail. (“We just don’t know how to implement anymore.”) In such cases subtle and critical links in thinking and communication can be lost, seriously damaging shareholder value. It reminds me of the famous and wonderful Morecambe and Wise comedy sketch with André Previn, written by Eddie Braben. André is

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Growth Management conducting a piano concerto, and when it comes to the piano part André motions to Eric to play. Eric bangs the keys of the piano in a seemingly mindless uncontrolled manner. André stops the session and turns to Eric saying “Do you know this concerto?” “Yes” replies Eric. “But” says an exasperated André, “you are not playing any of the right notes”. Eric smiles patiently, grins and says: “I am playing all the right notes ... just not necessarily in the right order”. Playing the right notes at work requires the whole team (orchestra) to play the same tune at the same time: whether individually, in a quartet, or as the full orchestra. Anyone playing out of time or out of tune is easily heard in music ... it is much more difficult in business, and takes careful planning and organization to avoid. Stripping out layers of management should make it easier to communicate. But if those people who are left just work harder rather than smarter, no amount of streamlined processes will stop communication breaking down. Re-organizations that simplistically lower the break-even point are doomed to failure (“There’s no joined up thinking”). Re-organizations must reflect how the business needs to operate on both the day job and delivering growth: in good economic times and bad. For many businesses during an economic recession the focus is cut the cost base ... fast! Too often subtle (and even obvious) communication links are lost: the baby gets thrown out with the bath water. Knowing what, when and how to re-organize flows on directly from a “Two Hats” approach. It identifies what’s urgent and what’s not and what’s important and what’s not. It reveals what the organization needs to do to support the differing styles of management required to run the day job and separately grow the company. Decision taking Business comes down to making better decisions faster than the competition. Unfortunately a lot of organizations are not good at making decisions effectively and efficiently. If they were we would not hear the comments we do: • • • •

“We’re not trusted to make decisions: everything goes upstairs”, “We’re making too many wrong decisions”, “No one accepts responsibility around here”, “We’re so short term focused ... we just fire fight”.

Companies that win make better decisions, faster than their competitors, regularly over time. They do it in good and bad economic times. They are

The Case for Growth Management more objective and well informed. They value data, translate it into information, analyze it and use it to good effect. But it is not as simple as that. Winning organizations also know how to make decisions. They are clear about who is responsible for which decisions and clear about the accountability that goes with it. They know how individual decisions impact on other areas of the business and their customers and suppliers. They make decisions at the right level in the organization, for the issue at hand. To do this they ensure that those making decisions are fully equipped to make the optimum decision for the company. They balance decision taking responsibility with capability, information, and timeliness. These reduce the chances of a “bad” or “slow” decision and make it easier for individuals to accept the accountability of their decisions. The crucible of company effectiveness and efficiency is the quality and speed of its decision taking. Showing an organization how to make better decisions is not difficult. The difficult part is in them sustaining the discipline and focus, and adjusting the process to market needs over time. A “Two Hats” approach helps companies understand who and how decisions should be taken on running the day job and separately on growth. It provides a clear understanding of the context in which decisions should be made and ensures that when decisions are made the best possible data and information is used along with subjective experience. It also helps make clear who is responsible and accountable for what. Health warning: success can kill We are all familiar with the concept of over trading: growing so fast that cash is taken out far faster than it is being put back in – clearly many companies have failed as a result. But there is a subtler death from success that progressively makes companies blind and deaf until it’s too late. Health warning: “Nothing fails like an old success”. Too many businesses rely too heavily on tried and tested methods, structures and marketing programmes. They stick with these historical successes even though they are getting progressively less effective over time. Why? Because they don’t want to risk a new idea that might fail (partly) ... because they can’t think of a better idea (partly) ... because the boss invented the original success and politics are stopping us from doing something new (partly). Whatever the reason old successes are not predictive of future success – irrespective of the form they take: people, processes, propositions. Things change and so must the business. Being blinded by an old success is not a good place to start.

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Growth Management A wildlife illustration: At the age of 2 months a tiger cub did something naughty, so its mother lightly cuffed his ears and he stopped doing it. Success! At the age of 4 months the tiger cub did something else naughty, so mother Tiger cuffed its ear again and he stopped doing it. Success! At the age of 12 months the tiger cub did something willful, so the mother cuffed it hard, the cub gave mother a sideways glance, but still he stopped doing it. Success! At the age of 18 months the tiger cub stole her lunch and the mother lifted her paw ... help! ... too late! ... he’s bigger than me and I need an alternative plan! Failure Big Time! Companies need to recognize and respond to their changing environments. Old successes and old ways of thinking have a place, but they must be applied with knowledge of the current and future market. A “Two Hats” approach avoids repeating old successes to the point of failure and keeps the company relevant to its market. In the increasingly fast paced global market, change is not only happening faster, it’s coming from previously unconsidered directions. “Nothing fails like an old success” is increasingly relevant. Successes are becoming “old” faster than ever before. Companies are morphing and adapting faster than ever before. Market needs are changing faster than ever before. The critical issue is how to adapt and redefine an old success to make it a new success by continuously recognizing the changed environment and context. Unbridled enthusiasm This is an interesting issue, as to many it’s counter intuitive. All companies want enthusiastic employees and teams. They engender speed, drive, commitment and almost every other power word that is used in CVs and candidate descriptions. But enthusiasm must be bridled: managed and controlled appropriately. If it’s not it can create friction and cynicism reflected in comments such as: “That’s the latest flavour of the month ... we just rush into stuff without thinking”. I recently came across a very enthusiastic entrepreneur and business owner in the Midlands. She made the following really positive comment about how she brings on new people in the business. “I hire only the very best I can find” she said. “People with great experience, fire in their bellies and a real desire to help. We show them how the company operates and our processes and we encourage them to make suggestions on how to improve things but only once they’ve worked in the business for six months and understood us”. She really believed she was open to new ideas and was enthusiastic about getting input from everyone. I asked her how the processes and operations of the company had changed over the years.

The Case for Growth Management “Oh hardly at all” she gushed, “so it’s obvious that the way I set it all up in the first place is spot on”. As the saying goes: “Yeah ... Right!” She had no idea that her own enthusiasm was blinding the business to new and better ways of working. Interestingly, she also went on to say that despite hiring the best, her people would not think for themselves! If it goes unchecked, unbridled enthusiasm is a double edged sword. Managing enthusiasm is essential to get the best out of it. A “Two Hats” approach provides a structure to make this happen without running the risk of generating an exclusive club that delivers well but alienates some in the process.

Summary In good times and bad times companies that win manage the day job and growth side by side. Companies that win understand the need to manage each separately and have a culture that supports and develops ideas on improving today’s business as well as responding to new trends and opportunities. They get results by ensuring that the whole organization respects both types of work – work for the day job and work on growth opportunities. They use a planned and consistent approach that they manage throughout the economic cycle – indeed a great time to grow is during a downturn, when your competitors are in free fall and costs are falling. In many cases running the day job should be 90% of the focus and activities, with 10% allocated to developing sustainable growth (but the proportions vary by sector). Companies that lose out often do not manage growth and the day job together. Growth is thought about in “fits and starts”, or it comes down to serendipity and luck ... neither of which are effective long term. As the saying goes “hope is not a strategy”. A “Two Hats” approach provides the basis for sustainable ongoing businesses and long term shareholder value.

This book This book assumes that most businesses are relatively better at running the day job than they are at growing. It also assumes that most growth that is managed tends to be driven more through simplified budgeting process rather than through well planned and structured Growth Management processes.

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Growth Management As such this book focuses on how to establish and manage growth rather than how to make the existing business more efficient and effective. It focuses on practical tools, techniques and processes that companies should use to drive sustainable growth. And by Growth I don’t mean just a bit more on the revenue line or an improvement in margin from cost management or revenue mix control. By Growth I mean new business that the company can and should be doing to position itself differently in the market and which provides the basis for sustainable high quality earnings. Growth is about knowing the opportunities, prioritizing them, defining customer relevant solutions, implementing those new propositions excellently and subsequently consolidating the new Growth business into the mainstream at the appropriate stage. I have used many of the tools, techniques and processes of this book in my work and know that they are effective. They are practical, focused and link together to provide a sound basis for Growth Management alongside managing the day job.

“Two Hats” in practice The first time I came across the need for a “Two Hats” approach was back in the early 1980s when working for Ford. The team was asked to grow the company’s aftermarket parts business in the UK in three separate but linked areas: retail DIY, fleet workshops, and body shop. We adopted the standard model of setting up projects and managing them to completion. No great issue there then? No ... not really, they were all successfully brought to market and had varying degrees of sustainability. But it was obvious that the company needed to do things differently if it was to avoid a fits and starts approach to growing the business. Just as I was thinking about this I was moved to another part of the company and the thought was put on hold. At various times subsequently the issue raised its head and really came to the fore in Jaguar in the late 1990s/early 2000s as the company grew from a two-car line-up (of XJ6, XJS) to a four-car line-up (XJ8, XK8, S-TYPE, and X-TYPE). What was obvious there was that growth needed to be managed throughout the company, and its partners. For Jaguar UK as a sales organization this meant managing our growth in co-operation with our marketing agencies, suppliers, and our dealers as the retail shop window of Jaguar cars. In association with our dealers, we defined, developed and implemented a “Scale Shift” programme designed to deliver the substantial growth in volumes and profits from the new

The Case for Growth Management models the company was going to introduce. A key element of the success of Jaguar dealers in the UK at that time was a clear understanding of the need to manage the day job and manage growth at the same time. Internally within Jaguar UK this “Two Hats” approach made life easier and reduced confusion considerably. It may not have been perfect ... but it was a heck of a lot better than had we not worked that way, and everyone benefited. I’ll give you one specific and detailed illustration. Ahead of the launch of S-TYPE the whole of the Jaguar UK sales team were brought together to take a look at the final design in the design studio, about nine months out from the official launch date. Needless to say everyone was excited and keen to see the iconic designer Geoff Lawson’s new car. The team were suitably impressed and applause rang out across the room as the covers were taken off. Great stuff! As we walked around the car the team were making notes and taking in the design features and uniqueness of the car. After fifteen minutes or so we all stood around the car together and started discussing with the designers our thoughts and the implications for us as a team and our dealers. In the midst of all the excitement and enthusiasm Rod Wilkinson said “What about the Rover 75, it’s going to be launched at the Birmingham Motorshow at the same time as we’re launching S-TYPE”. As a model the Rover 75 is a great car in the volume sector, but that wasn’t the point. As an individual Rod was fairly well known for coming out with left field thoughts – and this was another corker! In the midst of us all considering the competition as BMW, Mercedes, and Audi, we had hardly given a second thought to Rover and their 75 – it just didn’t compete directly with S-TYPE. But again that was not the point. The point is that we had a managed Growth process that allowed controlled input from everyone at the right time. Rod’s comment was not based on the relative products of Rover 75 and Jaguar S-TYPE. It was based on how he’d heard his dealers talking about Rover 75 and how they as dealers were perceiving it versus Jaguar S-TYPE. As many of our Jaguar dealers also owned Rover franchises, the issue for us was to make sure we positioned the commercial opportunities for our dealers from Jaguar S-TYPE clearly against those from Rover 75. In a moment the power of a “Two Hats” approach was crystalized. Rod’s comments lead us directly to consider how we would ensure that dealers supported Jaguar S-TYPE and were under no illusions: S-TYPE provided much better commercial returns for dealers and competed in a very different sector compared to the volume market of Rover 75. We were not going to allow any amount of Rover Group activities to persuade the dealers otherwise.

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Growth Management Without the Growth Management element of a “Two Hats” approach allowing open input, Rod’s comments would have been lost. I think he would still have said it ... because that’s Rod. It’s what makes him such a great asset. But I think the rest of us would not have taken his comment on board. Without Growth Management we’d have dismissed it as a “Rod-ism”. Thankfully the more open and thoughtful nature of that Growth meeting gave us the “authority” to explore and consider the comment properly, with very positive results. The remainder of this book focuses on specifics in developing and running Growth Management alongside the day job to capture the natural capability of the team to drive sustainable growth. So let’s be crystal clear here about the difference between the “Two Hats” approach and Growth Management: Growth Management is the organization and process of identifying growth opportunities and delivering relevant, sustainable customer valued propositions that support the company’s business strategy and provide long term shareholder value. The “Two Hats” approach encourages an organization to work and think differently on the day job compared to growth at one and the same time. It is the recognition that running the day job (day to day operations) requires a different management and operating style to that needed for delivering new growth. Specifically it recognizes that individual people who deliver the day job should also be involved in developing growth and that to encourage them they need the flexibility to work in different ways on each as they move from one meeting or discussion to another during the working day. Without Growth Management processes, tools and techniques, there can be no “Two Hats” approach; and vice versa.

CHAPTER 2

Defining Growth Objectives • Define “Growth” in the context of Growth Management and a “Two Hats” approach • Provide basis for generating a single understanding of Growth across an organization • Outline how Growth differs from Improvement

Defining growth Many companies consider growth to be simply asking the sales team to improve the revenues by 10% over last year. Many set budgets for revenue improvements and cost reductions to deliver bottom line growth. In both cases these fall short of a definition of growth that sets winners apart from mere players of the game. Winners want growth to deliver sustainable incremental business that builds the company in line with a well defined business strategy. It helps them stand out from their competitors and positions them to take advantage of new opportunities as they start to appear. It gives them the opportunity to take first mover advantage when necessary. It gives them the opportunity to help influence the market and customer expectations towards their company’s position. It gives them the advantage of being the benchmark proposition against which all other competitors are assessed. It also gives them the opportunity to remain the benchmark through continuous development and planned improvements that increase customer expectations of what constitutes an acceptable solution to their (changing) needs. In the case of GE under Jack Welch, the business units were all expected to re-invent themselves almost continuously to take advantage of significant growth opportunities and attain and retain sector leading positions. These descriptions of growth are a far cry from: “let’s target 10% on revenue”. “10% improvement” tasks show a lack of imagination and capability in a company to meet the rapidly changing expectations of all 19

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Growth Management customers. Such simple descriptions of growth assume the business environment is relatively static, that the company has its position in the sector and may be able to “steal” a bit of an advantage next year. This interpretation of growth is too narrow. It focuses on improving only the current operation. It is based in constrained thinking. These companies in effect go with the flow, not doing anything innovative or thought provoking. They are risk averse and cautious. They are spectators in their own markets. They make little material difference to the businesses they manage and in effect abrogate their financial performance to their competitors and customers: they are passive riders on a flume and they’ve forgotten why they are there and what they are supposed to do. With no great surprise such companies are not admired; they do not win, they are not targeting sustainable growth that will keep their business strong. So we now have some loose descriptions of what is and is not “Growth” in the context of managing growth as a fundamental driving force of business strength. Now let’s firm these up into a specific definition that everyone in the business can understand and rally around.

Definitions of growth and growth management What they are not Growth is not a simple percentage uplift on sales or reduction to costs applied with little or no thought to market and customer trends. Growth Management is not a budgeting process that sets out the numbers that the directors and shareholders want to see. Growth Management is not a “top down” set of simple targets.

What they are Growth is the development of incremental new business that provides sustainable improvements in company returns over time and supports the company in achieving a long term positioning to deliver sector leading shareholder value consistently over time. Growth Management is the ongoing organization and management of mutually complementary processes, tools and techniques that support innovative company thinking and actions to deliver sustainable growth.

Defining Growth Growth Management must work alongside and complement the Operational Management of the current business that delivers cash to the business (the day job). It continuously looks for ways to improve customer value to attract and retain new customers, to increase sales and margins from existing customers. It helps position the company to make better and faster decisions than the competition. Growth Management as part of the “Two Hats” approach is a process that allows the company to evaluate and prioritize a variety of opportunities coincidentally.

Operational growth In all businesses year on year improvements in (established) operational revenues and costs are expected to increase return on capital employed and shareholder value. Continuous Improvement (CI) should be a major competence of any well run business that complements the “Two Hats” approach. Financial growth from CI on the day job is extremely important, but the company needs to manage it separately from sustainable Growth Management delivered from incremental business.

Scale of growth Growth is not about finding a golden bullet that solves the company’s growth needs for the next 5 years: such opportunities rarely exist. It is a fallacy that companies should only grow by looking at sizable opportunities. Most successful companies grow through a “seed corn” approach that places limited and managed resources behind a number of carefully considered potential ventures. Each of these is allowed to flourish and develop according to the market opportunity. In the initial years the financial returns from initial projects will be small. But delivering a steady stream of managed growth options provides the capability to manage the scale of its growth year on year based on knowledge of which new ventures can be launched when. Growth Management is therefore appropriate to any business, whether in trading, manufacturing, professional services or whatever. All organizations need to consider the outputs of their work as “products” that customers’ value and buy. Developing these “products” or propositions to attack new sectors and emerging needs delivers sustainable earnings.

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Growth Management On this basis the scale of growth appearing in your financial budgets should reflect a Managed Growth process that is built “from the ground up” rather than driven from a top down allocation of a “wished for” set of numbers. It should be the sum of all the viable “seed corn” projects coming through, that have a quantified chance of success based on accurate forecasts of revenue and costs per project.

PART 2

Growth Management

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CHAPTER 3

Organizing for Growth Objectives • Outline who should work on what through the levels of an organization • Identify the different requirements for managing Growth from day to day operations • Introduce simple tools and techniques to support managed growth • Time slot analysis • Two Hats: Operations (day to day) and Growth Management • Meeting Mapping: Operations and Growth

Getting focus and balance In many companies a lack of planned and managed growth is reflected in the “urgent getting in the way of the important”. Employees and directors use excuses: “we didn’t do it because issue X cropped up” rather than “we succeeded despite issue X trying to sidetrack us”. When the urgent gets in the way of the important, employees at all levels are less capable of balancing day to day operational activities with a planned and agreed level of focus on growth. In fact they often forget about growth altogether. In companies where growth budgets have been set, growth objectives can pile up from one month to another: “snow ploughing” the targets to the end of the year, increasing pressure within the business and generating cynicism about delivering on “growth” projects. In such companies employees hunker down, working only in their comfort zones: doing the obvious and keeping busy irrespective of the real benefit to the company. They prioritize basic low value tasks ahead of important activities purely to make themselves feel busy in the face of confusion over what really needs to be done. Such blind acceptance of being busy rather than productive is highly dangerous and marks mediocrity. Successful companies that balance the day to day business and sustainable growth clearly differentiate the urgent from the important and manage both proactively. They don’t treat growth as “a project”. They treat it as an ongoing key part of their business that needs Growth Management. 25

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Growth Management How do they do it, and how do they keep it going in recessions as well as the good times? This chapter focuses on how you and your company should organize for growth.

Who should work on what Who works on operational tasks and growth management needs to be clearly identified, with clear accountabilities and objectives. Most people in the organization work on both types to some degree. In fact the more people that work on both types the better – the better will be their appreciation of both types of work and the management styles needed to deliver success on the day job and on growth. However, because each type requires different skills and mindsets, each needs to be proactively managed to avoid confusion and lack of progress. Graphically, who should work on what can be shown in Figure 3.1. The figure shows that everyone should be involved to some extent in running the day job and delivering growth. The blocks are purposefully not triangles. They are four sided to show that everyone can to some extent work on both elements. However there is a general trend that the more senior a person is in the company the more likely they are to spend more time on growth management. Since everyone is likely to mix their time working on both types of activity, a “Two Hats” approach is needed to manage the right mix for the company and each person in it. To give a bit more detail, the following charts shows the “theory” of what each level of the organization should focus on versus what happens in practice. Figure 3.2 clearly identifies the heavy focus of an organization on delivering the day to day job (cash into the business) with a focus on day, week, month and quarter results. Growth New Business

Day to day Continuous improvement Lower

Seniority in company

Figure 3.1 Split of who works on operations and growth

Higher

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Organizing for Growth Longer term timeframes (associated with major investments for growth) have a one year plus time horizon and should form a significant part of the work for senior directors and the Board, supported by key players. However, what happens in theory is different from practice, as Figure 3.3 shows. An increasing focus on short term financial results has shifted the focus onto the day job to drive cash flow, consuming valuable resources and management time that should be driving long term growth. This is particularly true of public companies responding to shareholder pressure, but increasingly also true of private companies reflecting faster market dynamics and increasing customer promiscuity. Implementing sustainable Growth Management addresses the natural tendency to focus on the short term.

Board

Theory

CEO

Theory

Directors

Theory

Senior Managers Theory Managers

Theory

Staff / Operations Theory Day to day

Week

Month

Quarter

Year

1-2 Year 2-5 Year 5+ Year

Timeframes

Figure 3.2 Timeframes: theoretical focus of work Board

Theory Practice

CEO

Theory Practice

Directors

Theory Practice

Senior Managers

Theory Practice

Managers

Theory Practice

Staff / Operations

Theory Practice

Day to day

Week

Month

Quarter

Year

1-2 Year 2-5 Year 5+ Year

Timeframes In practice the short term focus is increasing due to shareholder pressure market dynamics customer promiscuity

Figure 3.3 Theoretical focus of work overlaid with what happens in practice

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Growth Management This does not mean that only senior managers and directors should be working on growth. It says that senior managers and directors must know the importance of Growth to their business and manage it proactively despite short term pressures elsewhere in the business. This is what managers and directors (should) get paid for, balancing resources and priorities to make progress on the urgent and the important.

Health warning: feet are intended for Terra Firma Senior players in a company should keep a sharp eye on the day to day business – it keeps them grounded and keeps the Growth Management in “the real world”. Working on Growth can be heady stuff: stretching the little grey cells, pontificating over developments in the market. Heady stuff can easily turn to dangerous stuff – distracting valuable resources from generating practical achievable growth. Anyone heavily involved in Growth Management must keep their feet on the ground and work in a controlled manner. An Illustration: The Emperor’s New Clothes is a well known fable: it took a boy with his feet on the ground to not be blinded by the cock and bull of the “new clothes” and to state the obvious. How many senior managers are in fact Emperors taken in by their own “New Clothes”? Sustainable growth has to meet real customer needs better and more consistently than the competition. Just make sure you have a process to keep your ear to the ground and don’t believe your own hype coming back at you from within the company.

Do you really know who is working on what and how much time is taken up? If like most businesses you think you know but are not 100% sure then use the attached simple template and the following steps to get the facts. In large companies, you may not need to get everyone on it. In smaller businesses or business units, getting everyone involved can be good for morale as well as producing better data. As a first step identify “who works on what” currently – you need to take stock of how the company operates. The template shown in Figure 3.4 below gives an example for you to develop your own version. The form you use needs to be easy to fill in. This will give you better data and a good understanding of who is actually working on what.

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Organizing for Growth Name.................................................................. Day:................ Date:............................

5

specify

specify

specify

etc

specify

personnel

organis'n

Growth

Projects

to work

to event

to customer

other

supplier

customer

to supplier

Travel

Meetings

internal

Deletion

Develop't

Design

develop't

Research

Customer Proposition

Response

other

expenses

E-mails

Set mtg

Administration

Other

personal

Supplier

Customer

Internal

Time 08: 0 15 30 45 09: 0 15 30 45 10: 0 15 30 45 11: 0 15 30 45 12: 0 15 30 45 13: 0 15 30 45 14: 0 15 30 45 15: 0 15 30 45 16: 0 15 30 45 17: 0 15 30 45

Day to day operations Growth projects / Actions

Telephone

10 5 10

2

3

10

Y Y Y

45 30

2hr

30 30 Y Y Y Y

1hr

45

1Hr

30 15 1hr

Figure 3.4 Who works on what

Firstly you’ll need to modify the form to capture day job and growth activities that are specific to your business. The first two columns show a simple way of highlighting which type of work is being done. Overall, the form simply divides the working day into 15 minute time slots. Across the top are the actions that need to be done for the company to deliver its propositions to customers. Some of the actions add value, some add no value but no cost and some add cost. In this sense “value” is determined from your customers’ viewpoint. The timesheet must separate Operational from Growth activities, but don’t make it too complicated. You need to gather enough information to get a good picture without confusing everyone and making the task of completion a pain.

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Growth Management Secondly ask all the relevant employees and team members to complete the sheet for a couple of weeks. Whilst most employees will focus the majority of their time on operational activities, nearly all will at some point also work on growth opportunities. Obviously it is important to get an accurate assessment. Consequently it is critical that employees complete the template honestly and regularly during the day, and that the subject is introduced properly as a supportive tool not a “witch hunt”. It may be necessary to have the forms completed anonymously in some circumstances. It is usually necessary to complete the timesheets for two weeks to get representative data. Completing the forms should be straightforward and easy, provided that everyone completes the form on the same basis. Thirdly, summarize the data to show the amount of time spent adding value on the day job and on growth. Choose people to co-ordinate the input and summarize the findings and make sure it is interpreted both objectively and with practical experience. The summary needs to show consistencies and inconsistencies in the way the teams are operating. Simple comparisons within and between different levels in the organization are needed. The analysis should also identify the amount and types of work that add customer value and those that could be substantially reduced or deleted with no adverse impact: increasing the efficiency and effectiveness of the whole company. The analysis identifies potential resources that can be released to focus more on “important” growth projects. i. N.B.: Nil value add work may be necessary to ensure the smooth function of the business even though it adds no customer value. ii. The sequencing of the columns should be in natural operational groups, and not split by their relative customer value add (this gives higher quality results by making the template easy to fill in). It is good practice to regularly repeat the exercise to monitor progress on changes to working practices – 6 monthly intervals are usually sufficient. Reorganizations have (naturally) a major impact on who is working on what. However, even though new roles and responsibilities may have been set between growth activities and the day job, it usually takes time for them to become established. In the interim, some employees will hold onto their old ways of working – holding the company back. Comparing at regular intervals the “who works on what” time sheets helps show how changed roles are being played out in the company.

Organizing for Growth An example: in Jaguar UK the company was originally organized with separate field staff for each of the three key functions (car sales, servicing, and parts). Having separate functions created great specialism and knowledge but it meant that our dealers had three people calling on them regularly not one, and they never worked on the whole of the business with dealer owners. So the team was reorganized to reduce travelling time, and increase dealer contact time, by combining the roles into one. A year after the reorganization we weren’t getting the results we’d hoped for, and we weren’t sure why. We’d trained the staff properly but we were not getting consistent results. So we did a timesheet analysis. The results highlighted a real issue. The guys who had been in car sales still focused on car sales, those who had been in parts transitioned to car sales and parts, and those who had been in service focused too much on service issues. But even within this there were significant differences by individual. No wonder we weren’t getting the consistency we needed. In the heat of battle all the field staff reverted back to what they knew best. Clearly old habits die harder than you think! The time sheets really helped us focus on not only what to change but how to get greater consistency in our actions across the country.

Different requirements in managing day to day operations versus growth Before we go any further let’s take stock of why there is a significant difference between managing the day job and managing sustainable growth. If you don’t buy-in at this stage the rest of the book is pretty much wasted. The difference comes from the significantly different context and nature of each type of work. They are fundamentally different in how they deliver shareholder value and in how they are seen by customers, employees, suppliers and competitors. As a “starter for ten” Table 3.1 below sets out the differences side by side on the key elements.

Basis for implementing a growth culture The differences in the fundamentals of managing day to day operations and sustainable growth require organizations to use two different management styles. However the organization and its employees must recognize and respect both styles and use both appropriately. The alternative is confusion at best and outright conflict at worst.

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Table 3.1 The different context and nature of operations and growth work Day to day operations

Growth activities

Transactional focus: Deliver the “numbers” (profit, revenues and mix, cost base) Deliver on time every time, right first time By Day, Week, Month, Quarter

Strategic focus: Over the business plan period (years) and beyond Delivering new markets, implemented progressively, aligned to business strategy Predictive of change

“Known” Business Assumptions: for the period Customer needs, competitor activities/ propositions, supplier capability are set These assumptions do not need debating: they are known and established

“Flexible/Changeable” Business Assumptions: Market trends are extrapolated, technology forecasted, future competitor positions are “war gamed”, core assumptions need debating: relative importance, speed of change, direction of change

Objectives: Clear, specific, unambiguous, and interlinked. Based on experience and detailed knowledge of capability Cascaded in detail to all front line operations (production targets, sales targets, cost reduction targets, operational KPIs ...)

Objectives: Flexible, indicative, interlinked Development objectives, learning objectives, as well as financial and operational objectives Progressively refined with experience

Organization: Functional orientation, closed focus Focused refined structures, formal reporting Established role and responsibilities, decision taking and accountability (no change in period)

Organization: Flexible, fluid, holistic, inquisitive Functional structures subject to change as new business develops and progresses from planning to implementation to initial launch and full operation

Actions: Tactical, very quick, responsive (tomorrow is too late), time starved Emphasis on fast implementation and immediate impact Combative to changing market conditions

Actions: Progressive, managed, considered, focus on steady build and development, relatively time rich Tactical actions important in launch phase

Reporting: Automated, well established, understood Fast accurate standardized reports: structured to provide information based on data for immediate decision taking

Reporting: Bespoke, higher proportion of manual reports, need interpretation Project management controls Milestone KPIs

In the opening chapter the following example was used to show the difficulties in managing the day job and growth: during the morning there is an Operations Meeting reviewing sales and manufacturing performance. Let’s assume that the sales objectives were not met for the month, and that manufacturing decided to over build because they could! The tension and “blame culture” of the meeting is easy to imagine and resonates

Organizing for Growth with many of us. I’ve certainly been there – failure to hit a target is not good news and brings with it pain for all. Now let’s also assume that two hours after the Operations Meeting the company has a Growth Meeting which many of the same people attend. The ability of employees to switch between the grilling of the Operations Meeting and the open creativity of the Growth Meeting is questionable. Who is going to stick their necks out and be creative following the drubbing of the earlier session? Unfortunately this is a common issue in many companies: action oriented blame cultures often negatively impact on a company’s growth potential. But reality is often far more subtle than this. Outright conflict as in the example above is fairly obvious – it’s the misunderstandings and confusions that reduce a company’s capability to grow sustainably. Here’s a real example where I have left out the names to protect the innocent: Six months into a major growth programme, a marketing manager came to his boss and asked for ten minutes of his time. Naturally he said yes. The Marketing Manager explained that he had just saved 10% on the events budget by tightening up the procedures and processes with one of their major suppliers, saving the company £10,000 in the process. “Great stuff” the Boss said “that’s superb work ... now what?” The marketing guy was a bit flummoxed. “I thought you’d be pleased” he said. “I am” Boss replied, “but given the growth programme how do you take your operational improvement and translate it into a long term benefit for the company of 10 X £10,000?”. The Marketing guy went away a bit crestfallen but thoughtful. (For “crestfallen” read that he was aggressively sticking pins in an effigy of the Boss and twisting them with the vengeance of the trod-upon). He came back at the Boss three days later: “I’ve thought about your supportive and constructive comments the other day ... and I’ve realized what you meant. I’ve asked Purchasing to review the reductions in costs I negotiated with the marketing supplier and see if they are applicable in principle to any other suppliers we have, so it influences the type of suppliers we employ in the future.” As three cherries came up on the slot machine of managerial life the Boss smiled saying “Bingo, Bingo, Bingo!” and the Marketing Manager walked away with a greater ability to consider any issue in two frames: operational and growth.

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Growth Management Getting the organization to consider the implications of Operational and Growth opportunities on each other is a key skill of companies that win. They structure how they approach the day job and growth but they do not build walls between them. Quite the reverse, they encourage controlled input, questioning and support between the day job and growth through a clearly defined approach that recognizes the two separate needs of delivering on both activities. Consequently, setting the tone and style for managing sustainable growth has to be made in the context of also delivering the day job. This is absolutely critical. Even in highly charged short term focused organizations all employees must respect the need for full accountability in delivering the daily results AND the need for openness and consideration in managing growth. These are not mutually exclusive. However the tone and style adopted by the organization must be reflected in the processes, meetings and structures of each activity (delivering the daily numbers and managing sustainable growth). If it is not employees become confused and perceive dual standards in the company. In a global business a few years ago there was a considerable conflict on this very issue. Many employees commented: “Our company says in the annual report that it values its employees as its most valuable asset ... but you should see how they talk to us ... they don’t explain clearly what they want and then they criticize us for not delivering. One day we’re put down for not delivering on the daily numbers, the next we’re being told we’ve not grown new sectors and products”. Not surprisingly this company had high levels of staff turnover and was finding it increasingly difficult to recruit good staff as the message got out into the market: “this is not a great place to work”. Clarity on what was expected of the employees on each activity would have made an enormous difference. This could and should have been delivered through simple processes, tools and techniques that underpinned a true commitment to people as the company’s most valuable asset. It’s not hard to work out how the company should function ... the complicated bit is making sure it does it consistently over time. The different needs of running the day job and delivering growth need to be reflected in organization practices around structure, communications, meetings, decision taking and successful attributes. Table 3.2 below outlines this with examples.

Organizing for Growth

Table 3.2 The different needs of running operations and delivering growth Activity

Element

Operational day to day “delivering the numbers”

Managing sustainable growth

Business assumptions

Known, structured, cascaded and understood by all

Flexible, changing, open to interpretation, known only by “the few”

Meeting agenda

Pre-set, known, consistent/ inflexible, many items Operational focus: do it now! Known links between operational meetings: sales, supply, manufacturing etc

Variable, broad ranging, open, few items Flexible, it links to business strategy and board meetings

Attendees

Functional focus, delineated roles and responsibilities

Strategic focus, core “growth” team and “champions”, broad roles/remit

Meeting frequency

Weekly, Monthly Immovable dates and times

Monthly, Quarterly Movable to get right audience

Meeting principles

Highly focused on action – limited “discussion” Know your responsibilities, know your successes and shortfalls, know your action Tight/short timing per item

Focused on information, discussion, consensus, exploration Broader “business acumen” role beyond functional responsibility ... bring your brain Loose/longer timing per item

Meeting minutes

Action oriented, immediate, next meeting strict follow through

Recording of discussions, papers attached, considered responses, some actions

Meeting outputs

Tasks today, this week

Tasks this month/quarter

Decision taking

Functional hierarchy, data rich

Open, meritocratic, knowledge based, data rich but less “known”

Successful management attributes

Functional excellence, experience, drive for results, strong links and team approach

Insight, planning, vision, flexibility, adaptability

So what meetings drive your business today and how are decisions are made currently? In the last section we highlighted the different needs of day to day operations and growth activities. So how are the meetings organized in your company, how are decisions made and does everyone have a clear understanding of

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Growth Management how they work? This complements the timesheet analysis above to give a clear view of how the company is organized and operates in practice. Mapping out meetings and decision taking should be straightforward – provided you don’t get too hung up or pedantic. Fundamentally you just need to have a high level map of key meetings, their role and what decisions and actions are taken. The chart in Figure 3.5 below shows how simply this can be done, and covers the operational day to day business. Use this example to do the same thing for your company. Focus on the key meetings where decisions are taken. If you don’t have regular key meetings then consider how you should operate and map out a “rough cut”. This will help organize your thoughts about how decisions could be taken more objectively, and with better chance of success. A similar chart (see Figure 3.6 below) can be developed for growth meetings: those that drive development of new opportunities on a regular and controlled basis. But with no great surprise they follow a very different format recognizing the different needs of growth management with prioritized projects and opportunities. The progress meetings manage individual projects in detail via a small team of highly motivated people, pulling in additional resources and expertise to provide specific support at specific times. The “champions” meetings provide support to the project core teams. They act as coaches, mentors, and enablers for the team. The gateway meetings are held to take HR labour requirements hiring / training needs lay offs / employee support

Period 1 Sales review performance vs objective by product -total & mix forecasts for e.g.: 3 and 12 months Attendees: MD, Marketing, Sales, Manufacturing, Finance

Manufacturing production schedules to meet sales forecast Attendees: MD, Manufacturing, Marketing, Supply, HR, Finance

Marketing Proposition adjustment: promotions, tactical offers

Supply scheduling commitments to suppliers 1 month, 3 months, 12 months Attendees: MD Supply (incl Purchasing), Manufacturing, Finance

Repeats Every Period Sales review performance vs objective by product total mix forecasts for e.g.: 3 and 12 months

Sales activities planned actions for next period(s) revised objectives

Finance / Board meeting Updated financials: actual to date, forecasts for period(s) Operational Performance: Actions, Objectvies, resources

Figure 3.5 Example: simple mapping of decision taking – current operations

Week

1

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6

7

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Progress meetings Managed by core team Involving supporting members as needed Operational project management

‘‘Champions’’ meetings Attended by Project core team & ‘‘Project Champions’’

Control & support

Control & support

Control & support

Control & support

Report status Discuss issues / enablers / roadblocks Request help, advice

Gateway meetings Feedback

Feedback

Project Team leader and Champion report out to Executive Board Decide on Project continuation, delay, or hold Tied to investment timing

Go/N o Go

Figure 3.6 Example: simple mapping of decision taking – growth

Go/N o Go

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Growth Management key decisions requiring additional resources or commitments to the next stage in the development of a growth project. The example is just that ... you may decide to that your Growth Management process can operate differently. The key is to ensure that whatever the process, it covers the key elements shown. Clearly the meetings map for the day job and growth management are very different for good reason. Laying out how your company operates its meetings and takes decisions makes it a lot easier for everyone to understand their role and those of their colleagues. It also helps set the basis for implementing a “Two Hats” approach, to explain what needs to be done, and to highlight the links between the key functions of the business.

Summary Running the day job and delivering sustainable growth are two significantly different tasks requiring different management styles. However managing the two together is critical for an organization to succeed and win long term. Without “joined up thinking” between managing the day job and growth, a business will not achieve its full potential. Long term it will not win and shareholder value will be below its full potential.

CHAPTER 4

Implementing Sustainable Growth Management Objectives • Outline “Getting Started” Phase • Explain how to establish an initial team • Identify the roles of the Board and “Champions” In Chapter 3 we established the need for a “Two Hats” approach to manage separately the day to day activities and growth. The Two Hats approach is more than just a simple organization and management structure. It goes beyond processes, tools and techniques to provide an organization that has “joined up thinking” between the day job and growth opportunities. As many of you will know merely training an organization in particular tools and techniques is not sufficient. Application of tools and techniques is part of the solution but the organization needs to start to think and operate as a “Two Hats” business. It needs to respect and support all elements of the company’s activities if it is to operate efficiently and effectively. An excellent understanding for each individual of their roles, responsibilities and how these relate to their immediate team and the wider company is needed on both types of activity. This is not a book on organizational behaviour and processes ... it simply outlines what needs to be done to overlay and implement sustainable growth management and in the process deliver a “Two Hats” approach. Some organizational changes may well be needed to support a fully effective business but these will vary by organization based on how the company operates the day job and its clearly defined and understood business strategy.

Getting started What are we trying to achieve? Keeping it simple ... we all want to work in businesses that are energetic, provide ongoing shareholder value and test and develop us as individuals and as teams. In effect we want to be part of 39

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Growth Management teams that make better quality decisions faster and better than any of our competitors: this makes us winners on the day job and growth. The only way to implement Growth Management in businesses is to: • have commitment from the Board to a progressive, long term and sustainable change using a “Two Hats” approach. • set the scene internally to key players and influencers • use a practical real opportunity (pilot) for growth • the pilot should include a broad range of functions of the company to expose the whole organization to growth management • select a core team to work on the first pilot opportunity. Figure 4.1 below shows what needs to be done and the sequence of events. It is fairly self explanatory: the horizontal scale is time, the vertical scale is effectiveness and efficiency in business. The objective is to improve shareholder value and customer value by developing an organization that is a sector leader in the way it operates. Sector leaders are efficient and effective. They make fast accurate decisions based on data, but also use subjective inputs and are forward thinking. They also have empowered teams at all levels who are motivated to succeed and take an active role. The timings in the chart are indicative. You will need to think about your own business and its circumstances to set your own timescale. In the first stage of “Getting Started” the company needs all of the elements in the box.

Board commitment The Board needs to sign up personally and as a team with personal accountability for running a Two Hats approach: to a progressive, long term and sustainable change. They need to unswervingly and with clarity: Agree the priorities (between alternative opportunities that will deliver growth) Agree the resources Last the duration Support the teams and individuals Remove barriers and politics Enable capability Guide and mentor Be open and encouraging

Sector leaders : Efficient & Effective Fast Accurate Decisions, Data driven, Subjective where needed Empowered Motivated teams

Pilot Phase: 1

2

Initial assessment

Sign off Analyse data, fill in key data gaps, test assumptions and develop action plans by priority opportunity

What Problem are we trying to solve? Enablers / Blockers Data Flows & Key Processes Initial ‘‘Solutions’’ Short term Wins Longer Term Sustainable Solutions Underperformers: Low efficiency & low effectiveness Slow decisions, too subjective, data poor

Phases: Timing

3

4 Implement Priority plans. Feedback and adjust

Data collection Gaps Identified Identify business priorities

Pilot involving many functions

2–4 weeks

1–3 weeks

4–20 weeks

4–12 weeks

Phase 1 Focus on practical opportunities: Set basis for long term ability to grow. Use "Pilot" approach on few key business priorities.

Figure 4.1 Getting started: implementing growth management

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Growth Management Of these lasting the duration is the most difficult. There will be times when the company needs to reduce its focus on growth to focus more heavily on the day job, but it must do so consciously, for a specified reason and for a specified period of time only. If it does not do this it will confuse “the troops”. It is not good enough to pay lip service or be inconsistent when the going gets tough.

Setting the scene internally Setting the scene internally to key players and influencers requires clear communication of the objectives and principles of a Two Hats approach over time. The messages need to be consistent to get the message across fully to all employees. Everyone knows that different people will take different meanings out of the same communication and some need more convincing than others. I recall talking to an MD of one of the largest groups of Jaguar dealerships 18 months after I had taken the senior role at Jaguar UK. I was asked how I thought things were going. I said that I was getting a bit frustrated saying the same thing over and over again about the strategy and direction of the company. The MD replied “Ah yes ... but they are just starting to believe you”. At first this shocked me. Why should it take 18 months to get the message across to our dealer network? The answer is quite simple: human nature. There had been too many changes in the preceding years. The employees in the dealerships were wary of committing themselves to a “new initiative” because of what it meant to them and how they were seen by their peers. Those who embraced the initiative early took a risk. If the initiative turned into another flavour of the month they would have wasted time and effort. But more than that, they had put their reputation on the line, their ability and judgement would be called into question: “why on earth did you support that ... couldn’t you see it was just a flash in the pan?” The lesson is clear: consistent communications and long term support for key initiatives such as implementing and running a Two Hats approach is essential to progressively get everyone on board. Don’t assume one cascade meeting will be sufficient. Plan a series of communications and support sessions to keep the message consistent and on track, and once you’ve started, don’t just talk the talk, walk it! To set the scene you can use a simple progress chart showing the key steps in the overall process for getting started on Growth Management as in Figure 4.2.

Board and senior management Buy in and personal commitment

Internal scene setting State the problem: Not growing enough Urgent gets in the way of the important Slow and poor decision taking

How to solve the problem? Outline differences between Operations versus Growth Outline need for team working on BOTH Outline different management and team styles between Operations and Growth

Installing growth management

Getting going

Explain Thin Slice Pilot with examples Outline Pilot Team Structure and support from: Champions and Gateway Meetings

Board Commitment Select Champions Select Pilot Team Members (may have to be chosen based on a specific project)

Repeat Choosing a pilot

Pilot preparation and sign off

Pilot implementation

Next pilot

Outline selection process (data and objective based) Outline tools and techniques Explain prioritisation processa

Developing the Growth Opportunity business plan research and data based

1. Operational launch,control and monitoring 2. Growth Learnings on the process and on the pilot business to us on follow on ‘‘pilots’’

Selection of Pilot: not too big, not too small, touching as many parts of the business as possible

Agreement and Sign Off to implement

Repeat process, and as capability increases in the company, increase the scale and number of growth pilots being handled at the same time

Figure 4.2 Setting the scene internally: key steps in growth management

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Growth Management Using this or your own version of the chart helps provide a consistent message within the company. It can be used time and again to make sure everyone keeps on track. A large version of it should be put up on a prominent wall, to be a visual daily reminder of the overall process ... for everyone at all levels of the organization. This latter point is important. It provides a structure for any level in the organization to politely remind others of the total team approach needed. The company should refine the chart over time, provided that it remains recognizably the same process. Refinements must not confuse, they have to clarify. Anything that risks a consistent and understandable message must be avoided.

Don’t do too much at first Don’t bite off more than you can chew! This means that your first pilot project needs a small team working together across as many functions as is reasonable. This gives the company the opportunity to expose Growth Management to a broad range of employees. However, you need to choose a pilot project that is big enough to be worthwhile commercially, but not so big that it requires too much resource and risks sufficient focus on the day job to deliver cash. Identifying potential growth opportunities and prioritizing the best one to use for the first pilot is discussed later in the book. There are a number of objectives of the first pilot but they split into two key areas: actual business growth (with financial benefit) and learning how to operate “Growth Management”.

Pilot – learn by doing The principles of Growth Management and running a Two Hats organization are relatively easy to understand. The difficult piece is making it come alive for the company, in getting everyone to know what it means to them, and how to work consistently and effectively as an organization on both day to day operations and growth. A pilot growth management project provides the basis to learn by doing. This focuses individual and team actions on what works as a team and cements the learning quickly into the company. Working in multifunctional teams on a targeted and controlled pilot increases the speed and quality of decision taking and improves their business understanding. The

Implementing Sustainable Growth Management pilot project provides learning for individual roles and responsibilities and shows the links between them to generate joined up thinking and action. Those involved should be managed and controlled in developing the general principles and processes to meet your organization’s specific needs.

Team selection To be effective and provide the basis for sustainable growth, the Two Hats approach needs the support of the whole of the company. However this takes time to prove that the approach works and to prove the skeptics wrong. In the process, heroes and careers can be made. You and those who buy into the concept and processes early on will help lead the organization in delivering sustainable growth. To give the team the support it will need, it needs to be supported by the personal commitment of the board and senior directors and by a specific “champion” who is a board member or senior director. Table 4.1 below outlines their roles. With the support of the board and senior directors the selection of the champion and the project team can be done based on the specific growth project chosen for the pilot. How to choose the pilot needs a couple of chapters in its own right (Chapter 5 and 6). But as part of the Getting Started stage, the company needs to know the principles for team and champion selection: hence covering them here. To make it easier to explain how to select project teams and champions I am going to use a fictional example: A components supplier company called CompoCo Ltd has identified a growth opportunity with introducing Widgets to its product range. Widgets are used in computer production and servicing and are sold in a variety of sizes and performance characteristics. CompoCo has not previously sold Widgets other than buying the odd few in to fulfill an order where the customer insisted on a “full service approach” from its suppliers.

Choosing the project team CompoCo is a mid-sized business. It has chosen Widgets as a pilot project since it represents a good profit opportunity, in a growing market and involves most areas/disciplines of the company. It does not include manufacturing, but the possibility of in-house production is possible once the company achieves sufficient sales. Additional support will be needed from Systems/IT and possibly from HR.

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Table 4.1 Support team roles Support team

Role

Board and senior directors

Board commitment to running Two Hats as part of the Company’s Business Structure and Strategy: running the day job and delivering growth Individual, personal, sign off as a team to Two Hats: openly stated and acted upon Board and individual interest and support to the pilot project Board and individual interest and support to all follow on growth projects and opportunities Mutual support of each of the board and senior directors to each other to deliver a Two Hats approach Agreement to selected (prioritized) growth projects Agreement to allocating the necessary resources and tools, techniques and processes to drive growth projects continuously

“Champion”

The Key supporter of the specific growth project (one/two champion/s per project) To be committed to Two Hats and Growth Management Remove blockages to progress Represent Growth Project to the Board with the project team leader Encourage and support of Project team as individuals and as a team Collate and feedback learning and team development on the Two Hats approach: Growth Management and Day to Day operations

The project team is divided into core members and supporters. Core members are chosen based on the key elements of work required to bring the project to market. In effect the core team has to develop a business plan and a launch plan for the project. As such there are five key roles: Marketing Sales Finance Purchasing & Supply Distribution Additional support will be required from: Systems

HR (overseeing)

Manufacturing

(timing for in-house production).

The project team needs a leader, who is responsible for the overall coordination and completion of the project, and for the function they represent.

Implementing Sustainable Growth Management CompoCo Ltd could have chosen either a person from marketing, finance or purchasing to fulfill the role, but they chose the marketeer. As such the specific roles and responsibilities for each person and function would be as shown in Table 4.2. Using this example, selecting the project team therefore must take into account the importance of each function to delivering a successful growth project and the personal capability of the individuals available to work in a multi-functional team. They must have the technical competence to represent their function to a high standard, and have the personal and interpersonal skills to fully support the project. Growth Management requires individuals to work with a different style to running day to day operations. Anyone working on the core project team must be adaptable and open to working on both the day job and growth. Getting the right mix of individuals is the key to success on the first pilot, along with selection of a highly supportive and interested Champion. Table 4.2 Growth project team roles Function Core team Marketing (Leader)

Sales

Purchasing & Supply

Finance Distribution

Supporting team Systems HR

Manufacturing

Role

Project co-ordination and leadership: business plan and launch plan Key link to Project Champion and the Board Delivery of functional input: customer value proposition, competitor analysis, market trends Support for full project team Co-ordination of feedback and learning from the pilot Delivery of the Implementation/Launch Plan Delivery of functional input: sales and “voice of the customer” Support for full project team Delivery of supplier quality, schedules, Delivery of functional input: costs, sourcing, and technical developments Support for full project team Delivery of functional input: financial and commercial business case Support for full project team Delivery of functional input: logistics inbound & outbound, warehousing – stock, availability Support for full project team Transaction reporting and consolidated reporting processes Control and interpretation of Two Hats approach, personnel development in Growth Management Functional support on organization team working and legislation Input on potential for in-house manufacturing Watching brief on supplier manufacturing processes and efficiencies

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Choosing the champion In the example, CompoCo Ltd should choose the project champion from any one of the Board or senior directors. The choice should be based on balancing the capabilities of the core team. In this case with a marketeer as the project leader, Compco chose to have the purchasing director as the champion given the need to secure a strong supplier relationship that could respond to potentially significant increases in volume as the project launched successfully. The role of the champion has already been stated. The champion should call on additional support from peers and the Board as needed to keep the project on track. Their role is also to provide feedback to the company on how the team are responding to a Two Hats approach, and the benefits and issues involved personally in working as a project champion and still running the day job. In organizations large enough to have a dedicated HR department, the HR team need to take an active role in helping the team operate with Two Hats. They need to support individuals, the project team, the champion and members of the Board in the transition to using the Two Hats approach. They need to observe and take action to support delivery of the two styles of operating.

Summary Implementing a Two Hats approach requires the full commitment of the Board and senior directors, personally and as a team. Using a pilot project provides the basis for a cross section of the company to work on a growth project as a multi-functional team. Selection of the project team needs to reflect core and supporting roles. The core team will reflect the needs of the specific project chosen, and each person needs to be adaptable in working between the day job and this growth project. On the day job they must drive for results, in the project they need a more open and questioning approach, they need to test and explore preconceived assumptions, and work openly as a multi-function team, requesting and getting specific targeted support from other areas when needed. The role of Project Champion is critical in supporting the project team and ensuring ongoing support from the Board and senior directors. Warning: Parts of this chapter can sound a lot like project management. Taken out of context this is an easy mistake to make. This chapter is the first stepping stone to implementing a Two Hats approach. As the

Implementing Sustainable Growth Management approach gathers pace and becomes embedded into the culture and fabric of your organization, project management becomes one of a number of tools to help deliver growth. It is not a surrogate for the management styles and disciplines of the Two Hats approach and the thinking, decision taking and actions that flow from it.

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CHAPTER 5

Identifying Growth Opportunities Objectives • • • •

Identify relevant Growth Opportunities Define the scale of each opportunity Identify the need to “War Game” competitor activities Highlight the need to understand barriers to entry and exit

Identifying growth opportunities Companies need to make sure that their Growth Opportunities reflect the capability of the business as well as being sufficiently large to justify investment in time and resources. Growth is not about getting new customers. It is about getting sustainable new business. Gaining new customers is far more expensive than retaining existing customers. In both cases, customers that are bought by the business are the most fickle and provide the lowest returns. Organisations that genuinely offer real and perceived customer value must ensure that all new growth opportunities are based on maintaining the same focus (providing long term customer value). Figure 5.1 below shows the key elements that determine relevant growth opportunities. Each opportunity needs to be assessed against the objective criteria shown in the diamond box. Let’s take a look at these elements in turn.

Business strategy and business alignment Your growth plans must be developed in line with a Business Strategy and Plan that accurately describes the current business and provides clear direction for the future. The strategy should identify by key element: • Maintain – those parts of the business which have little growth potential but which need to be maintained to provide profit and to support customer loyalty 50

51

Identifying Growth Opportunities • Divest – those parts of the business which are unprofitable and which will remain so despite remedial action, and which are not required to secure ongoing business elsewhere • Grow – those parts of the business which have potential for growth, and where the growth enhances company profitability and customer loyalty. All actions within the business need to be aligned with the Business Strategy. There is no point in doing things that are not in the Business Strategy and Plan. If this is the case then either the actions or the Strategy and Plan need changing! Understanding the Business Strategy is critical for the organization to allocate the correct level of resources to growth. It sets the context for considering various opportunities. Business alignment Consistency / Communication Linked activities

Business strategy by key element Maintain / Divest / Grow

Competencies & enablers Skills, technology, systems, Know how / why

Market trends Emerging sectors Scale

Growth opportunities

Transferable capability

Experience Sector understanding Existing business and gaps Know who / where / what / when

Scale / Stability Accessibility Relative Risk Business Alignment Resource Investment

Learning: New Skills and Capability

New markets Scale / stability

Competitor strategies Existing/ Latent

Supplier / Partnering Capabilities New / Existing

Figure 5.1 Identifying growth opportunities

Ansoff Matrix A well known tool for helping analyzing various growth opportunities is the Ansoff Matrix. Igor Ansoff in the Harvard Business Review in September 1957 published a simple chart based on two of the key factors – products and markets (see Figure 5.2). The matrix helps focus the mind on how each opportunity fits with the business strategy in terms of products and markets. Ansoff’s matrix is simple to use and very effective in driving clear strategic thinking around growth. It works on the basis that to deliver growth a company must decide how and where it needs to compete: in current or new markets and through existing or new products.

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Growth Management

New

Ansoff Matrix

Diversify into new product for new market

Aim to increase market share

Develop new product to meet needs of existing market better

Established

Market

Extend product into new market

Established

New Product

Figure 5.2 Ansoff Matrix

A more detailed explanation of each of the “boxes” of the matrix is as follows: Aim to increase market share Market penetration is increasing your sales performance by competing more effectively in existing markets with existing products. The risk is (relatively) low but to succeed you need to take market share from your competitors. To sustain these gains you will need to increase real and perceived customer value at lower costs to drive market penetration. Customer value must be defined by your customers and prospects, not your company! Extend product into a new market Market development is capturing new markets with your existing products (or services). You will need to leverage your company and brand

Identifying Growth Opportunities reputations to break into and develop new market segments. These new markets can be geographic (e.g. another state or city or launching in the “new” markets of China and India) or new applications of the existing products, to target new customer segments. Develop new product to meet the needs of the existing market better Product development will be important if your existing markets are already saturated. You can use your knowledge and relationships with existing customers to design and push new products. Consequently you need great and detailed understanding of your customers’ future needs and expectations to develop products which are perceived by customers as better than the competitors’ offers. Product development helps you move away from direct competition and create an “uncontested” sector. Companies that have product development at the core of their business models must have an innovative outlook to identify the emerging opportunities and be the first to market. Investment in R&D, advertising and focus on time to market are of prime importance. But be careful, mere improvements in technology are not enough if they do not add real and perceived customer value. The continual increase in technical capability of mobile phones and computers is reaching “overload” for many customer segments. Adding value is therefore now based on clear segmentation of customer needs and building appropriate products with the “right” level of technology to each segment. Diversify into new products for new markets Diversification involves entering new markets with a new range of products. Diversification can be related to your existing propositions or not. Obviously it is less risky to stay close to existing markets and products, but this may not produce the growth needed. Any company that moves away from its core strengths and capabilities must be careful to develop unique competencies and propositions to enter new markets. A classic example in transport was the move by Honda from motorbikes into cars and into industrial equipment, marine products and garden tools. It leveraged its core competency in engines ... captured beautifully in its advertising strap line “The Power of Dreams”. In summary, the power of the matrix is that it is both simple and comprehensive. It stimulates thinking on the two key business elements: your customers (markets) and the propositions you offer (products). It splits this

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Growth Management between existing and future options and helps identify issues which need greater analysis before decisions can be made.

Competencies and enablers It is stating the obvious to say that companies should ensure growth is based on their existing core competencies and enablers (systems, processes, technologies). However, many companies fail to accurately identify exactly their core competencies. Core competencies must be defined based on the customer value they add, and the differential advantage they provide versus competition. It is important for you to assess your company’s skills, technologies and know-how objectively based on what is of real value to customers and why/how this sets the company apart. You can use the simple Relative Competencies table shown on the next page as a basis for developing your own specific version. The example table in Figure 5.3 below identifies which competencies are important to each type of customer, and shows the proportion of revenue each customer type represents: providing a simple indication of weighted relative importance. To give the relative importance, all you need to do is understand the mix of your business that comes from each area. In the example this is from each of four types of buyer: retail, wholesale, store owner and contractor. As you can see sales directly to retail buyers are relatively unimportant at only 5%. Sales to contractors and store owners each provide 25% of the revenues, with wholesale buyers being the largest group at 45%. Consequently, the competencies your company needs to meet the needs of wholesalers are the highest priority. The rating used is a simple – High, Medium, Low – for each competency as rated by each type of customer. In other words anything rated high is according to the customer a really important competence that they expect their suppliers of these products to have. In some cases a particular competence may not be relevant, in which case just mark it as not applicable (n/a). You then need to complete the form for you and your competitors to give you a relative performance. You can use a simple traffic light system to produce a highly visual chart explaining the company’s relative ability versus competitors. Simply use green (good), amber (average), and red (poor), to give an easily understandable assessment. In this book we’ve had to show it in monochrome: black (poor), grey (average), white (good). You must be objective to provide a clear and accurate assessment. In many instances you will not have a distinct advantage versus your

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Identifying Growth Opportunities

Revenue split by customer type % mix

5

Competitor 6

Competitor 5

Competitor 4

Competitor 3

Competitor 2

Competitor 1

Client

Client and competitor Ratings

Contractor

Store owner

Wholesale buyer

Retail buyer

Priority by customer

45 25 25

Sales

Retailing Technical knowledge Customer relationships National salesforce Web sales National accounts mgt

H L L n/a H n/a

L H H H L H

L H H M M L

L H M L H L

Marketing

Trade events promotional offers advertising price deals

n/a L H M

H H M H

M H M H

L L L H

Supply

Availability Quality control Supplier relationships

M L L

M H L

M H L

H L L

Purchasing

cost base multiple sourcing technical knowledge long term relationhips

L L L L

M H M H

M M M H

L M M H

Manufacturing quality technical know how volume flexibility managed complexity continuous improvement

M L L L L

H M H L M

M H M L M

H H L L M

Logistics

warehousing costs transport costs stock management availability

L L L L

L L M M

L L M M

L L H H

Systems

order management stock control manufacturing control financial reporting technical support customer database database mining purchasing Exchange knowledge management design CADCAM

L L L L L L L L L L

H H M L M H H L H M

H M M L M H H L M L

M M M L H L L L H M

Figure 5.3 Relative competency matrix

competitors and in some you will be at a disadvantage. The key is to know where the strengths and weaknesses exist and plan growth accordingly. There is little point in spending resource to attack a market where the competitors are well established and are more competent than you.

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Growth Management If you are struggling to get objective data to measure how you perform as a company then you may need to get specific feedback from customers and potential customers. Clearly you will need data on both your own company and the main competitors. You may need to do specific qualitative and quantitative research to get the information required.

Experience/sector understanding In addition to knowing what your company is good at (competencies and enablers), you need also to identify the experience in the company. This is more difficult to quantify, but compared to the know how, and know why of “competency”, this is more like the know who, where and when. To start with identify from the transactional data in the business who is buying what, where, when and why. Look for patterns in the data. Use experience to interpret the patterns and from this identify what the experience and sector understanding is that allows you to interpret the data that way. Secondly, review the differences between what the company is supposed to be working on and what it actually works on (see Chapter 2). Comparing the two reveals the company’s experience and sector understanding. Thirdly, check the transactional data for gaps in the current offering: products and services that the company does not offer but which their customers are regularly buying from competitors. This understanding needs to be reviewed against both the current market and the future trends. Experience is not just confined to those who have been in the business a long time. Experience from other industries and sectors can be invaluable in interpreting changing markets. Consequently you should not assume that only “old hands” have relevant experience: it impacts how you think about Growth Management. Experience and sector understanding can help identify new opportunities, and act as a competitive advantage in delivering growth opportunities. Experience can help interpret the speed and development of a new sector, but it must not blind the company to broader opportunities (see Chapter 1 North American motorbike industry example). Likewise experience can help reduce costs and time to market. Review all the company’s key assumptions about the sector. Define which ones are still relevant and which ones need updating. Check that your company’s “experience” is continually developing and adjusting your sector knowledge. If it is not, then your “experience” is already losing its relevance and power. Analysis of your experience/sector understanding must separate substantiated experience and understanding from “received wisdom”.

Identifying Growth Opportunities “Received wisdom” is the cause of many business failures: primarily because the company fails to check it out to make sure it is relevant, accurate and appropriate to the changing market in which they operate. The saying “nothing fails like an old success” is highly relevant to businesses that continue to use their “experience” to repeat the same actions of the past even though they are becoming less and less effective. You need to clearly understand what “experience” actually tells you about the past and more importantly future opportunities.

Transferable capability, learning and partnerships Having identified the competencies, enablers and experience, it is important to understand which capabilities can be transferred to new sectors, recognizing that different sectors will require different capabilities to provide customer value. Consequently defining the transferable capabilities ultimately must be done against specific opportunities; however this does not stop an initial assessment to be reviewed later. Obviously any gaps which exist in capability can be overcome through learning and partnering but the assessment must be realistic. It needs to be pragmatic and based on achievable assumptions: through planned training, or partnering with established suppliers. To avoid wasting resources, the possibility of buying specific companies to fill competency gaps should only be assessed against specific growth opportunities. On the example Relative Competency Matrix above, the company needs to improve its capability in systems. Any growth would probably require it to at least match the systems capabilities of competitors 1 and 2. It is also needs to address its “average” capability in logistics. However it does have a competitive strength in purchasing. Note: Suppliers often develop new capabilities and propositions that require routes to market. You should develop strong relationships with your more progressive suppliers to take advantage of any emerging developments they may have both as opportunities themselves and as “halo” propositions to enhance sales and margins on established offers.

Current gaps, market trends, emerging sectors and new markets Some of your growth opportunities will come from researching market trends, and emerging sectors, defining over time the opportunity in

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Growth Management revenue, margin and unit volume. The research should also reveal the similarities and differences versus existing market needs and your company’s current propositions. But before you conduct additional research, check out what opportunities exist just from expanding your existing business (selling more of what you already sell, and introducing new products and offers that supplement what you already sell). The diagnostic matrix shown in Figure 5.4 on the next page provides a simple format for checking out how your company currently services the market and the more obvious gaps. The matrix obviously needs to be set up specifically for your company and the sector(s) where you operate. The idea is to get on one big chart all of the major product or service categories you offer and how you compare to the market overall. The example is based on a wholesale distribution business. To be of use the matrix needs to have sufficient data to be meaningful. If “hard” data is not readily available you will need to estimate (but not guess!).

Explanation of the diagnostic matrix The left hand side of the matrix covers all of the key product groups offered by the company. In this case there are six (fictitious) product groups. In some cases the market sector is big enough for individual products rather than product groups. The level of detail needs to be sufficient to identify if there are any significant gaps in the company’s offering and if so what is the scale of the opportunity. Across the top of the matrix are key data on the size of the market, recent growth trends, your company’s market share and margin, and where possible the same data for competitors. The simple principle here is to show which products have the largest market shares and to ask questions on those with low market shares. To complete the exercise, you need to check out your range of products and offers versus the competition: do they offer a wider range, do they sell alternatives, do they have different quality levels of products (premium, standard, economy). Filling in the diagnostic matrix as much as possible will help identify opportunities for further review and research. The idea is to keep the matrix simple and make it easy to complete, but at the same time for it to have the necessary detail to allow opportunities to be picked up. The data needed is detailed on the top of the matrix. It starts with an assessment of market scale, and whether the market is growing or

Your company Market leader Volume & financial data Market Revenue Growth rate Market Share share Protential growth Volume Revenue Margin share graphic Mkt Share Relative 06 04 05 06 07 08 09 04 05 06 difficulty 06 graphic % mkt share % share f’cast Growth % Itrs, units % % % % Itrs, units £m £m % £m Compelling Competitor mils mils

Market Value Volume Growth Diagnostic Matrix gaps and opportunities £m

Proposition Reaction

80

8 –2 –2 –2

20

16

5

7 5 5

Product group Listing Products Category Included Nos Category core 1 Widgets connectors clips capacitors Widgets plus drivers cooling 2 Odgetts

Joints Link Bars Bushes Pins

3 Planks

filters meters valves

4 Gadgets

Belts Lifters Cleaning Enhancing Maintenance Emergency H&S

5 Retail

6 Capital Equipment

Dynos Stamps

Figure 5.4 Diagnostic Matrix: identifies gaps and opportunities in current business

7

9 10 H/M/L H/M/L

0.4

How much effort is needed to produce a compelling proposition, what is the strength of competitor react on likely to be

Complete based on data and good quality Judgement

4

1.6 40

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Growth Management declining. It goes on to compare your company’s performance against the market leader for that product group in simple revenue and share terms. Gaps and opportunities are identified by your relative performance on a particular product versus your “average” market share, or where a significant sector exists where the company does not compete at all. The products or product groups are defined in the left hand (vertical column). Determining how products should be separated or grouped together needs your experience of the business and sector. In some cases it is important to review specific products; in others the analysis can be most useful at the group level. For example in the grocery trade it may be appropriate to combine all types of canned fruit into one group whereas canned vegetables need to be segmented into the separate products, recognizing their far higher revenues: baked beans, tinned tomatoes, kidney beans, mushrooms etc. The relative level and quality of data available varies by company and sector. Where data is not easy to get you should estimate the information as accurately as possible. These estimates can be checked by talking with industry bodies, and extrapolating from known data. The matrix shows the gaps and indicates the profit potential available. It also forces you to estimate the level of competitor reaction to your growth actions by simply asking the relative difficulty the company will face in developing a compelling proposition and the degree of competitor response. This will help prioritize opportunities as detailed in the next section. The matrix also helps you put down on one piece of paper an overall description of your business and potential gaps/opportunities. However in addition you will need to research trends and emerging markets that are not covered by your current operations. You should keep up to speed on industry and sector developments through a variety of sources: general industry contacts, trade bodies, trade press, customers, suppliers, and by monitoring competitor activities. These are key sources of quality information for ongoing Growth Management, and they need to be managed proactively. You can use a table similar to Table 5.1 below to make this happen regularly. It shows where to get good information, how to use it and who is responsible for delivering each element. The speed and scale of development of trends and new sectors varies considerably. So you also need to predict the impact of the speed of change on emerging sectors and trends. Specifically you will need to understand when sufficient scale will emerge to justify your investment, and an estimation of how long the trend or new sector will last. But you will not be the only company looking to grow. Some companies will want to enter the market early, getting first mover advantage. Others will want to hang back, avoiding first mover mistakes. So you also need to assess competitors and “war game” their likely actions.

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Identifying Growth Opportunities

Table 5.1 Sources of quality back up information Source

Types of information

Who is responsible

Trade press Financial press

Market trends, supplier developments, personnel moves, new entrants Financial performance of sector Company closures New technologies Government legislation/changes

Marketing Purchasing Manufacturing

Trade bodies

Government legislation Sector issues Industry developments Personnel moves (movers and shakers) Training Research for the Industry

Senior Director or Board member

Trade events, shows and conferences

Rumours, politics, background detail New product launches, competitor announcements Trends and technologies New entrants and associated sectors/ sub-segments Customer preferences and feedback Specific topics from seminars and networking

Need a planned approach from many levels of the company

Supplier visits

Capacity planning, volumes per product Production complexity and cost differences per product R&D New technologies, new products, range extensions Support services: marketing, technical, delivery, etc

Purchasing and supply managers/ directors

Customers and prospects

Channel and end customer needs Revenue split per product/range/brand level

Marketing and sales directors

Ideally, forecasts of sector size and stability should be developed for each key opportunity: however in practice accurate data is often difficult to obtain so experience and judgement become relatively more important.

Barriers to entry and exit Each growth opportunity will have barriers to entry and exit which your company will need to identify. The relative “height” of the barriers will have a direct impact on investment, financial return and business risk. You need to check out the barriers for your own company and your

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Growth Management competitors – some of them may be more able to overcome the barriers more easily than you and may therefore have an advantage. Importantly some opportunities will have high barriers to exit: disposal costs that have to be recognized in the risk assessment. For example: legal protection around employee redundancies; environmental decommissioning and disposal of specific types of equipment and machinery.

Competitor strategies and “war gaming” The amount of information you can get on competitors is dictated by how much is in the public domain. You need to check out a variety of sources to see if you can work out what each major competitor is trying to achieve, and what they have done in the past. Putting these two pieces of information together you then need to “War Game” (estimate) what they are likely to do in the future and how much of a threat they will continue to be. Competitors include direct and indirect competitors. Direct competitors operate in the same market space and offer similar solutions (products or services) to customers’ needs. Indirect competitors provide alternative ways of serving the same customers’ needs. Additionally there are latent competitors, companies that could enter the market with similar or new solutions to the same customers’ needs. Table 5.2 on the next page shows how to get and interpret competitor data. Predicting who the latent competitors are is often difficult; for example camera manufacturers a few years ago would have found it difficult to predict that happy snap photography would move away from camera manufacturers to mobile phone companies. Fortunately for most companies such substantial shifts are rare.

Simple mapping To help work out how competitors are likely to respond to market trends and opportunities, it is a good idea to use simple mapping techniques. Whilst it great to get quantitative data to confirm the position of competitors on a simple map, in many businesses this is too expensive. To get around this try using your advertising agency or external business partner to help interpret what is going on in the sector. The idea is to be able to position where competitors are relative to your businesses, and to show where they are likely to try to move over time.

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Identifying Growth Opportunities

Table 5.2 Sources of quality information on competitors Source

Types of information

Interpretations and inferences

Website

Company structure, Company history, Contacts, Products/services, Pricing Marketing activities, Web as a channel to market etc News items Financial information (public companies)

Quality of site content and operation indicates level of openness and professionalism of the company in the sector. Content itself needs to be checked against known actions and standing in the market.

Financial accounts/ Companies house/ Financial press

Financial performance, net worth, indebtedness, cash flows, company ownership, mix of business, corporate structures, board members, assets, company strategy, future positioning, historical trends, relative importance of market sectors to overall company performance. Operation indices: profit per employee, revenues per employee, ROCE, etc Company policy on assets (freehold, leasehold, depreciation policy etc) Changes in Board composition, Auditor comments, audit firm used, length of relationship with audit firm.

Financial stability, rate of business growth. Attitude to risk. Relative ability to respond to or lead major sector initiative. Potential future strategies. Take over target or acquirer. Compliance.

Price lists

Product range(s), pricing strategies, frequency of issue (change of prices), relative importance of price list versus ad hoc deals, inferred margin.

Infer competitor’s margin structure (cross referred to client margin structure plus/ minus adjustments). Alternative pricing strategies, and potential gaps and opportunities.

Catalogues

Product range(s), technical specifications, technical support and advice, suppliers, brands, warranty terms and conditions, returns policies.

Market coverage, target customers, attitude to customer satisfaction. Potential market sector opportunities and gaps.

Advertising, POS, Events, Promotions

Level of competitors’ promotional activity & discounting relative to the market.

Marketing impact and expenditure for competitors relative to each other and their own (stated) company positioning. Level and type of marketing spend in the sector.

Continued

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Table 5.2 Continued Source

Types of information

Interpretations and inferences

Communications messages. Competitors’ company & brand positioning(s). Tone & style and consistency of all communications with brand and company positioning(s). Sector core messages (used by all) and company differentiating messages (used by a few or one).

Definition of KVIs (Known Value Items) to sector.

Conferences/Forums/ Industry and trade bodies (also 1 on 1 meetings & contacts)

(Personal and Company Networking) Competitor reaction to and interest in: key sector issues and trends, impact of new legislation. Identifying formal and informal alliances between competitors, suppliers and distribution channels. Identifying competitor attitudes/activities in lobbying. Latest news and product introductions/ developments.

Key contacts and people of influence. Competitors’ views and agenda relative to industry issues (leaders, followers, politicians, aggressors, etc). External Threats and Opportunities for the sector.

Industry Press/PR coverage/local, regional, national press

Key subjects, issues and trends. Key movers and shakers in the industry. Personnel changes. Competitor announcements, initiatives, investments, disposals and issues. Relative level of editorial coverage of each competitor.

Specific competitor activities that may indicate a strategy or short term initiative(s). Who are industry “gurus” to whom press turn for comment. Which companies use PR to best advantage, and what lessons can be learned for client?

Customers and prospects

Ask customers and prospects to rate the relative strengths of competitor propositions versus client proposition. Include all elements of the proposition (product, price, promotion, place, people). Determine the ease of doing business/long term relationships.

Define and prioritisz actual differentiators of customer choice in choosing between competitors’ propositions.

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Identifying Growth Opportunities Technology

Speed Pinkerton Anglo National

Cooke Saxon Gadget Norton Multi format

Value

Figure 5.5 Competitor positionings

The example above (Figure 5.5) has been based simply on how competitors advertise and promote their brands in the market. Whilst this is not a perfect indication of how competitors are likely to develop it is a practical alternative when doing your own research is not feasible. Any differences between how a company promotes itself and its stated strategy should be highlighted in notes: to highlight the discrepancies. The company positionings have been based on the four key messages that reflect the main advertising messages used. The alternative is to devise and implement specific research with customers, suppliers and end users that rates businesses in the sector on the key factors that drive customer value. This type of mapping is not scientific but it should be accurate enough for data poor sectors. It’s also really helpful in getting everyone in the company to see how the competitors are positioned and what your company thinks they are trying to do in the future. Based on this example, the mapping shows that Pinkerton and Anglo, two of the three large competitors, are moving quickly to attack Saxon’s position of multi format, and Saxon are likely to have to reduce prices to maintain their market position. Of the other competitors only National has a discernible strategy: a drive for increased value as speed becomes less of a differentiator.

Summary Companies need to make sure that their growth opportunities make the most of their own capabilities, emerging market trends, and

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Growth Management their relative strengths against their main competitors. Each growth opportunity must also fit with the company’s business strategy. It needs to enhance shareholder value over time and provide sustainable earnings. A variety of tools and techniques can help you decide which are the best opportunities for your company to develop. Ranging from the well known Ansoff matrix, to simple listings of competencies and current gaps in your product offerings, these tools make it easier to choose and potential opportunities to be prioritized.

CHAPTER 6

Prioritizing Opportunities Objectives • To rank all identified opportunities using consistent criteria • To identify the most appropriate initial pilot opportunity to deliver short term incremental business quickly using a “thin slice” of the business

This is not just another simple prioritization task Chapter 4 covered getting started and team selection amongst other aspects of implementing Growth Management as part of a Two Hats approach, and Chapter 5 provided ways of identifying growth opportunities. In deciding between various potential opportunities, your company will be making its first key decision in Growth Management. Not only is it important to choose the right opportunity to use as a pilot, it is important in how the decision is made and how it is seen as supporting the Two Hats approach and Growth Management in particular. For many people in your company this will be the first “solid” decision taken under Growth Management. Consequently, employees will look to see if the principles outlined in Chapters 3 and 4 are being followed. Specifically in prioritizing between opportunities they will be sensitive to how decisions are taken in deciding between opportunities: • • • •

who is going to be involved how are their views received is the company truly open to new ideas and different opportunities who is/are seen as being best able to make the decisions on prioritizing opportunities • who has the accountability and responsibility for choosing an appropriate pilot project that will produce growth and start the Two Hats approach? As a result, if you think choosing the pilot is just another simple prioritization task, then you need to take time out and rethink. This is a 67

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Growth Management key step in “walking the talk”. It is potentially the first of a number of hurdles around “politics”, “cynicism” and even “terrorism” that the company needs to avoid. Getting the choice of pilot right and being seen to get it right goes beyond a simple prioritization task. If a top down view is simply imposed on the team, then Growth Management will have got off to a bad start.

Who needs to be involved in the decision? At this early stage in implementing Growth Management it is important that all key players review and comment on the various opportunities, using the same data and information. The section below shows how data and information can be laid out easily to help the process and decision. Those who have developed, consolidated and co-ordinated the initial list of potential opportunities should be candidates for managing the initial project and are central to the choice of project. The Board and senior directors of the company need to be heavily involved, supporting the processes and being seen to be open minded, inquisitive, supportive and balanced (displaying longer term growth management styles of working rather than shorter term day to day operations management style).

Setting the tone and style of the Prioritization Meeting With no great surprise this key meeting has to adopt the tone and style to be used for managing growth in your organization. It must allow and consider alternative points of view. A rough cut check list and memory jogger to help you plan a meeting to decide on priorities and choose a pilot is shown in Table 6.1. It must discuss and develop opportunities openly based primarily on objective inputs. It must take input from all relevant sources. At the same time it must make progress and not be just a talking shop. Before your company starts prioritizing various opportunities, you need to agree the ground rules for the discussion. You need to consider and agree: clear objectives/outputs, agenda and timings, time of day and duration, attendees, principles for discussion, roles for individuals (input, review, consideration, decision) responsibilities and accountabilities of those involved.

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Table 6.1 Prioritization meeting Element

Considerations

Requirements

Objectives

1. Selection of pilot for growth management 2. Ensure principles of Growth Management are respected in the meeting

Ensure clear communication to all involved Ensure all those involved agree and support the objectives

Agenda

Detailed timed items by subject and person Duration of meeting, start and finish times Sequencing: introduction, review of each opportunity, discussion, prioritization process, decision taking

Clear communication ahead of the meeting

Time of Day

Ensure high energy and positive attitudes to match the tone and style of the meeting Morning, afternoon, evening

Consider need for breaks/ refreshments

Tone and Style

Location: which room – onsite/offsite Room layout : Ease of showing and reviewing data/information as a group Clear “rules of engagement”: structured but “open minded” (listen, consider, respond, support) Sequencing: input, review, decision

Communicated ahead of the meeting Attendees know what information is needed and how it is to be reviewed

Roles

Team focus with everyone involved Specific roles as needed per agenda item (each potential opportunity) Full team decision taking or sub-group

Clearly understood and respected by all attendees

Responsibilities

High quality input, respect for the “rules of engagement” Open minded review and full consideration of facts and subjective inputs

Do not revert to set paradigms Work as a team player

Accountabilities

Clear decision, team accountability, team commitment to achieve, known benefits of success and failure. Walk the Talk of Growth Management

Individual and team accountabilities clearly known

Outputs

Clear next steps Clear expectations, objectives Minutes of meeting distributed within 24 hours Who compiles and reviews ahead of distribution

Recipients of minutes Follow through on actions/ next steps

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Growth Management

Consistent criteria In addition to approaching how to prioritize the various opportunities and choose the pilot project, you will need to agree the criteria to be used to objectively measure each one. Using consistent criteria will help the team judge the various benefits and risks of each opportunity, and reduce the risk of a political favourite being chosen over the one which has most merit. So to prioritize between the various opportunities you need to use the same criteria and be as objective as possible. With no great surprise the criteria are based on many of the elements from Chapter 5. Table 6.2 outlines potential criteria: they are pretty self explanatory, but they are not exhaustive so add your own specific criteria as needed. Table 6.2 Growth opportunities identified Growth opportunities identified No 1

No 2

No 3

No 4

No 5

No 6

£ 50k £ 10k 5 0.5

£ 12k £ 2k 3 0.2

£ 4k £ 1k 3 0.1

£ 65k £ 25k 6 0.8

£ 18k £ 8k 3 0.5

£ 250k £ 65k 8 1.2

Medium High

High High

Medium Medium

No Yes Slow No High

Yes No Fast No Low

Partly Partly Fast No Medium

Yes No Slow Yes High

£ 10k 2 heads n/a £25k

£ 3.5k 2 heads n/a £5k

£ 0.5k n/a n/a £2k

£ 20k 3 heads n/a £35k

£ 10k 2 heads n/a £17k

£ 60k 5 heads New IT £55k

Key Finance departments Sales Manufacturing Purchasing Supply R&D Warehousing Distribution

Yes Yes No Yes Yes No Yes Yes

Yes Yes No Yes Yes No Yes Yes

Yes Yes No Yes Yes No Yes Yes

Yes Yes Yes Yes Partly Yes No Yes

Yes Yes No Yes Yes No Yes Yes

Yes Yes Yes Yes Partly Yes No Yes

Overall rating

3rd

2nd

1st

4th

Financial Business Case

Revenues (scale) Profits (scale) Life cycle (yrs) Payback time (yrs)

Sensitivity

Cost of goods Revenues

Business Strategy

Core business New markets Speed to market Future proof Likelihood of success

Investment

Finance People Processes Products

Medium Medium Medium Low Low Medium No Yes Yes Possibly Fast Slow No Yes Medium Medium

Prioritizing Opportunities But be careful: don’t make the list too long otherwise it turns a positive and informative session into a complicated, frustrating and long winded discussion. For any company it is important to agree these assessment criteria across the business, otherwise you will fail to get full buy-in to the chosen pilot and increase the risk of politics and back biting, negatively impacting on Growth Management and the Two Hats approach. As a company you may want to use a “staged” process to simplify the decision on which opportunity to choose – for example using the above chart: Stage One: Ignore any growth opportunity that produces less than a 25% profit margin, and requires investment of more than £20k Stage Two: Ignore any growth opportunity that does not involve at least 6 of the core company functions (thin slice) Stage Three: Rank the remaining opportunities based on the total criteria In the example above, growth opportunity No 4 is the best option for the first pilot project using Growth Management because it meets stages one and two, is big enough to test the company’s commitment and involves most of the functions/departments of the business to define, launch and implement it.

Consistent quality of data is needed In addition to having consistent criteria to judge between the various opportunities, you will need to make sure that as a far as possible the quality of the data on each is largely consistent. Putting it bluntly, a team can twist the information on their “pet” opportunity to favour it over others. A simple exaggeration of margin potential or revenues or any of the criteria will produce a skewed decision on which opportunity to choose as the pilot. In extreme cases this can be bad news: choosing the wrong pilot can damage the credibility of the team and introduce a potential lack of openness that is damaging to achieving sustainable long term Growth Management. Consequently a word of caution: before you prioritize the various opportunities, you must understand whether the opportunity is based on “fact”, “inferred”, “implied”, “estimated”, or “guessed”. The level of risk

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Growth Management clearly increases as the quality of the data falls. Not only do you need to be objective in assessing the quality of the data you must retain this perspective when planning how to fulfill each opportunity. Poor quality data repeated often enough become “facts”: which can produce disastrous results. Consequently, investments need to reflect the scale of the opportunity and the quality of the data. To make sure the quality of the data on each opportunity is largely consistent you can use a variety of simple checks. However the best way is to get those pulling together the data to explain how they got it and indicate how confident they are in its accuracy. This encourages openness and helps them work effectively together, providing the right basis for developing a strong team on growth management.

Summary Prioritizing between growth opportunities is a key decision point in implementing growth management. It has to be done professionally, based on objective data and consistent criteria. The chosen pilot project should ideally cover as many of the key areas of the business as possible. This exposes a large section of the company to growth management, increasing the company’s ability to use it quickly and effectively. Consequently not only does the choice of the pilot have to be well managed and produce the right answer (choice of pilot), the way in which the decision is taken has to be seen by everyone to be supportive and in line with Growth Management principles.

CHAPTER 7

Controlled Creativity Objectives • Provide the basis for developing customer relevant propositions • Outline the need and context for creativity • Introduce some established tools and techniques to generate creative ideas Having chosen a growth opportunity to exploit this and the next two chapters show how to capitalize on it. Although many companies can see the same market opportunities, those that win also have the critical ability to develop and launch great propositions quickly. In summary developing ideas into propositions is a three stage process, as shown in Figure 7.1. This chapter covers the first step and how you can help increase the “controlled” creativity of your business. Whacky ideas rarely produce great, sustainable propositions that you can build on. Controlled creativity has far more chance of success for most growth opportunities. But you need to set the right conditions for controlled creativity. This controlled creativity has to drive a compelling customer offer, and its launch. How do you do this? Figure 7.2 below gives a suggested structure.

Structured timetable Developing a structured timetable to capitalize on the growth opportunity is usually straightforward. Some opportunities will have a “natural” launch date, others need to be set based on the amount of work required to define, develop and launch a compelling proposition. Finally, when you know that there is a race to be the first to get into an emerging market, then time in itself becomes a key factor. Whatever the basis for defining the required launch date, a structured timetable is required to manage the project and ensure accountability by individual and team. Project management and critical path analysis are key tools in defining who does what by when. 73

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Check assumptions & scoping

Controlled creativity Proposition plan ‘‘Mini business’’

Launch plan ‘‘Take It To Market’’

Feedback

Figure 7.1 Developing ideas: 3 stages

How

Structured timetable

Growth opportunity scale Enablers & known assumptions / conditions

Ideas generation

Refinement

Final compelling proposition

Figure 7.2 Controlled creativity process stages

Growth opportunity scoping document

Controlled Creativity

Test assumptions and scoping Scoping is a “structured brief”: it defines in broad terms the specific growth opportunity. The scope indicates the type of solution, its scale and key assumptions of what is included and excluded. (For example specific countries may be excluded or specific market segments.) Scoping is necessary to ensure the ideas generated stay focused on the opportunity. However, if the scope as defined restricts the development of a sustainable and compelling solution then it may need to be re-worked using tools such as Boundary Examination and Assumption Surfacing (see below). Scoping must be accurate otherwise it will produce the obvious: rubbish in – rubbish out. The starting point for scoping is a quick double check of the assumptions used in selecting the opportunity in the first place. This does not have to be a major review – the detailed work around the project will be done in the next section. What is needed here is a summary that is agreed by the board and senior directors of the company of the opportunity and clear statements of the underlying assumptions. The scope of the project can be set out in much the same way as an advertising brief. The fictitious example in Table 7.1 below for a project for Widgets shows how an initial scope could be laid out. When stating the key assumptions you should highlight anything that impacts how the solution will be delivered. For example, use of existing financial reporting systems, sales force or distribution systems. It is essential to know which of the client’s existing “people, processes and propositions” are essential to the successful introduction of a compelling proposition. These must be clearly stated to ensure that all the necessary resources are available. These key assumptions need to be tested and refined continuously during project development. You will need to adjust this example brief for each specific opportunity. This or a similar way of summarizing the scope of the project provides the basis for the team to start work. As the team develops a compelling customer proposition it will check, refine and correct the assumptions and data included in the scope. Any key issues or differences that arise between the initial scope and the proposition as it develops need to be discussed and raised with the Board/ senior directors to adjust expectations and/or the level of support needed.

Controlled creativity Most solutions to growth opportunities tend to be derived from existing products or services. However all new markets can require all new

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Table 7.1 Scoping the project Scoping document growth opportunity: Enter the Widget market Scale: The market is worth £150m at wholesale prices annually equal to 5m units. The company is targeting a 2% market share in 24 months (£3m revenue), 100,000 units, with a 35% gross margin. Sales are expected from our existing customers, with additional sales to a new sector (Gadget repairers). Scope: Widgets are used in gadgets in manufacturing and in after sales support (repair and maintenance). Why this opportunity? The company has outstanding relationships with customers who buy widgets in large volume. The company can use its strong reputation and brand to secure a small but profitable share of this adjacent market. Although the sector is well established, customers have told us that their existing suppliers do not give them the service and back up they get from us. The company needs to expand its product range to compensate for low margin and declining sales of Dodgits. Target Customers: Large gadget manufacturers Widget retailers Gadget repair shops Target customer needs: Gadget Manufacturers – multi-format and high technology plus bulk deal pricing. Widget retailers – wide range availability, stock cleansing, promotional support, low price. Gadget repair shops – local availability, wide range (including back catalogue), tech support. Existing competitors: Key competitors are: Pinkerton, Anglo, Saxon, Cooke, National and Norton Key assumptions: Our brand and customer service will attract existing customers to consider our widgets. Competitor reaction will be low (a 2% share will not materially affect their volumes). Our current IT systems and reporting will not need any significant re-programming. Warehousing and distribution capacity can be released through pruning unprofitable business. Key issues: Finding a low cost source for widgets requires specialist purchasing and sourcing capability: this might be achieved by permanent/interim/consultancy/third party supplier. Resources needed: No significant investment in processes. Financial investment in stock estimated at £400,000. Other resources: Growth Project Team and Champion – time needed to be established, with modest re-allocation of some existing workload. All team members retain day job responsibilities as part of the Two Hats approach.

solutions. The degree of all new thinking required to develop a proposition therefore varies. The objective of controlled creativity is to bring creativity to aspects of the project provided so that it adds customer value. There is no point in being creative just for the sake of it. Creativity needs to help differentiate the proposition from others in the market in

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Controlled Creativity a way that customers value and pay for: driving increased sales and/or increased margin. But you can’t just make people “creative” at the flick of a switch. The trick is to set up the conditions that allow everyone to be more creative than normal: reducing risk, encouraging whacky “out of the box” thinking. Figure 7.3 shows what is needed to help get the best results. Some people are not naturally creative but are excellent at developing and building on initial thoughts and concepts. Others are great at initial concepts but not so good with the detail of turning the idea into a formal proposition. Either way, creativity requires a blend of team members and a clear brief of the required outcome. So it all comes down to having a clear brief for the growth opportunity, creating the right environment for creativity and using some of the many tools available to encourage new ideas and development of existing propositions. Some of the more common tools are listed later in the chapter. In effect creativity needs to be constrained! It needs to be creativity in

Growth opportunity scoping document

Key Input

What

Who

Identify key skills needed Functional, External, Catalysts

Project team

Define mix of skills for ideas generation Attitude / Teamwork Positive, creative, open

Add people to help generate ideas

Output Potential ideas and concepts Project team Development of the best idea into the Proposition

Figure 7.3 Supporting creativity

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Growth Management context. Letting ideas flow is fine but you need to keep them relevant to customer needs and to the ability of the company to deliver.

Initial ideas New and innovative ideas can be developed on all aspects of the proposition. If the company is responding to a market trend or development, often existing products and services are adjusted and refined to meet emerging customer needs rather than being all new. In generating new ideas you and the team need to think like a customer. You need to understand their real and perceived needs, how they use the products or services and what benefits they get as a result. You and the team need to consider therefore all the elements of the proposition to customers (product, pricing, packaging, promotions, technology, branding, delivery, availability, technical support, administration etc) to see where innovative ideas and refinements can help generate a compelling proposition.

Getting the right people involved The Project team is responsible for defining who should be involved in each stage from initial ideas generation through to development of the preferred idea into a compelling proposition. This does not mean that all of the project team are involved in every step. In some cases creativity can be constrained by having too many of the project team (usually do-ers and developers) involved in ideas generation. You should also take a look at the “wider business” to bring in specialist support and different perspectives. Suppliers and customers are a great source of ideas. These external inputs have to be managed by the team. If you ask for outside support, the worst thing you can do is ignore the input and not treat it with the due consideration that your customers and suppliers expect. Potential contributors to help develop ideas are outlined in Table 7.2 (the list is not exhaustive). Who you choose as contributors will vary by each specific growth opportunity and the degree of inventiveness required. The project team with support from the champion need to be clear about what help is needed, who needs to be involved and how the input is to be managed. It is also likely that you will need to have ideas generated for each element of the proposition so consider running separate sessions. This helps keep people

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Table 7.2 Additional contributors for ideas Types of contributors Internal Select key employees with key skills and knowledge across the business

Shareholders: company owners, selected key investors

Friends and family

External Customers Current customers Lapsed customers Prospective customers “Rejectors” Component suppliers Key small scale specialists Major suppliers Logistics suppliers

Channels to market (dealers, shops, direct subsidiaries, third party agents)

Trade associations in your sector/associated sectors

Benefit/Cost (in italics)

Use/level of involvement

Maintained confidentiality, internal knowledge of company capability and historical markets “the art of the achievable Pre conceived ideas and perspectives, constrained thinking? Keep them informed and involved, semi external perspective, encouraging Too “top down”, can constrain creativity Outsider view from insiders. Semi consumer perspective Subjective, relatively uniformed views

High, broad ranging

Great insight on needs and expectations, qualitative input, views on the important and not so important elements of the proposition May have “axes to grind” Introduction of new thinking and alternative solutions to existing practice. Access to their R&D, development of long term relationships Confidentiality risk, focus on ideas that suit the supplier not the customer Inclusion of channel needs as well as customer needs, opportunities to lower cost or increase margins through the channel Confidentiality risk, focus on ideas that suit the channel not the customer Add Government/Legislative perspective, can provide basis for shared development costs on non competing/differentiating elements Potentially very high risk of confidentiality

Highly focussed, input must be carefully controlled to manage expectations

Low, focused input

Low and selective: early view on initial concepts and direction

Medium level, dependent on trust and capability High level involvement if joint funding and development occurs

Medium level, dependent on trust and capability High level involvement if joint funding and development occurs

Very selective only

Continued

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Table 7.2 Continued Types of contributors

Benefit/Cost (in italics)

Use/level of involvement

Academia: universities/ colleges/schools

Leading edge ideas and technologies Ability to commercialize Customer bias, clarity on differentiating elements, ability to communicate and market the new proposition/idea, innovative ways of reaching new and existing customers Cost and added complexity, desire to “sell hours/communications solutions” Additional perspectives, provide differentiation, refinement of solutions Handling a guru as a dominant input, commercialization/ pragmatism

Varied dependent on type of opportunity and value of academic input Medium, input on presentation of the proposition Selective input as an outsider/customer on the proposition itself

Agencies: advertising, PR, Brand, consultancies

Sector Gurus: those with specialist knowledge and insights

Medium: but highly targeted and focused

focused and fresh: creativity needs an open and vibrant atmosphere so try using separate sessions – product, promotions, logistics, branding etc.

Attitude and teamwork Having defined who needs to be involved in generating ideas, the Project Team needs to decide how to get the best out of them. In addition to providing the scale and context of the opportunity, and the scope of the project, a constructive, positive and open approach is important to get the best out of people. You can use the basic principles shown in the table on page 28, to help set the right tone and style for creative meetings. Additionally some of the specific creative tools you can use require particular rules. For example, brainstorming is a great tool but it is often poorly used with limited effect if those involved do not respect and follow the need to delay comments and criticism on each idea until the creative session has finished.

An example I remember trying to create a new name for a major new product. We had tried various brainstorming ideas internally and basically got

Controlled Creativity nothing new or interesting. So we decided to uses a specialist naming agency. These guys specialize in making up suitable names for products and services in all walks of life. What was interesting was how they organized the event. As the client company we were asked to turn up at 6:30 pm ready for an evening session. I was a bit intrigued on two counts i) that such an early start timing implied a long and heavy creative session and ii) that the agency felt that evening hours were the most productive. We turned up on time, to be greeted by the agency and ushered into a room with a great big one way mirror on one wall – we could see into a room with comfy chairs around a large table. At various points in the room were flip charts and loads of marker pens. Otherwise the room was bare, no pictures, no other stimuli. This was the “creative” room. We were briefed as to what to expect. Shortly a group of six to eight “ordinary” people would walk in, make themselves comfortable and introduce themselves on first name basis. Each person was carefully chosen to provide different perspectives. They came from a variety of jobs; they were chosen for being creative, they were of different ages, gender and race, most of them had done similar product and brand naming sessions before. They made themselves comfortable, got themselves drinks and snacks from beer to tea, from chocolate digestives and hob knobs to pizza and fruit. They settled themselves down and just started chatting. Five minutes later in walks a facilitator. She set the ground rules – very similar to brainstorming. Then she dropped the client bombshell. Our product was to be one of a sequence of products that needed a name. Despite the cost we would not be the centre of attention for the whole evening! No more than twenty minutes was to be given to each product, five minutes break between each product, and the team were to run straight through for over two hours. We were one of six products that night. Each product concept was outlined briefly with its target market by the facilitator; just enough information to frame ideas, not too much as to confuse. I can’t recall if we followed nappies, toilet cleaners or frozen peas; or if we were before bed linen, sugary drinks or athlete’s foot cream. What I do recall is the sheer vibrancy and creativity of that group. They were ordinary people producing extraordinary results. Words tumbled from their mouths; the facilitator scribbled fast and furiously, adding encouragement and ideas as the pace slowed. Descriptive words, prosaic words, exciting

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Growth Management words, involving words, demanding words, crazy words, jumbled up words and plain mixtures of letters with no meaning. But the result? Hello “Mondeo”: born around eight o’clock one weekday evening in a central London room just off Soho. Appended to one of the most outstanding cars it helped generate a class leading international brand. It became a name for middle Britain: “Mondeo Man”. It was a meaningless set of letters, but it spoke of a world product for a world market in many languages. So ... what are the lessons? Targeted specialist contributions can be very helpful to support the overall proposition. Those involved need to be kept on track, need to keep focused and remain “fresh”. The creative process needs to be set up properly – it must be carefully placed in context. The hard work is not the creativity, it is in setting up the context, constraints, enablers and target market that the hard ground work is done. Use contributors selectively to help set your products and services apart. Know when to use them and how to use them. Just because a project team has been formed around a growth opportunity does not mean everything must be left to them. Encourage them to work as a team and ask for selective resources when needed.

Some tools and techniques There are a number of tools and techniques available to help you set the context for creative thinking and action. Some of these may be very familiar to you; others less so. Some are concerned with supporting the scope and context of the opportunity; others target pure creative thinking and ideas generation. Many of these tools can be used on a number of different aspects of controlled creativity, so they have been grouped in Figure 7.4 for convenience. The purpose of this book is to focus on growth management, not the republishing of acknowledged tools and techniques. It is far better to encourage you to check them out for yourself and to try them in practice. There are a number of websites that provide excellent support in explaining these and other tools. All you have to do is type “creativity tools” or something similar into a web search engine to get a raft of support from sites such as www.mycoted.com. The key to using most of these tools is simple. Don’t cut corners, use the right tool for the job (don’t use a screwdriver to hammer a nail), and get yourself familiar with the tool before you use it on a real live project.

Team & process management

Considerations

Growth management Problem centred leadership

Stakeholder analysis War gaming Personal balance sheet CATWOE

5 W's & How In what way might 5 Whys

Project management Critical path PDCA

Controlled creativity

Fishbone ishikawa positive and negative Provocation SWOT Problem definition Boundaries definition Paradigms Assumption surfacing

Problem definition and scoping

Laddering Chunking 6 hat thinking Contradiction analysis Problem reversal Super heros Brainstorming SCAMPER(R) Osborne check list Simple rating methods

Tools are not purely sector specific

Figure 7.4 Controlled creativity – established tools and techniques

Creativity

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Summary Developing the right conditions for Controlled Creativity is a core element of Growth Management and the Two Hats Approach. This starts with identifying the scope and context – to ensure that the team has a consistent and comprehensive view of the opportunity. It includes identifying who should be involved as contributors, their attitudes and teamwork, and the tools and techniques needed to help. Controlled Creativity is needed for all elements of the customer proposition to differentiate it from the competition and demonstrate added customer value. It is a key requirement for the next two chapters: the Proposition Plan and the Launch or “Take It to Market” plan.

CHAPTER 8

Proposition Plan Objectives • • • •

Define a Proposition Plan Provide a structure for developing a Proposition Plan Understand the role of a Proposition Plan in the business Define how a Proposition Plan is produced

Definition A proposition plan is effectively a mini business plan. It treats the growth opportunity as a small business in its own right since to provide sustainable growth for the business the opportunity should provide revenues and profits for a number of years. A proposition is a product or service that the company offers to customers. It includes the product or service and any additional elements (such as technical support, customer service support, exceptional availability) which support the sale and add value for the customer. A proposition plan identifies all the key elements of the proposition that provides customer value. It identifies how the proposition is different from competitor offers, how it is produced, developed, distributed and marketed.

What does a proposition plan do? A proposition plan is a proactive tool for the business. It provides a structure for collating and reviewing data and information. It is a living document that should be kept up to date with notes and comments scribbled in the margins. It should be formally updated at regular intervals. During the development of a new proposition for a growth opportunity the proposition plan also provides a rough structure for the project team. It supports “joined up thinking” by making the company take decisions in context. For example: if you want to raise prices, then you do so in the context of the total proposition, considering what the impact on volumes 85

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Growth Management may be, considering the net improvement in margin, and possible competitor reaction as well as customer impact. It encourages the whole team to consider the complete “business” of the proposition. It also helps develop their understanding of the (proposition as a) business and their roles. The plan provides the basis for better and faster decision taking, and speeds up the process of bringing new propositions to market. It is a great tool in building the knowledge, speed and accuracy of decision taking by the organization. Caution: ... a proposition plan must not be produced for its own sake. It needs to be concise and relevant to making decisions and driving action. It needs to be easy to read and very easy to update. It is not something to be proud of ... it is merely a tool ... the pride comes in the results it helps produce – revenues, profits and fulfilled customers.

Constructing the plan You should of course have a proposition plan for every one of your major propositions for customers. However, here we are just going to focus on proposition plans for growth opportunities and in particular as part of installing Growth Management and a Two Hats Approach. The format and structure will be the same. The only thing that is normally different is the level of data and information available. New propositions and growth opportunities don’t have the same level of information to hand as established propositions. As you extend the use of the proposition plan to all your propositions over time, you should be as consistent as possible to ensure: • • • • •

Consistency of approach Customer focused solutions Ease of comparison proposition to proposition Faster development of management capability on managing growth Better management of knowledge within the client company.

Contents The example below provides a basic structure for a Proposition Plan: 1. Introduction & Executive Summary 2. Industry Structure 3. Market

Proposition Plan • Segments • Customer needs • Channel needs 4. 5. 6. 7.

Manufacturers/Suppliers Competitors Competitor Propositions (Your) Proposition Strategies

• • • • • • • • •

Target market Product Brand Sourcing Operations Logistics Pricing Sales Communications

8. Business Case for three years minimum • Revenues, Direct costs, Indirect costs, Investment costs Depending on the specific Growth Opportunity you may need to add further sections. For example, you may need to include sections on: Corporate Social Responsibility Research Development Channel Management Partnering/Associations

Sustainability Waste Management PR Intellectual Property

Example plan Figure 8.1 below provides an example layout of a proposition plan, summarizing what needs to be included by section on the left hand and right hand pages. The example covers most aspects of product based propositions where products are bought in and subsequently repackaged/redistributed. For service propositions you will need to adjust the format in places. Additionally

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Growth Management Cover page

Left hand page

Right hand page

Left hand page

"Subject" proposition plan

Contents listing

Executive summary

2

3

Industry structure chart tables and data

title page

Suppliers

Suppliers

4

Competitors

Right hand page

Left hand page

Market Data, charts, graphs Scale, trends

Right hand page

Market

Industry structure What sector are we in? What are the layers of the industry (suppliers, manufacturers, distributors, channels, customers)

Ranking of customer and channel needs Trends and future projections

Segments, Scale,Sub segments Trends and opportunities Core and differentiating customer and channel needs, prioritised

5

6

7

Competitor propositions

Competitor propositions

Competitors

Data,charts, graphs Scale, trends

Key suppliers Benefits / costs Quality / relationships

Data,charts, graphs scale, trends "Mapping of positions"

who, what, where threats / opportunities war gaming ability to react Relative levels of influence in the market

Data on core proposition elements: pricing product capability, channels to market Branding & marketing, market shares, volumes

Relative customervalue, core propositions, brand strength, threats and opportunities

8

9

10

11

12

13

Target market

Target market

data, segmentation charts, tables needs analysis

Rationale for target market specify core needs and differentiating needs Key trends

Data and Charts covering Proposed "Product" offer, range, quality, features and benefits

rationale for product as specificed, ability to meet and exceed customer needs chosen Differential advantage vs competition

data on chosen positioning, core and differentiating elements, brand strength

rationale for chosen brand. If multiple brands required provide rationale (premium standard, economy)

14

15

16

17

18

19

Operations

Operations

Product

Sourcing

Production / operations charts, tables and data Resources by activity , customer value added

Rationale for in house versus outsourced operations Relative costs and benefits Clear rationale of customer value added

Data tables on suppliers’ prices and discounts Key benchmark on quality, delivery, ISO 9001 etc

20

21

22

Pricing Data tables on price and discounts Key benchmark pricing data Data on special discounts / volume related etc

Product

Sourcing Strategy, rationale for chosen supplierss, rationale for costs (prices) strucutures, relevance to target market needs Long / short term relationship 23

Pricing

Sales

Sales

Strategy, rationale for chosen benchmarks, rationale for discount strucutures, relevance to target market needs

charts on sales organisation and channels to market Productmix and volume assumptions by customer / segment

Rationale for choice of key customers / segments. Sales strategy by channel (direct, indirect, web, etc) Sales objectives by product and customer

26

27

28

29

Marketing communications

Marketing communications

Business case financials

Business case financials

Timetable of communications costings by subject area. Media plansexpenditure by medium and month / quarter

Rationale for marcoms key messages and core audiences and mix of spend Ability to reach audience and generate awareness and action

P&L, Balance Sheet and Cash Flow projections for 3 years

Profitability and RoCE Relativesensitivity to changes in prices, costs, volumes etc Investment levels Risk and reward

32

33

34

35

Brand

Logistics charts on chosen logistics, routes, structure, operations and costs speed, security, damage control 24

Promotions Charts, timings and tables on Launch and ongoing promotions required to accelerate sales from launch

Brand

Logistics Key customer benefits provided to the propostionby logistics Rationale on how logistics integrates with overall proposition

25

Promotions Rationale for launch and ongoing promotions support Prioritised actions and value to customers as part of the proposition

30

31

Appendices if needed

Back page

36

37

Figure 8.1 Proposition plan: example layout

in sectors such as pharmaceuticals, it may be necessary to have a section on research and development and testing. Businesses that manufacture their products will need a section on manufacturing.

Format A proposition plan uses data to drive information and to interpret the data to deliver a differentiated and compelling proposition that customers’ value and will pay for. To keep the proposition simple to read and use every day,

Proposition Plan each section must not be more than one page of text and one page of data/ charts/tables. You should set out data, charts and core information on the left hand page. Then use the right hand facing page to explain and interpret the data. This makes it easy to set out the key points and easy for everyone to see how facts drive the decisions. An example is given on the next two pages, to show how a left hand page (Figure 8.2)/right hand page format makes it easier to show data and interpretations/conclusions. At the bottom of each right hand page should be a “Key Learning” box. This summarizes the key points from the page which impact the proposition to customers. The box serves four purposes, it: • ensures that the key important facts and interpretations are highlighted • allows readers to quickly understand the salient points prior to reading the plan in detail • provides a basis for fast re-reading as a reminder of key points when making decisions • helps structure the Executive Summary. In some exceptional cases you may need to split a section onto two pages – but this should be an extreme measure as it will complicate the plan and make it more difficult to see the critical few key issues that drive a successful proposition.

Developing each section of the plan The Project Team is responsible for the co-ordination and writing of the plan, all key functions in the company actively provide input to it and agree: • data, analysis, content, interpretations and conclusions • the proposition • actions, learning and feedback. The matrix in Figure 8.3 below gives an example of a Project Team and who is responsible for what in developing the Proposition Plan. Clearly the roles and responsibilities can vary depending on the specific growth opportunity and individual capabilities in the team. All functions should use the Proposition Plan as a template to structure their work and produce a realistic and practical plan.

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Growth Management Example: left hand page UK widget unit sales volume 5.2 5.1 5 4.9 4.8 4.7 4.6 2002

2003

2004

2005

2006

% replacement level

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

40 35 30 25 20 15 10 5 0

1996

Volume (mils units)

% replacement level

Usage before replacement (hours) 450 400 350 300 250 200 150 100

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

50 0

Usage before replacement (hours)

% response 90 80 70 60 50 40 30 20 10 0 Speed of function

Price

% response

Figure 8.2 UK Widget Market

Availability

Application range

Proposition Plan Example right hand page: using the fictional “Widgets” UK Market – Widget market Scale • The Widget market in the UK is estimated at 5 million units annually, within a range between 4.5–5.5 million units. At wholesales prices the market is £150 million, with retail revenues of over £200m annually. • CompoCo market share has increased to 7.3% from 6.3% over the past few years, despite this growth it is not a major supplier to the industry. • Extrapolating from these figures suggests a European Widget market of approximately 25–30 million units annually. • Gadgets using widgets are used in many sectors from healthcare to computing, from industrial to consumer and from stand alone to complex integrated applications. Trends • Increased Gadget specification and technology creates greater stress on widget performance and increases the need for higher quality, more powerful widgets. • Replacement levels have fallen consistently from 36% in 1996 to 28% in 2006 due to increased OE fitment of more powerful, higher technology widgets. Additionally, the average hour’s usage before a replacement widget is fitted increased from 250 hours in 1996 to 425 in 2006 – potentially reducing replacements by 40%. • Widgets are classified as hazardous waste which needs to be disposed of correctly. Increased compliance with Health & Safety and Environmental legislation is required by the industry, however no material change to current practice is needed at this stage. Needs • Research identified customers need to feel confident that their widget supplier gets the basics right. The 2 principle factors are: “function speed” and competitive prices. Additionally, excellent availability and comprehensive range are important when choosing a widget supplier (see bottom box facing page “% response” relating customer market research). • Replacement widgets are routine maintenance purchases based on known hours used. Almost 25% of widgets are fitted as DIY by consumers in low tech Gadgets; however, this is reducing due the increasing complexity of Gadget performance and widget functionality which increasingly requires professional widget replacement. • Used Gadget traders operating on slender margins (£15 per unit) continue to need replacement widgets that only meet minimum standards – 30 hour operating usage warranty. Lowest cost for basic functionality is needed for this segment. • Businesses using multiple Gadgets tend to require either an OE quality equivalent where the Gadget is under 18 months old and a reduced specification but “good” quality widget for Gadgets over 18 months old. A high proportion of widget replacements are preventative replacements during routine maintenance. • Actual failure levels are low, but speed reduces after prescribed usage times have been exceeded, resulting in fairly consistent widget sales by month (little seasonality). Segmentation • OE quality widgets are the largest segment at 75%, followed by OE Premium (faster longer life units) at 15%, and budget widgets accounting for 10%. Key Learning: The widget market is stable at around 5 million units, although replacement frequency is falling. Sub-segments exist relating to customer choice between cost and quality. Almost 25% of widgets are fitted by consumers (DIY) but this is declining as Gadget complexity increases.

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Figure 8.3 Responsibilities by element of a proposition plan

Writing the plan – principles The plan must be based on factual data and information. The facing pages for each section indicate the type of data relevant to each section. Without factual information the plan remains subjective and potentially inaccurate. Factual data and information needs to be interpreted with objective reasoned arguments. You need to be careful to remain objective and avoid preconceived assumptions. Anything which does not fit needs to be double checked to see if they indicate changes in the market, or if they are simply wrong. With the facts on the facing page, the narrative should highlight key points and interpretations from the customers’ view. In many industries and sectors detailed facts are not available. So you will need to use specific research, your best judgement, and “constructing” probable data from known facts.

Proposition Plan For example, a small business had no idea what the size of the local market was for its mortgage services. So to get some idea it constructed the information from national statistics. It simply adjusted the known national data to local information based for a number of known facts or educated estimates – the population of the region, the number of estate agents, an estimate of the number of mortgage advisors by estate agent and those operating independently or via major financial institutions. It knew the data was not factual, but it also knew it was a lot better than a guess! It gave them a range on the size of the opportunity, and the confidence to progress to a successful conclusion.

Working tool not shelf fodder The proposition plan should be used to make decisions on any subject affecting the proposition. It helps make sure all decisions are taken in context. For example, price increases are only implemented in full appreciation of the impacts on volume and competitive position. This means you need to keep the proposition plan up to date. However updating should not become a job in itself. Ideally the plan should be kept on a computer shared drive with updates authorized by the Project Team. Any proposition plan that sits on a shelf gathering dust is a waste of time and resources and shows that the Two Hats Approach is not working effectively! It may look good as a piece of work ... but be proud of how and what it helps you deliver to the business not what it is itself.

Formal review You must keep the proposition plan as a living document – so it needs to be reviewed regularly. An effective plan is up to date. It describes a business, and provides the ideal basis for reviewing progress and seeing (objectively) how the project team has performed. The frequency of these reviews needs to be based on the circumstances of your business and organization. These formal reviews should be lead by the project team leader and attended by the board and divisional/functional heads. This will ensure that all key areas of the business buy into the update and ensure resources continue to be allocated in line with the agreed objectives.

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Summary Project teams working on growth opportunities need a structure to work within. A proposition plan provides the basis for analyzing the opportunity objectively and for developing a customer valued compelling proposition. It is a key tool in providing structure to a Two Hats Approach and specifically Growth Management. This chapter has provided the basis for introducing and using proposition plans effectively.

CHAPTER 9

Take It To Market Plan Objectives • Provide a powerful and controlled launch for the Growth Proposition • Ensure “joined up thinking and actions” between the project team and the rest of the company • Recognize the four key stages in a Take It To Market Plan

Definition A Take It To Market Plan is different from a Proposition Plan. The Proposition Plan outlines the proposition as a business, showing market development and financial returns over a number of years. The Take It To Market Plan gives the proposition the best possible market launch and involves three key phases as shown in Figure 9.1.

Purpose of a Take It To Market Plan Everyone wants a great launch for their growth projects. But there is a famous phrase to remember: if it’s a choice between an OK launch of a brilliant proposition, or a brilliant launch of an OK proposition, give me the brilliant launch every time. This well known sentiment reflects the fact that for many opportunities your customers will not use the finer points of the proposition every day – they mainly use and value the mainstream attributes. Mobile phones are a classic case. For most of us the finer features of the latest mobiles are sexy, add to our image and solve problems we never knew we had. So at time of purchase many customers trade finer features for availability, marketing image, brand, reliability and core functionality. The quality of the launch is therefore critical for the proposition: from advertising and marketing messages to product availability and the ability of sales staff to positively sell and sound knowledgeable – without these the “brilliant” product proposition is left floundering. 95

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Growth Management Take IT To Market Plan Phases & team support The project team Propositiion plan Key input

Take it to market plan Translates the proposition plan to launch action

Key additional support: internal & external

1. Set up: Initial Plan indicated key actions and resources

The implementation team 2. Internl launch: Establish the implementation team, broad based buy in 3. ‘‘Do it’’ Detailed and timed activities by function leading to the External ‘‘Customer’’ launch

Figure 9.1 Take It To Market Plan

Put simply the purpose of the Take It To Market Plan is to translate the Proposition Plan into a specific set of co-ordinated actions that launch all aspects of the proposition to the market brilliantly and to provide feedback on the launch process for future projects. It is a key stage in combining the actions of the growth project team with other people in the company working on their day jobs, and uses the Proposition Plan as the starting point. The Take It To Market Plan is “where the rubber hits the road”. For many people who are used to getting on and doing “stuff” this is a more operational element of “Growth Management”. Unfortunately many companies fall down at this key hurdle. They are predominantly operators that run the day job. They focus on deliverables and tend not to develop formal plans because they work on the established business with its established processes and procedures. They like solutions even when the problem is not fully defined! They rush in anxious to get their proposition to market without considering sufficiently the lasting impression they create. For many people used to operating the day job on set processes and procedures, the Take It To Market Plan provides the sort of structure they like to work with. It identifies specific activities timed out with agreed outputs. As a result the Take It To Market Plan also has a key function in helping

Take It To Market Plan to bind the wider company into the growth opportunity and in promoting Growth Management and the Two Hats approach. As elsewhere in life “first impressions count”. If you launch your proposition without careful planning five things will result: i. customers will be less than fully impressed – they may even be put off for life ii. you will have wasted a significant proportion of your investment in the proposition iii. you will fail to maximize the profit potential iv. as a company you will not implement the Two Hats Approach properly, negatively impacting the ability of your organization to win v. you and your colleagues will not maximize your own individual capabilities to grow businesses. The Take It To Market plan outlines the key steps required in launching the proposition to the market with optimum impact. It provides a clear basis for team activity, detailing resources (all types as needed), timings and objectives. It must be developed by the project team, and signed off by the champion and the board. This may seem a bit heavy handed ... but it is not. It is absolutely essential. Because the Take It To Market Plan will involve all key functions in the company, it needs to be co-ordinated not only to achieve its aims but also because it needs to fit in with all the other existing activities the company is doing: most of which will be on day to day operations. Consequently getting buy-in from all the key functional areas and a commitment to deliver the Take It To Market Plan on time, on quality, and with enthusiasm, is critical – critical for the proposition and critical for the ongoing cash position of the company. There is no point in having a fantastic Take It To Market Plan that delivers a superb proposition against a growth opportunity only for the day to day business to suffer from lack of focus. But this happens in real life. New propositions are often seen within the company as the golden bullet: proposition X will be our saviour! I’ve seen it time and again. Companies in the throes of new product launches take their eye off the ball on the current business. They fail to recognize and manage the substitution of customers from existing propositions to the new propositions. They take the easier sell of the new proposition over all the existing propositions – even though for many existing customers existing propositions are the best solution for them. It can even produce major issues for your stock of existing products if the new proposition effectively substitutes them.

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Growth Management Growth through proposition proliferation does not necessarily generate sustainable growth. Increased choice for customers increases their expectations and their options for brand and proposition promiscuity. We can see this in every walk of life. I want a cup of coffee ... oh hell! I can manage de-caf or regular, I can even manage with or without milk, but this is child’s play decision taking in the world of the coffee house. We all know the issue: ever played the game in America when ordering food, of trying to ensure the waiter/waitress cannot ask you a follow-on question to what would you like to order? I swear it’s impossible to win. Perhaps a chess grand master could figure it out, but not the average consumer. A friend of mine recently reminded me of a great experience he had had in an Italian restaurant. He had asked a major customer of his – an American businessman – to go to dinner with them whilst he was in their city (Bologna) on a business trip. The American accepted the kind invitation. Having studied the menu and being used to ordering exactly what he wanted, the American placed his order with the waiter, being very precise in his choice. When he finished the waiter said firmly “No, that’s not possible”. Just before embarking on the “I’m the customer here” routine, the American wisely asked why the restaurant would not cook to his request, given that he had indeed ordered off the menu. The reply was startling in its customer focused simplicity. “Because if you order that combination sir, it will be difficult to digest and you will have a bad night” replied the waiter. In developing growth propositions and fulfilling customer requests we all need to go beyond what is technically feasible (Yes, I can cook that combination) to define what is of value (but try this it won’t give your stomach a work out!). So ... what do we learn ... that choice is good up to a point? That managing choice and providing the right information for customers to make the right informed choice is essential? So ... in a world of mass propositions how you launch and promote your proposition from the start is critical. The launch helps your proposition stand out and helps you and your customers understand it and position it correctly against other offers. The launch cannot be left to chance, and by the way the “start” begins internally before you even think of exposing it to customers and prospects. Given the importance of the launch, the Take It To Market plan must be agreed at the outset by the board and the directors of the relevant departmental teams. Once agreed the implementation team take responsibility for their individual elements under the co-ordination of (usually) the project manager. The project manager has overseen the development of the proposition plan and now is authorized by the company to manage

Take It To Market Plan and direct the Take It To Market team and has responsibility for the launch against the agreed objectives. You can if you want to have a different project manager for the proposition and implementation stages. However if you do you will lose some consistency and run the risk of people blaming each other. Keeping the core team the same helps focus accountability and responsibility as well as improving the individual skills and capabilities.

Sign up So what specifically are the Board, functional directors, the champion and project team signing off? In summary the Take It To Market Plan needs to identify the flowing key elements, the: i. market launch date, launch period, launch objectives and the measurement criteria – key performance indicators (KPIs) ii. allocation of agreed resources (people, investment, processes, finance) iii. market launch activities (pre and post the launch date) iv. internal launch date v. key work streams by activity (including drop dead dates after which delay to the launch date is necessary) vi. control process meetings or “gateways” for the Take It To Market Plan (key status meetings and sign off to progress to the next stage). Some of these elements will be identified in the proposition plan, but many specific elements and their timing will not. To bring this all together requires the key phases of the Take It To Market Plan.

The three key phases Phase 1 – set up This phase defines the overall structure and timescales for taking the proposition to market. The project team that has defined the proposition and written it up into the proposition plan needs to be heavily involved in translating the proposition from theory to profitable reality. However, it is likely that you will need to widen the group of people involved to launch the proposition effectively – the implementation team. The first element of the set up phase is to agree and formalize the core outline elements that the company will sign up to delivering.

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Growth Management Setting the market launch date Some propositions will have “natural” launch timings where specific external dates need to be achieved. For example, propositions for Christmas need to be in retailers in August to catch the early shoppers. Other propositions may be less date critical; others may be even more date critical (to coincide with a specific date for a trade event or show). Whatever the date chosen, it must be achievable by all the launch critical elements of the Take It To Market Plan. Long lead elements Working back from the market launch date, the project team needs to identify all key long lead elements (advertising, development and placement, sales training, stock build through the channel(s), etc), and detail the sequence of actions needed to deliver on time. The project team will need to bring in specific support from other functions to confirm the timescales and develop the core activities (work streams) required to launch the proposition (see below). Key work streams These need to be identified for each of the key activities so that all functions recognize the key “drop dead” dates for each activity. Any delay beyond a “drop dead” date means a delay to the launch timing. Clearly, all project plans will include some degree of “recovery” time to accommodate unforeseen issues. But any plan that has too much recovery time will generally be poorly managed as the team will tend not to respect the key decision points as critical to launch success. Consequently you need a balance between time pressure to maintain momentum and time flexibility to allow management around issues. This balance has to be viewed for the company as a whole – not just for this project. Any Take It To Market Plan that has timings and actions that do not recognize the day job as well as the growth project will generate significant friction in the company, will increase employee stress and is likely to increase the “politics” and negativity towards a Two Hats Approach and Growth Management in particular. The control process The project team will need to agree with the champion and the Board how the Take It To Market Plan is to be controlled and managed. This can be easily done within one of the many project management tools and techniques available. However, the critical element for the company at this point is to understand how the team plans to keep the plan on track. This

Take It To Market Plan includes the need to make sure that the project is progressing well between the various phases. There is no point in the team continuing to make progress in some areas and falling behind in others – all activities of the plan need to develop in step with each other. Consequently the project team, the champion and the Board need to agree how often they are to get together to review progress against the plan and agree the basis for signing off the progress made to date. In some circles, these are known as “gateway” reviews. The project needs to show that it has achieved all the critical activities needed up to that date, in order to progress through the “gateway” to the next stage. The concept is simple – all that is required at the start of the process is to agree what criteria are set for each gateway for each key sequence of activities (advertising, sales training, promotions support, stock build, etc). Then at each gateway meeting the project team provides the status. A simple traffic light system is great for highlighting progress quickly and visually. Using the traffic light colours – green (achieved), amber (partially achieved and recovery plan agreed) or red (not achieved, and recovery plan not complete) – makes it easy for everyone to see the status of individual elements and focus their effort on recovery actions. To pass through the gateway and allow the project to continue, the company needs to formally agree that the Take It To Market Plan is on track and therefore that further investment in people, time and money is agreed (everything is “green”). These “gateway” meetings need to be formally identified in the Take It To Market Plan so that all those involved understand the key criteria to be achieved at each stage and the timing of each sign off gateway meeting. This avoids the project running ahead at different speeds, committing valuable company resources without a clear understanding that all elements will be delivered on time and to the required level of quality. The discipline also makes it easier to run the day job and manage the growth proposition at the same time. This is especially important when multiple growth projects are being developed, stretching company resources.

Phase one: set up continued – translating the proposition plan into activities Translating the proposition plan elements into a Take It To Market plan requires the project team to specify how the strategies and policies turn into detailed actions. For example, the pricing policy for the proposition may be agreed as “a 5% retail price premium to Competitor A”. This translates into confirming Competitor A’s retail prices by product (or service), ensuring

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Range: product or service

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Final checks and confirmation by part number and application Adjustment to mix assumptions based on Implementation Team input Final pricing to the agreed policy reflecting latest price movements and market levels Finalized launch offer pricing versus ongoing pricing

Define: message(s), creative, media selection, production, delivery, research, results feedback

Sales training: definition, delivery (product, proposition, market, competition, “why buy”) Objectives by sales team and individual by period Sales scheduling Mix management Incentives: definition, communication, monitoring, reward Agency choice Venue choice Presenters – who? Conference content/style/format Entertainment Timings, running order Feedback from delegates, measurement

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Table 9.1 Continued Element

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Growth Management refer to the element of the proposition (product, pricing, branding, etc) and the area responsible for the work. The third column identifies from the proposition plan the agreed principle or strategy on each element. The fourth column effectively translates the agreed proposition plan elements into activities that have to be done under the Take It To Market plan, and is a high level indication of potential work streams. This initial “translation” should be done by the project team as part of the Set Up phase. It helps the team to start thinking about all the detailed work that needs to be co-ordinated throughout the organization. The more the team works on the detail the more is usually revealed. At this early stage all that is necessary is to get a good idea of the main work needed. It’s a bit like the metaphor of peeling an onion – and in some cases it can even make you cry when you realize how much detail needs to be managed! The above table is indicative only. It provides thought starters on how to get going in translating the proposition plan into specific Take It To Market activities.

Phase one: set up continued – the Take It To Market timetable The initial translation of the proposition plan elements should be used to draft an initial outline for the Take It To Market Plan. Figure 9.2 below uses a simple timetable format, listing all key elements involved in launching the proposition internally and subsequently to the market. At this stage the timetable is not the detailed project work plan that will be needed to control the whole Take It To Market plan – this will be developed with the help of the implementation team. In the example the timing plan starts 60 days before the public launch, and continues through to 60 days after launch. Whilst the length of time will vary, all Take It To Market Plans must include the pre-launch phase, the launch date itself and a post-launch analysis and feedback phase. This implies that there should be one specific launch date: however for many companies the launch is a rolling set of dates as the proposition is revealed to different customer segments (e.g. different countries or regions). Consequently the “launch date” might only refer to the date on which advertising and marketing communications break in mass media, with the actual “on sale” dates rolling out quickly after that. In addition to identifying the specific activities by function, the first line of the chart shows the review/control meetings (gateways) for the senior management sign off, before moving to the next stage of development.

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Phase one: set up continued – selecting the implementation team The Set Up phase needs the project team to indicate who else is needed to support the Take It To Market plan. Although some functions will have had little input to the development of the proposition plan many day to day operational areas will be involved in the launch. For example, the proposition plan will have identified the resources needed to promote the proposition through the relevant channels to market (direct sales, web sales, distributorships, retailers, etc). There may also be the need to generate increased customer awareness and understanding through education and promotions. In both of these cases sales staff will not have been heavily involved in developing the proposition, but they are critical to taking the proposition to market. They will need to be trained fully on the growth opportunity, the market, target customers, their needs, the elements of the proposition, how the proposition differs from competitors to provide a compelling offer to customers, proposition features and benefits, the list goes on ... As a result the key activities referred to in the proposition plan need to be itemized and turned into actions in the Take It to Market Plan, timed and resourced to achieve the external (customer) launch date. The additional people and resources for launch must be agreed and detailed in the plan. In smaller companies this is usually self explanatory. In larger organizations it is important not only to identify what needs to be done but who is to do it, given the other work that they are also responsible for delivering – the day job. Beyond identifying the additional internal people needed, the Take It To Market Plan will also confirm the other launch resources required. These include financial investment, processes, systems, facilities, and outside suppliers (e.g. trade mark agents/lawyers, advertising agencies, specialist support as well as core suppliers). During the Set Up phase most of this information will be taken from the proposition plan, prior to it being checked and refined during (next) Phase 2. Ultimately in signing off the Take It To Market Plan, the Board and directors are committing the company to delivering on the growth opportunity, and to continuing with the Two Hats approach. The additional people involved at this stage become the implementation team. This provides a great opportunity for the company to drive a deep understanding not only of the growth opportunity and the specific proposition developed, but also of the processes and techniques used so far in developing the Growth Management of the company.

Take It To Market Plan The implementation team is a development of the original project team. So it is important for the project team leader to manage the transition to the Take It To Market stage by involving and motivating the wider team. Because the project team has now expanded to include the implementers, it is critical that the original project team do not generate an “us and them” mentality. The whole culture has to remain open and inclusive. A real world illustration: On one occasion I was leading a team in developing a growth project. The members of the project team were excellent and had a great deal of experience. However, as with all teams, each had their own skills and capabilities. Some were quicker at picking up on concepts than others, and some were faster at delivering on the practical aspects than others. As we expanded the team to include the implementers, one of the original project team (we’ll call him Tim) quickly understood what was needed of him technically. So he delivered it. Having done so, he waited for the rest of the team to catch up. He was right in what he did, but he was only partly right. Where he was wrong was in not knowing that what he was specifically tasked to do was only part of the equation. By standing to one side he separated himself from the team, he sent the message that he was smarter than the rest and that he was irritated at having to wait. Tim needed a quiet word to make him realize the negative impact he was having. He denied it vehemently of course: “My work was on time, it is to the right quality and I’m waiting patiently for the other links to be delivered”. “Yes” I replied, “but you’re not helping us implement the Two Hats approach. You’ve only seen half of the job. You need to deliver on your specific role and be a team player by helping everyone else to deliver as well”. Tim changed his ways immediately and helped bring the implementation team together as one unit. Using the old cliché – the team is only as strong as the weakest link. It is the job of everyone to make sure that the implementation team succeeds as a whole on behalf of the total organization. The Take It To Market Plan provides the structure to ensure that in moving from a written proposition plan to a live business the team delivers the best possible result through co-ordinated actions and joined up thinking.

Phase one: set up continued – avoiding the “Not Invented Here” (NIH) syndrome In many companies there is a view that propositions developed in the centre (HQ) are then “thrown over the wall” to the team that has to launch and

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Growth Management run them. This is a crazy waste of resources. It is also guaranteed to generate an Us vs Them mentality – often seen as Not Invented Here (NIH). NIH is a vicious and obnoxious “bindweed” of company life. NIH is notorious for increasing “politics” and massively reducing the chances of success for the company and its shareholders. If things don’t turn out as expected, you just watch the finger pointing, blame and downright sabotage that takes place by one group on the other as they strive to retain their personal credibility at the expense of others. Some companies manage to root it out and avoid it but many suffer from it in one form or another. It stems from poor planning and communications – both of which can be fixed. The Take It To Market Plan is a great help in avoiding NIH. It is a key process in building a seamless team and great communications between proposition development and its subsequent market launch.

Phase two: internal launch – establishing the implementation team Whilst the Project Team is responsible for co-ordinating Phase 1 of the Take It To Market Plan, in Phase 2 it will need to expand those involved to include the implementers. Although some may have been involved during the development of the Proposition Plan, some may be new to the opportunity. An outline structure for the implementation team should be developed by the project team and the champion, based on the Proposition Plan (identifying the key success factors) as part of the Set Up phase. Some of the implementation team may be full time for a short period, but most are likely to retain some or a large part of their day to day responsibilities. This is important to help the company adopt the Two Hats approach in practice. The release of people to the implementation team will need to be agreed by their functional directors (manufacturing, sales, marketing, supply, finance, logistics, etc) and the Board. The directors and the Board need to agree that the team is sufficient to successfully launch the proposition. They must also agree that the full implementation team is needed to Take the Proposition To Market, and that the impact on the day to day operations can be managed without impacting cash into the business. Before the internal launch itself, the functional directors and the project team need to speak to each member of the implementation team and get their buy-in and support for working on the team. Without this there will

Take It To Market Plan undoubtedly be confusion over who is to do what, and how much time is required between the day job and growth: producing friction and the opportunity for some people to take advantage and create mischief and political gain.

Phase two: internal launch – what is the objective of the internal launch? The purpose of the internal launch is to make sure that everyone who will be involved or affected by the Take It To Market Plan is aware of what is expected of them and buys in to their role and responsibilities. Depending on the size of your organization and the scale of the opportunity this will vary from an informal meeting to a major presentation. As such you need to work out how to launch the growth proposition internally. It may be appropriate and important to include key suppliers in the internal launch – particularly those that are important for the launch process (communications, training). Whatever is the correct scale for the internal launch, you will need to view it as another key element in developing the Two Hats approach. It is another chance to “walk the talk”: to show that the company is sticking to the concept of running the day job and separately managing growth, to running Two Hats, and to developing your company’s capability in Growth Management. Consequently, in addition to the obvious operational needs of the internal launch, there are also key process objectives. These include reiteration of the company’s need to drive sustainable growth through: • a continuous stream of relevant opportunities and compelling customer propositions • the separate management of day to day operations and cash management from growth • different management styles between the day job and growth • involvement of everyone in innovation on current business and future propositions • the use of key tools and processes to focus on priorities • the use of the Proposition Plan and Take It To Market Plan. The internal launch is a great opportunity to show that you are continuing to deliver on managing the business under a Two Hats approach. Remember the comments of on page 35 – it’s not just an issue of communicating that

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Growth Management you are going to adopt a new way of working, you have to keep on communicating it and doing it day to day. Skeptics will not be convinced by statements, they will only be convinced (reluctantly) by actions and success. So what seems like a simple internal launch meeting is a great opportunity but also a minefield. Get it wrong and you will lose momentum on the project and on the development of the Two Hats Approach. However, get it right and the team will be filled with renewed vigour and will get enthusiastic support from the wider audience.

Phase two: internal launch – who are the audiences? This may sound like a pretty simple question for an internal launch. The truth is that defining who the audiences are is simple. The tricky bit is in understanding their motivations and attitudes and how best to engage them. Table 9.2 below is intended as a thought starter for you to build on and adjust to your own organization’s needs. It’s based on a mid-sized company and includes some suppliers as internal audiences. The columns under Impact refer to the specific proposition itself as a business (project) as well as the development of Growth Management in the company (process), and are simply graded high, medium or low.

Phase three: do it Do It – getting on and taking the proposition to market requires the project team to work with a broader group of implementers to provide the level of detail and controlled activities needed to produce a truly great launch to customers. As we know, first impressions are important. You need to give the proposition the best possible start in business life. On occasion there are second chances but they are more costly and far less effective than doing it right in the first place. Anyone who has had to go through a product re-launch will tell you that it is doubly hard to get the impact the proposition deserves and needs if you have already tried and (partially) failed once already. Not only have you wasted most of the resources involved in the initial launch, the relative lack of success means that customers and prospects are already aware to some degree that the first launch was less than good. So the re-launch has to work twice as hard to overcome the preconceptions already generated. However in most cases the failure to launch a new proposition first time is usually its death knell – most do not get a second chance.

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Table 9.2 Internal launch: audiences and considerations Impact Audience In the company Employees – those who will be the Implementers

Other employees not directly involved in implementing

Immediate bosses and subordinates of the Implementers

Project team

Considerations

Project

Process

Will be part of the Implementation Team that works with the original Project Team. Will still need to deliver on their day jobs as well as the growth project. Should be excited and interested in working on the project if briefed correctly. They will be keen to understand how the Project Team has worked as well as what it has produced. Some will be looking for senior management endorsement and need to be convinced that working on the Take It To Market proposition is not a “poisoned chalice”.

High

High

This group is interesting and has the widest set of considerations to be accommodated. Some will be very positive about the project and the Take It To Market Process. Of these some will be glad that they are not directly involved (too busy on the day job, concerned about working outside of their comfort zone), others will be concerned that they have not been included in the Implementation Team (why not, why him/her and not me?). Some will be very positive about the project but cynical about the Two Hats process, and others still will be cynical about both. Whatever is the mix of people in each category the Internal Launch must acknowledge and cover off their issues head on. This group is likely to have to pick up some of the work that the implementers are currently doing on the day job. As such they are looking for acknowledgement of their key role in keeping the cash coming in and in providing the spare resources through their extra work that allows the implementers to focus some of their time on the Take It To Market project. They can easily become terrorists to the project and the process if they do not step up to help release resources. The Project Team are presenters for the internal launch meetings as well as an audience.

Low

Medium

High

Medium

Very High

Very High

Continued

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Table 9.2 Continued Impact Audience

Considerations

Project

Process

Board and Senior Directors

They will present the Proposition internally and continue to work as part of the Implementation Team through the Take It To Market stage. They will also be very keen to understand how the senior management of the company supports the internal launch. The Project team will be looking for strong endorsement of the Proposition and their roles in bringing it to the Internal launch stage, and will be keen to be seen by the company in a positive light, and as a great team that the implementers should want to work with. This group is a mixture of pure audience and like the Project Team both presenters and audience. They are interested in consistency of message on the Two Hats Process, both over time and between the presenters and Board. They need to see strong commitment and a drive for results in the Take It To Market stage: as such they want to hear and see enthusiasm and continued support for the proposition and the Two Hats Process. Each functional director needs to be seen to sign up fully to their function’s support for the project, in common with all other directors.

Medium

High

Selected key shareholders will be interested in the specific project and its chance of success as well as the developing ability of the company to develop its Growth Management through the Two Hats approach. This in turn will help to deliver sustainable growth, more predictable and better quality earnings, and increased shareholder value. They will also view the reaction of the wider audience to the Internal Launch, and look to see commitment and consistency to the process as well as the specific project.

Low

Medium

Any support agencies that are needed to deliver the Take It To Market plan should be treated to a large degree as an “internal”

High

Medium

Shareholders

Outside the company Support Agencies: PR, marketing, training

Continued

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Table 9.2 Continued Impact Audience

Considerations

Project

Process

Medium

Low

audience. Any good agency would expect to be included as part of the internal brief; however some companies are reluctant to include agencies in open forum internal meetings. Ideally a single internal meeting including the agencies should be used: this helps develop the Implementation Team as a single unit. It encourages the agencies to feel they are an integral part of the team, and properly controlled their input and support can be substantial. Suppliers

In some cases it will be appropriate to bring in suppliers as part of the Internal Launch. Critical suppliers need to understand how their actions support the overall delivery of the proposition. HOWEVER the rest of the Internal Audience need to be comfortable with their involvement, particularly as exposure of the proposition details to the supplier could be used against the company unless there is a strong long term mutually supportive relationship. Clearly the risks need to be carefully considered before inviting suppliers to participate.

So the key role of the implementation team is to make sure all the details of the launch are done properly, on time, on budget and are co-ordinated for maximum impact. The first task is therefore to take the initial plan outlined by the project team in the Set Up phase, and to break it down into individual actions, that are timed and structured to support each other. To provide the level of detail needed the wider team of implementers will need to take responsibility for their area. Fairly obviously a larger team needs greater co-ordination and control to ensure it works effectively together. With no great surprise this is where project management tools and techniques need to be used fully. On major launches the implementation team needs to be supported by at least one person who can keep track of all the activities by element and ensure that the team keeps to schedule with quality actions and measured deliverables.

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Growth Management Even on smaller propositions, someone needs to be responsible as the “gate keeper” to highlight when tasks are falling behind time or when the quality of input is not good enough. Under tight deadlines we’ve all seen people and teams cut corners to meet a deadline, only for the cut corners to come back and bite us later. So it’s important that the implementation team not only details what needs to be done by when, but also has a clear common understanding of the quality of output that each person and the team as a whole is responsible for delivering. This common understanding of quality of work is often understood by the way the company normally operates. However the growth proposition may need a higher level of quality to break into a new market or establish the proposition against competitor offers. So it is important for the team to state explicitly the expected level of quality for each activity. To do this each team member of the implementation team needs to understand the linked activities flowing into their work and the hand offs they make to other areas downstream from their work. Simply put we want people working with us to hand to us great work for us to work on ourselves, so that we can add great value and pass on great work to the next person. This helps ensure we add real customer value, minimize waste and deliver a compelling customer proposition. The first step is therefore to separate the actions required into two parts: defining the activities themselves and separately the quality of the output of each activity.

Phase three: do it – defining the activities There are a number of excellent project management tools available to help you map the actions and their sequencing to deliver the proposition on time. The power of these tools is their simplicity and ease of use. In essence they are matrices that use a timetable across the top (days, weeks, months), with a listing of all key actions by area down the left hand side. For each activity a line is drawn showing when the activity can start, how long it will take and therefore the finishing date. Clearly some actions cannot start until others have been finished. The charts provide a simple mapping of each action, the relevant prior actions, and the subsequent actions resulting from each completed activity. Mapping the actions and their links to others allows you to see which actions are dependent on prior actions being completed beforehand. By reviewing the various dependent sequences you can identify the key

Take It To Market Plan sequence in bringing the proposition to market – the one which taken together takes the longest time. Delays in delivering this sequence will delay the launch date.

Phase three: do it – defining the quality Having identified the sequence of actions the team needs to define the quality of the “hand offs” between linked activities. In other words the team needs to agree and state what the prior action needs to provide to allow a continued quality activity next stage. In some instances this is objective input and can be easily specified, (advertising production lead times, costs, number of sales calls, quantity and type of sales materials, etc); for others it is more subjective (the marketing creative brief, the tone and style of training materials). Once again, you and the implementation team will need to decide the level of quality that you need to make the launch a success. This is always a balance of the ideal with what can be achieved practically, and what the customer expects. To make it clear what level of quality is expected for each activity, the implementation team needs to use simple, easy to communicate examples that mean the same thing to everyone involved in each link in the chain of each core activity. To make sure you don’t get into too much bureaucracy, the implementation team should only concentrate on describing the quality of the hand off activities between different members of the implementation team. For example, warehousing and supply chain activities will involve a wide variety of detailed actions. However, the only activities that need to have the output quality identified are those where the output has direct effect on another department. For example – achieving stock levels in all retail outlets is a clear hand off to Sales or Retail Operations. To help define “quality” you may want to use the following format or a version of it (see Table 9.3). Based on the detailed listing of the activities needed under the Take It To Market Plan and a clear understanding of the quality of the output expected, the implementation team can get on and deliver all the prelaunch and launch activities. However this is easier said than done. The team needs to respond fully to the growth opportunity and drive aggressively to deliver an outstanding proposition launch and follow up. In doing so, they need to understand and respect the rules of engagement for the implementation team.

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Table 9.3 Defining “quality” hand offs Activity

Output

Key activities that hand off to other areas of activity (not hand off activities within an area/department)

Describe the expected output in terms of content and/or format

Example: Advertising

Quality expected

Example of quality

Hand off by ...

Hand off to ...

Refer to known or already existing tools, techniques and processes that support the level of quality of output expected

Provide specific examples (internal or external)

The person/area responsible for the action

The person or team responsible for using the output as the next stage of the Take It To Market Plan

Creative Brief

Fully completed and agreed by the Board

Marketing (Jon Smith)

Ad Agency (Jo Peters account dir.)

Creative Ideas

Breakthrough high impact concepts, in line with creative brief 2 or 3 alternatives for review: each within budget and timescale Detailed timing plan for adverts, and Point of Sale materials Ability to translate all key proposition elements and customer benefits into effective training for sales staff and selected channel customers Quantities by part number, by retailer/market opportunity Delivered to schedule Damage and shrinkage within agreed standards

See “proposition X “ advertising brief as previously used “proposition X” from company Y “proposition J” from company K

Ad Agency

Implementation Team and Board

Production timetable Training

Selected external supplier with training materials

Deliveries into retailers

Accurate and timely stock in branches

Standard timing plan Advertising Agency template, showing lead times and contingencies Materials to the quality Marketing & training and quantity delivered for proposition C

Marketing

Use of company standard reports Confirmation by retailers

Sales & Marketing

Supply & Distribution

Sales

Take It To Market Plan

Rules of engagement As already stated, the Take It To Market phase of Growth Management is where the “rubber hits the road” for a specific proposition. It is also where the initial project team has to involve and rely on a broader set of implementers. Most of the implementers will also have to continue to run the day job. So there is naturally greater work pressure and the potential for additional stress from conflicting priorities between the day job and the growth opportunity. The trick is to use this pressure positively and channel it to good effect in delivering the launch. To help the team deliver the Take It To Market plan, the following simple rules of engagement are helpful.

Senior management support The support of the Board, the project champion and all directors of the business needs to be clear to everyone. In addition to supporting the internal launch (as described above) the relevant directors also need to take an active interest in the Take It To Market stage. The champion must retain his or her key role in helping drive the project and in breaking any roadblocks. For the gateway reviews, the meetings need to be held on time with all the required directors actively involved and supportive. Additionally, if the project is falling behind and fails to get through one of the gateway meetings, the directors should take personal responsibility for helping to break deadlocks and for supporting the implementation team in getting the plan back on track. Finally, the senior management need to retain a “no blame” culture that attacks issues objectively and unemotionally. The alternative is a blame culture that rapidly increases the personal risk for the implementation team and introduces fear and unproductive stress. This is not only bad news for the specific project, it also sends the wrong signals to the whole company and shareholders – that the senior team (of directors) does not know how to manage and run a Two Hats approach to deliver sustainable growth.

One team As detailed above the implementation team needs to operate as a single team, supporting and encouraging each other to achieve all activities on time and on quality. Additionally the implementation team needs to be

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Growth Management open and “inclusive” to employees not directly involved in the process but who nevertheless can influence the success of the launch. The one team approach needs to be co-ordinated by the project manager, but it is the responsibility of all to deliver and respect the rules of engagement. In effect the success is a team success. Personal success rests on team success. This requires personal responsibility and accountability. It also requires a mindset that the team will succeed despite the issues that crop up, as opposed to taking advantage of those issues as excuses for failure.

Respect for the timing plan and the quality to be delivered – keeping track of revisions The plan needs to be regularly updated to reflect changes that are agreed by the team in delivering the plan. This updating is important for two reasons. It provides: 1. consistent communication and understanding at all times, 2. the basis for learning for future growth projects as they enter the Take It To Market stage. One individual on the team must be responsible for tracking the changes to the plan, recording the reasons for the change and the lessons learned. As part of this “rule of engagement”, the team needs also the authority to immediately highlight unforeseen issues (rather than hide them) and to develop alternative solutions that keep the plan on track.

Respect for the skills and capabilities of the team To fully benefit from the Two Hats approach and deliver Growth Management, you need everyone on the implementation team to earn respect from the team and the company for their expertise and capability in delivering the Take It To Market Plan. The plan will naturally help do this by highlighting to everyone the practical actions each individual delivered in launching the proposition. The plan helps everyone increase their own understanding of the total business and appreciate how their skills and actions fit with the overall team effort. The champion and senior directors need to openly acknowledge the development of this greater understanding and respect. The Take It To

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Take It To Market Plan Market process encourages open questioning and better solutions on everyday issues as well as on the specific growth opportunities.

Measuring success It is fairly obvious that you will need to measure the success of the launch to the market. This provides essential information on both the proposition itself and the company’s ability to use the Take It To Market Plan effectively. Consequently you’ll need to split what you measure into two areas: the commercial benefits of the growth proposition itself and the Take It To Market process used.

Measuring success – the proposition itself The company will need to assess its ability to forecast accurately and implement effectively. Most companies will use a simple variance analysis to show actual performance against the plan (see Table 9.4 below). This can be separated in management reports or operating controls, based on day, week, month or quarter, as necessary. For example in the retail sector

Table 9.4 Measuring commercial success Variance Forecast (from Proposition Plan) Actual Achieved Volume units

Financials Revenues and Mix

Direct Costs and Mix Gross Margin and Mix

product 1 product 2 product 3 total product 1 product 2 product 3 total product 1 product 2 product 3 total

Overheads Net Margin Total

Value £

Volume units

Value £

Volume absolute units %

Value absolute £

%

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Growth Management various daily operating controls are essential to manage the day to day business. So the same basis should be used for new propositions as they are launched. This helps keep the reporting consistent with the established format for day to day business: making comparisons easier for everyone in the business. Another benefit of using established company management reports is that it clearly indicates to the business that the growth project needs to pay its way and will be tested on the same basis as the established business. A word of caution: There may be good reasons not to use the established reporting processes and formats. Usually this occurs when the new proposition attacks a new sector or is sufficiently different from the ongoing day to day business. In these cases the relevant objective financial criteria may be different and may need different emphasis. In addition to financial criteria, measuring the success of the proposition and the market launch will include a variety of factors. Table 9.5 below provides a thought starter list – the criteria can be objective and subjective.

Measuring success – The Take It To Market processes Measuring the success of how the team and company has used and learnt from the Take It To Market Process also requires a mix of objective and subjective criteria. The criteria you choose are likely to be based around the following thought starter list (see Table 9.6), which should be adapted to individual circumstances. In some cases some of the data is best obtained through internal questionnaires which can be completed anonymously by the implementing team and the broader organization.

Summary Generating ideas and solutions to deliver sustainable growth propositions is only part of growth management. You also need to be able to launch the propositions effectively to establish a solid basis for an ongoing business. The Take It To Market Plan recognizes that the external launch is one element in the process of introducing a new proposition. It identifies the structure and processes necessary to co-ordinate actions across

Take It To Market Plan

Table 9.5 Measuring the success of the proposition Element

Example criteria/Key Performance Indicators (KPIs)

Advertising

Audience actual reach vs forecast Target customer awareness pre and post launch vs objectives Sales achieved during and post advertising Call to action: coupon responses

Web Marketing

Additional visits to website following launch Dwell time on specific proposition detail pages Dwell time on overall site (pre and post launch) Calls to action achieved Direct sales

Availability

Stock available Stock “Outs” Back order status and completion Stock mix actual vs forecast by location Delivery accuracy: right product, right time, right admin

Sales

Actual sales vs objective by target audience Mix of sales vs objective by customer type, by location, region, national Market share/volume Substitution effects (impact on existing products/services): ability to at least maintain focus on the day to day operations to retain revenues and margins whilst launching the new proposition Calls made, sales achieved (ratios) Source of sales (what customers bought previously (converted from competitor propositions))

Product Performance

Warranty/failure rates vs objective Durability, reliability rates versus objective In market actual performance versus forecast (speed, technical ability, adverse conditions)

Customer fulfillment

Customer fulfillment measures/customer satisfaction measures Customer expectation measures Right product, right time, right price, right support, right administration Ease of doing business

Competitor Reaction

Reaction in line with expectation? Changes to competitor offers Price realignment, marketing offers, PR

PR

Coverage by media Ratio of positive to negative coverage in editorials Pundit reactions Consistency of coverage and comment by region/national

Channel support

Acceptance of the product/service Promotional support/joint marketing POS Range coverage and positioning in store

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Table 9.6 Measuring success of the process Element of Take It To Market Plan

Example criteria/Key Performance Indicators (KPIs)

Delivery

On time by activity: actual versus timetabled plan On quality by activity: actual versus prior agreed levels on links between areas (functions)

Rating of tools and techniques

Simple assessment (high/medium/low ratings) of the relevance and ease of use of individual tools and techniques: e.g. critical path analysis, Gant charts, project management controls, linked work streams, co-ordination achieved

Meetings

Formal meetings: Operational success (achieved necessary objectives, timely, always fully attended, controlled with minutes and outputs) Informal meetings held proactively and with agreed purpose

Culture

Transition from Project Team to Implementation Team achieved with “single purpose” Support from senior directors and Board: clear, open, consistent, unambiguous Support from non internal areas (agencies): rating of their value added, and their views of the process and their ability to influence the process positively. A simple feedback questionnaire, with collation of objective and subjective input

Level of learning

Identify the relative understanding of the Take It To Market plan before and after working with it Obtain views on how to develop the Plan for future growth projects for the company Simple rating of what went well, what was OK and what went badly in operating the individual elements of the Take It To Market Plan – by major activity/function

the company. It provides the basis for managing additional internal and external resources as an implementation team that builds on the work done previously by the project team. It recognizes the need for “gateway meetings” involving the senior directors of the business to keep the whole business aligned with the growth project and the day to day operations. It highlights the need for an internal launch as a key stage ahead of delivering an outstanding launch to customers and the market. The Take It To Market Plan gives the growth project the best chance of success. Companies often know how to implement the day to day operations very well ... but they do so partly on “auto pilot” – without thinking. The Take It To Market Plan ensures that the team takes the time to identify, quantify, timetable and action all of the activities needed to implement a great launch that maximizes customer impact and sales.

CHAPTER 10

Growth Project Integration Objectives • Transition the growth project into the mainstream business • Develop learning and capability of the company in managing the integration of growth projects

When to transition A number of factors influence the point when a growth project needs to be adopted as part of the mainstream of the business. Fairly obviously these factors fall into three camps: the project itself, the mainstream business and external circumstances.

The project itself As far as the project itself goes, you need to ensure that the company has a clear understanding of the new business with the benefit of experience. Also you need to be convinced that it provides a sustainable and replicable business. The growth project therefore needs to have achieved its launch objectives (revenues, costs, margins, quality, delivery, customer fulfillment, etc) and be settling into a growth pattern in attracting and retaining customers. Additionally, the growth project should have been refined and developed through the launch phase to produce a customer valued sustainable proposition. The proposition plan should be updated to capture the refinements from the Take It To Market phase and initial sales and market performance (on all aspects of the proposition, plus competitor actions, customer feedback, sales and margin data, etc). The timescale for all this will depend on the type of proposition, the customer sector it appeals to and the ability of the company to implement quickly any refinements and developments needed. The period could be as short as a couple of months, or as long as a couple of years. Whatever the 123

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Growth Management period of time the key point is that transition for the project into the mainstream should be as a sustainable and proven business.

Mainstream business The second key set of factors influencing the transition is the mainstream business itself. Primarily this is all about the openness and capability of the business to accept and accommodate the new business. This will be based on a mixture of the project’s needs and the adaptability of the people, organization and processes of the mainstream organization. In businesses with high volume well established and highly refined processes designed to compete in low margin sectors, the risk is that integration of a growth project might reduce company efficiency and effectiveness on the volume business – potentially hurting cash flow significantly. So the timing and the transition itself need to be carefully managed. For companies under pressure to re-invent themselves and grow aggressively in new sectors, there is a need to run multiple growth projects at the same time. This increases the pressure to transition them into the mainstream at the earliest opportunity, so as to release resources for still more growth projects. If not handled correctly, these transitions can be rushed, and the value from them dramatically reduced. In worst case examples they can even bankrupt companies as the transition not only takes excess resources and time, it detracts too much from day to day operations and drains cash flow. Simply put the growth project needs to be taken on by the mainstream business when the project itself is proven and sustainable, and when the mainstream business is capable of accepting it. This is the case for most projects, except for those where the business strategy is based on the growth project providing a major change of direction for the total business. In this case the transition is in reverse: the mainstream needs to morph into the growth proposition. Assuming the circumstance and the time is right for the transition you also need to make sure that the mainstream business is also ready “psychologically” to accept the integration of the growth project.

External factors As for external circumstances any integration project needs also to consider key factors beyond the company’s control that are significant and impact

Growth Project Integration on the timing or outcome for the integration. Key examples include major changes in legislation, competitor actions (particularly acquisitions/mergers), and the economic cycle (boom/recession). These can simply affect the timing of an integration project or significantly change its objective and therefore the activities involved.

So what is the problem here? Some people find it difficult to understand what all the fuss is about, here at the integration stage. Because they are so used to running the day to day operations, they believe they can easily understand how to assimilate the growth project into the mainstream business, and in many cases they are capable of achieving it very quickly. “So” they ask “what is the problem here? ... Surely the answer is easy and we can just get on with it”. This attitude is a double edged sword. On the one hand we need the enthusiasm and the desire to integrate, on the other we don’t need the established paradigms and assumptions that close down potential alternative routes and opportunities. In essence the issue is the same for introducing a new growth project as for integrating an acquired business. The whole point is that you do not want to be the same business after the integration as you were before it. And yet many businesses think this is the point – just to be a bigger version than previously. Pointing out the obvious error in this type of thinking is not difficult. But the issue here is often the “danger of disproportionate scale”. What this means is that if you are not careful the mainstream business will apply its preconceptions and ideas to the growth project and basically trample all over it – reducing the value to the company in the process. Let me put this in context. Most companies will not “bet the farm” on a growth opportunity. They may do so if it is a major acquisition with fast access to an established business base, but otherwise it is rare. Consequently the vast majority of growth projects that need to be managed represent a relatively small scale to the mainstream day to day business. Often the relative scales will look a bit like those shown in Figure 10.1. In absolute terms, the relative scale of the growth project to the mainstream business shown in the picture is 1 in 20. In other words this growth project by itself represents 5% of the existing mainstream business, and is earnings enhancing (it makes more % net margin and RoCE).

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Revenues

Mainstream business scale

Growth project

Profits Employees

Revenues Employees

Profits

Figure 10.1 Existing mainstream business scale compared to growth project scale

The picture is helpful: it graphically shows the relative scale of most growth projects and shows clearly why Growth Management extends fully into the integration phase ... without it growth projects are likely to be handled badly in the transition into mainstream operations. What is also important is the impact of internal company publicity. Growth projects by their very nature will attract a disproportionate amount of company time, effort and resources. As a result they will appear to employees as bigger commercially than they actually are. This lulls the mainstream team into thinking that the transition involves a bigger business than it actually is and as such they can be less delicate in their handling of it – wrong! It is important therefore that the teams understand clearly the scale of the opportunity. There is a key point to remember here – the mainstream business is often in very slow growth or decline. Consequently transitioning the growth business into a static mainstream is a sure fired way of generating a static growth project! The whole point behind growth management is to use projects to drive incremental business and to affect the way the mainstream business operates, driving the psychology of a growth culture across the business. One final point. The scale chart above is a point in time. It shows the relative scale of the mainstream and growth business. But a static depiction is misleading; it does not show the relative trends and the future importance of the growth business. The proposition plan will have identified the growth potential for the project for a number of years (3–5). Usually the transition of the project into the mainstream will take place after the initial launch phase (most commonly between 3 to 12 months after the launch date), but well before the end of the proposition plan timeframe. Consequently, showing the dynamics of the problem to be solved helps those who asked the

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Growth Project Integration

Revenues

Mainstream business scale Static / shrinking Employees

Profits Revenues

Explosive growth project

Profits

Employees

Figure 10.2 Dynamic view: mainstream business scale compared to growth project scale

simple question “What is the problem here?” to understand the role that the growth project must continue to play within the mainstream business. Taking the picture on 24 months produces the following dynamic for the company (Figure 10.2). The “future” picture based on the proposition Plan shows the explosive development of the growth project and the continued decline of the mainstream business. This tells a different story: it is not so much about transitioning the growth project into the mainstream as encouraging continued growth and development of the new business. So we have some clear answers to the simple initial question “What is the problem here?” In summary the problem is the management of a number of subtle and not so subtle issues. The growth project must influence the mainstream business in a positive way ... • • • • • • • • •

Financially Operationally Organizationally Culturally In brand terms In customer profile and relationships In positioning within the market and against competitors In its ability to learn and change In its ability to grow sustainably and continue to develop.

Given this list the transition of a growth project into the mainstream business needs to be done with care. However it must be done – if it isn’t the

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Growth Management business will not learn how to develop and integrate its way to a sustainable future. The integration therefore needs to recognize the benefits the mainstream can provide to the growth project and vice versa.

Getting started Figure 10.3 on the next page visualizes the key inputs to drive the integration actions that introduce the growth projects into the mainstream business and vice versa. At the top of the chart are the key inputs: the proposition plan, the learning from the launch and initial sales, and finally the mainstream (current) business. The mainstream business input includes not only the structure, organization and basis of the current business (the day to day operations), but also the overall strategy of the business. In Chapter 5, the strategy for the business has a clear impact on which growth opportunities should be prioritized. With no great surprise the overall business strategy now has a major impact on how the growth project should be integrated into the business. At one “book end” of growth integration the project may have little impact on the overall mainstream business – it needs to be largely subsumed into the existing systems, processes and organizational structure. At the other “book end” the growth project marks a major transition for the company, meaning that the company needs almost to integrate (or reverse) the mainstream into the growth business. To be clear how to integrate the growth business you therefore need a clear understanding of what the future business will look like based on the agreed business strategy. The chart helps explain what the vision of the business might be in 2–3 years time once the growth project has been integrated. It separates the implications into key business areas: people, processes, products (propositions), customers, competitors, and business positioning. The amount of change on each of these elements will vary depending on the influence they have on the future business. In the example given the impact on people, while substantial (reduced numbers, new skills and competencies), is not as significant as the relative change predicted on company processes and in particular systems. The notional mix/impact between the growth project and the mainstream business is shown visually as the relative mix of the shaded or unshaded areas under the “Today” and “Vision” columns. It helps the teams get a clear and consistent view of the expected level of change needed on each of the key elements.

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Key inputs: collated and interpreted – drive integration actions over time

Proposition plan

Today People

Processes

Products

Customers

Competitors

Business Positioning

Launch feedback / post launch learning

Exisiting mainstream business

Integration activities

Vision (2–3 years)

Skills development & competency for the future: technical and organisational Locations: static or changing Ratios: -employee: revenue

New systems added for Growth business Simplify processes for speed and cost Continuous improvement and refinement Translate legacy systems to new format and competency

Add and develop new range on Growth propostion Simplify existing mainstream product range for cost and customer value

Manage new customers from Growth Proposition Recognise customer value to company (future revenue and margin over time) Manage customer acquisition, retention and exit

Develop clear understanding of new competitors and latent competitors Update understanding of existing competitors and their ability to react / respond

Build revised company position through the growth proposition Define revised brand and company positioning Use changes to drive higher company valuation for shareholders

Figure 10.3 Initial actions: integrating the proposition

The purpose of the chart is therefore to help the business outline the level and type of integration expected. This needs to be recommended by the implementation team, the champion and selected key players involved in running the day to day business, prior to being signed off by the Board. The chart provides a starting point from which a more detailed set of assumptions, objectives and timings are produced for each integration activity.

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Growth Management Having developed a clear understanding of the scale of the integration required, the team can now set about defining the actions needed to achieve it.

Defining the integration activities and team In developing the growth project a specific project team was used. This team then morphed into an implementation team with the addition of key people (internal and external) that would bring the project to market and launch it successfully. Now the task is to establish the right team members that will drive the transition of the project from its post launch phase into the mainstream business. In the same way that the project team needed to bring in specialists to help with the internal and external launch, you now need to identify what expertise and skills are needed to transition the growth project into the mainstream with the maximum effect at the lowest overall cost (time, money, people, processes). The outline elements of the transition should be identified by the project team, the champion and senior employees (or directors) responsible for the day to day mainstream business. This initial outline structure and scale of transition actions (as Figure 10.3) will indicate the key skills and competencies needed in the transition team. Figure 10.4 on the next page provides thought starters to help you work out who is needed on the team, and shows the type of information required to help. Again from this thought starter list you should develop your own version. The basic principle is to try and lay out side by side the key elements that drive the growth project and the mainstream business. To make it simple, the chart splits each element into three core support areas: people, processes and systems. These should catch the majority of the points that describe how the growth project and mainstream business operates. At this stage you do not need great detail (as you can see). All you need to complete is sufficient detail to explain the similarities and differences in approach and operations. Completing columns three and four allows you to compare how each one (growth and mainstream) are managed and operated. Under the block of columns “Differences” the project team and champion can highlight what they see as the critical, nice to have, and non essential differences between the growth and mainstream businesses. The chart should use a simple traffic light system (red: critical; amber: nice to have; green: non essential) to help visually highlight the important and relevant differences

Growth Project Solution Used Proposition Element Support people Outbound transport processes systems Supply chain people & Purchasing processes systems people Sales processes systems people Service support processes systems people Marketing processes systems people Manufacturing processes systems

Mainstream Business Solution Used

Skills needed to identify & check similarities & differences between Growth and Mainstream Function

HR

IT/Systems Finance Other..... Yes

3rd party specialist

in house van fleet

Logistics

Yes

hazard carrier as mainstream

non hazard products IBM 5000, logistimap

Logistics

Yes

specialist buyer

12 buyers, 3 specialist areas

Purchasing

Differences

format

Internal: coded and published IBM 5000, stockdoc, buydoc & chaindoc

3rd party temporary

telesales and fieldforce

Sales

as mainstream as mainstream

Internal: coded and published IBM 5000, propectdoc, salesdoc

Sales

outsourced

limited tech hotline

Cust Service

Yes

Yes

Yes

fully integrated outsourced

minimal: low volume call monitoring

Cust Service

Yes

Yes

Yes

mainstream

internal and agency

mainstream mainstream

Internal: coded and published Mac, projmgrdoc, creativedoc

Yes Yes

black

black

black

black

Yes Marketing

grey

Training

grey grey

Cust Service

Yes

Figure 10.4 Defining the integration activities

format

black

training

Yes

grey

black

grey

black

grey

black white

Marketing: confirmation only

white white

n/a (supplier source) 2 shift fabricators and assemblers n/a (supplier source) Internal: coded and published n/a (supplier source) IBM 5000 legacy mfrgdoc

format

black

Yes warehousing

supplier based supplier based

format

black black

Supply

Transition

critical nice to non adopt adopt develop need have essential growth mainstream hybrid all - new

Manufacturing: holding brief for info only white

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Growth Management which need action. However, for the purpose of printing here the chart uses black: critical; grey: nice to have; white: non essential. In the middle block of columns “Skills needed to identify & check similarities & differences between Growth and Mainstream” are a set of columns that indicate the skills or functions that the team will need to quantify how to integrate the two businesses. The functions (and people) identified can then help produce indicative answers to the columns headed “Transition”. The example chart not only shows the specific functions that will be needed in the integration, it also highlights potential key work areas which will need more detailed activity planning to complete effectively. As such it also helps define who should manage and control the integration team. Candidates include the original project manager for the growth project, a key player from the transition team, or an individual from the mainstream business that will have ongoing responsibility for the success of the growth business post integration. Whoever is chosen, they need to have the necessary authority and skills to manage the team, its objectives, time scales and the relationship with the champion and the board of directors.

Defining the integration plan: activities and timing In chapter 9 the Take It To Market Plan identified the need to use project management tools to manage all the activities involved in bringing the proposition to market. Any substantial integration project will need to be carefully managed and controlled by an integration team. So with no surprise at all the same tools and techniques need to be used here to identify the detailed activities, their links to each other and the critical timings for each. Rather than go over the same content here, you should refer back to chapter 9 and apply the same principles to the management of the integration project, action by action.

Defining the ongoing activities and implications The mainstream business and the growth proposition each have their own work activities. The integration is designed to match these in the most efficient way to reduce cost and increase customer value. At the detail level it is usually relatively easy to identify where actions can be shared between growth and mainstream propositions. The difficulty is in ensuring that the integration does not reduce the power of the propositions (either mainstream or growth) or the value they provide to customers.

Growth Project Integration Consequently, defining the ongoing activities to drive the mainstream business and growth business together needs to be carefully planned to make sure the efficient running of the integrated business. In some cases it just doesn’t make sense to integrate certain activities. An obvious example is in a manufacturing business where the growth project uses completely different machinery and tools to produce the products for the growth market versus the mainstream business. Clearly you would not expect the business to force itself to use the wrong types of machines purely for the sake of integrating the activities. However, you would expect the business to share best practice in the hiring, training and retention of people, in sharing maintenance and security activities, in sharing logistics, warehousing and administration wherever possible. All of this is fairly obvious stuff and is relatively easy to plan out activity by activity. However, there is a less obvious element that successful businesses recognize: the relative flow of activities and the style and culture surrounding each type of business. They understand that relative to the mainstream business, the growth project takes decisions more quickly as it refines the proposition from customer feedback. The differences and similarities in the way the businesses are operated are understood and respected. Successful companies often refer to the fact that in growing their business overall and in repositioning it for sustainable growth, that they need to be respectful of the past but not hide bound by it. This appreciation and explanation of how the business is to move forward provides the basis for integration. These successful businesses recognize the need for the integration to generate a natural flow for the new business – one that delivers tangible and intangible benefits to the company and the customer experience. Most efficient mainstream businesses will already have developed a natural rhythm for their activities. For example these include a regular sequence of weekly or monthly meetings that drive decisions and actions, together with recognized and respected roles, responsibilities and accountabilities that drive performance; they may well be ordering supplies just in time, the operations will be well planned, sequenced, and deliver consistent quality. Their marketing, delivery and customer service will be costed, controlled and valued as part of the proposition. Almost subconsciously the mainstream keeps operating efficiently. By comparison the growth business will still be in its infancy. The natural flow of activities is still being refined, and there are potentially new ways of improving the value and efficiency of the proposition. Even so there will be some natural flow to the growth project. In successful businesses

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Growth Management they recognize these flows and ensure that the integration emphasizes and refines them to the benefit of both the mainstream and growth elements. It’s a bit like looking at frequency charts. The mainstream business is well established and has a long low frequency (see Figure 10.5). The beat of the business is known by all, understood and worked to by all and efficiently delivers exceptional value. This compares to the Growth business with faster flow and frequency of decisions/actions reflecting the need for more frequent adjustments and refinement as the proposition becomes established in the market (see Figure 10.6). Integrating these two styles requires attention to detail and sensitive planning. Merely slamming the two business opportunities together is likely to disrupt both. You can’t afford to upset the rhythm and flow of the mainstream business, but you can take lessons learned for the growth business to see if faster decision taking or a different approach could produce even more efficiencies. Likewise, the development of the growth business must not lose momentum from the slower flow of the mainstream business. Conversely it may benefit from less frenetic changes that refine the proposition in potentially a more sustainable manner. Consequently, the team involved in the integration needs to protect the short and long term commercial benefits from both elements (mainstream and growth). In doing so, the team must work out where the key sensitivities and benefits lie. They need to adopt a growth management style (open minded, questioning the status quo) whilst delivering the integration. So each member of the team needs to put themselves in the shoes of the future business. They need a common vision of a changed business. If they hang on to their preconceived view that ether the mainstream or the growth business is the only way to operate then the integration will not produce the best result.

Figure 10.5 “Mainstream business”

Figure 10.6 “New growth project”

Growth Project Integration Metaphorically it’s a bit like a man and a horse. The mainstream business (the horse) can operate very well by itself thank you very much. It can run, jump, swim and feed and water itself. The man can also do pretty well by himself. He also can run, jump swim and feed and water himself. Integrating the two is fairly obvious – but is it? In company A we are so concerned with maintaining the exalted position of the mainstream business that we put the horse on top of the man. Result – total physical domination, a badly bruised man and win:lose. In Company B we are so concerned with growth that we put the man on top of the horse. Result? Horse throws off man – win:lose again. However along comes Company C which integrates the actions of the man with the capabilities of the horse. It develops both, and ends up with a rider sitting on a domesticated horse. Both have changed. The rider is physically on top, but both recognize what is kept separate, what is integrated and the synergies that result.

The subtler activities – don’t lose them in the melée The integration team should use the prior charts on pages 129 and 131 as the starting point for developing specific detailed actions and timings that will deliver the Vision of the integrated – a more efficient combined business with sustainable growth. However, in defining and delivering the integration, the team needs also to review the less obvious elements in how the mainstream and growth businesses are delivered, so they understand the differences and similarities. For example, successful businesses always keep a weather eye on developments and trends generally. They use formal and informal networks to keep themselves up to speed on what is going on in the market and in the minds of customers and prospective customers. Effective integration requires the combined business to still have access to this type of important information. Therefore the combined business needs to ensure it keeps open these formal and informal lines of communication by scheduling them into the annual work. Attending trade events, customer fairs, industry seminars and the like are key sources of information for many businesses. They are also the easiest things to let drop following the integration particularly when the growth business brings in customers from a significantly different market sector. The task of the integration team is therefore to recognize and secure both the obvious and the subtle actions that drive and deliver the existing mainstream and the new growth business over time.

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Rules of engagement Having determined the team, the vision for the integrated business, the specific integration activities themselves and the timescales, the company needs to ensure that the rules of engagement applicable during the Take It To Market phase are applied and seen to be applied by the whole company for the integration phase. Chapter 9 identified each of the specific rules of engagement and each one is applicable to the integration project. In addition to detailed project management, the integration team needs to work to agreed gateway meetings with sign off by the champion and the board/senior directors. The control is just as critical as for the launch phase – if not more so. A poor integration can disrupt day to day operations quickly and even bankrupt a business. So in addition to the rules of engagement from Chapter 9 there is one other critical rule: growth project integration involves subtleties and nuances that have to be respected and understood in detail. Ignore them and you run the risk of permanently damaging the growth business, your mainstream operations and your ability to grow shareholder value sustainably. The subtleties relate to many aspects: scale (see above), company history (heritage and ownership), internal loyalties and politics, as well as the shifting customer base and the propositions offered.

An example Just over five years ago the board of a business group decided to integrate the growth operations. The growth business was substantially web, mail order and telesales based. The mainstream business was a bricks and mortar retailer but was moving into web channels. One element of the integration project was the desire to advance a new computer system to control all commercial aspects of the combined business. In scale terms the system had to bridge a huge scale divide – the growth business was less than 2% of the mainstream business. The decision was taken to test the computer system in the growth business as part of the integration project. The scale of the test was so great as to absorb the majority of the management time of the growth business – reducing operational performance dramatically. Whilst the computer system was eventually tested and all wrinkles ironed out, the result was a massively depleted growth business and limited additional shareholder value. Integration projects therefore need to work both ways. They need to deliver the efficiencies available from the mainstream business and ensure

Growth Project Integration the growth opportunity continues to flourish. In this it is important for everyone to understand what they are dealing with.

Green house plants – an additional rule of engagement Most growth projects are a bit like green house plants. They are sheltered from the full effects of the environment. They are developed with specialist care and support. They are nourished and groomed (and in some cases talked to!) If however you take the plant straight out of the glass house and put it in the garden just check what will happen – cold winds and deadly bugs will take their toll. Whilst many will recognize that growth projects are equivalent to greenhouse plants, very few people actually act on the knowledge, either because they are too busy or they don’t know specifically what to do differently. Anyone from the mainstream business that goes to review or work with the growth business needs to be comfortable working in a greenhouse until the “plant” is ready to move outside. So you’ll need to get rid of the scarf and top coat that fends off the cold winds of the mainstream business. Likewise when you start to integrate the growth project, you need to introduce it progressively and with planned support to the outside world. If the integration team doesn’t take this approach, but merely says “our job is to integrate you (growth) into us (mainstream) and how we operate” then the result is usually clear: great integration, but no growth business. Let’s put it another way. Integration is the means to an end. The “end” is a growing and sustainable business. It is a process in itself but it does not earn anything. It is a cost to be managed in sustaining and developing a better revenue and profit stream. The key to managing integration is recognizing what you are dealing with – a tender sapling – and what you need to achieve – a new forest.

Managing customer expectations During the integration of the growth project into the mainstream, your customers have two separate needs: i. they want to retain the same or better value for money they currently enjoy (on the growth proposition and/or the mainstream offers), and ii. they want to deal with successful companies, so they will want to see a successful integration. What they will not want is any disruption to

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Growth Management the business relationship during the process. Obviously this needs to be managed carefully and is a core objective of integration. However some customers of the growth proposition will be concerned at the integration itself. They may see it as a potential dilution of the offer or worse a “sell out” of the original growth proposition. These customers are usually a small proportion of the total but they can be influential. Therefore the sales activities in particular need to be constantly communicating to and fro between the company and customers on the integration project and its successes to make sure you retain all your customers. The sales team has a key responsibility at this time to communicate the capability of the company, and the benefits of integration from short term retention of value to longer term improvements in the customer relationship. This is particularly the case for B2B (business to business) customers, where business relationships can be strong and long lived, but is also relevant in B2C (business to customer) relationships.

Communication – at the start of the Integration Project The integration phase is another “test” for the company in operating a Two Hats approach and Growth Management. It is another opportunity to emphasize the process and the benefits it brings to the organization and to individual employees. Whilst it may not be appropriate to have an internal meeting specifically to tell everyone about the integration of the growth project, it is important that everyone knows what is going on and why. So the purpose, timing and vision of the integration project needs to be clearly communicated to everyone. So what exactly needs to be said? In essence it falls into two chunks: commercial benefits and growth management benefits. On the commercial side, the company needs to highlight the benefits already gained for the growth project: revenues, profits, customer base, associated sales, business development (skills, competencies, relationships with suppliers). On the growth management process side the company needs to highlight the learning processes used, benefits gained and the structured and replicable approach to driving continuous sustainable growth. It also needs to outline who is involved in the integration project and what needs to be achieved (The Vision) for people, processes and systems as well as the overall structure of the integrated business. How you communicate will depend on the individual circumstances. A simple e-mail, newsletter, or discussion at a weekly departmental

Growth Project Integration communications meeting may be enough to let everyone know about the integration and the reasons for it. In other companies an informal get together or a formal meeting is needed. Whatever the format you use, you need to communicate what’s going on. If you don’t they’ll come to their own (usually wrong and politically charged) conclusions. “I told you that project would never work – now look what they’re doing – its being brought to us in the mainstream because they can’t hack it ... just watch us get lumbered with the objectives and extra work!” Not only will good communications stop uninvited and ill-informed skuttlebutt, it will help smooth the way and continue to emphasize the impact and importance of growth for the business. In companies where a number of separate meetings or communications are needed to tell everyone about the integration project, you should be careful to make sure the same message is sent and received by everyone. You may need to use a standard presentation to make sure the same message is given, but you will definitely need to check afterwards that everyone sees the same objective and opportunities from the integration. If you do not, you run the risk of poor integration, confusion and lowered financial returns.

Managing the actual integration – KPIs, controls and measurements As part of managing the integration as a specific project with the integration team, you need to be clear how success is going to be measured. Measuring the impact of the growth project itself against clear objectives should be straightforward based on the proposition plan and the results of the initial launch period. The normal rules apply – a mixture of financial (e.g. sales, unit costs, return on sales, return on capital employed, gross and net margins) and operational measures (sales per employee, prospecting calls: sales value ratios, availability measures, quality measures, customer loyalty, customer referrals, sales growth per customer ...). Measuring the quality and effectiveness of the integration starts with the control and management of the project itself. As with the Take It To Market plan, the company needs to deliver the activities on time and on quality as per the integration timetable. Additionally, the company needs to measure the impact of the integration on the mainstream business. Specifically, have the day to day operations been positively affected as planned, have revenues and costs stayed on target? Has any substitution of sales between the new proposition and

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Growth Management existing propositions remained within agreed levels, or has the company suffered from excessive substitution? From a team perspective, has the integration team managed their work effectively and efficiently, has it learned from the experience and taken that learning into the mainstream business to improve efficiency and effectiveness? What you need to be measuring, therefore, is has the company improved its capability to integrate growth to change the existing business? The whole needs to be greater than the sum of the parts (to produce synergies). This needs to be measured objectively and subjectively. The following Table 10.1 provides a thought starter list that you should adapt to your own business. The objective measurement of the quality of the commercial impact of the integration is relatively straightforward, using regularly used criteria (revenues, margins, number of customers, satisfaction/fulfillment scores). From this data it should be easy for you to identify the synergies developed. To avoid duplication and identify the benefits accurately you will need to identify the existing and the new customers who are buying both the mainstream and new propositions. In terms of margin, the new proposition in the example above has higher margins. However, the integration project itself has also driven incremental margin on the mainstream products perhaps through better sales mix, additional pricing or additional cost savings. As such, the integrated business has far better margin that just the sum of the two parts. Evaluating the integration process as a process itself falls into two areas. The impact it had on delivering on the specific project and its future use, relevance and ability to improve employee capability. The example below (Table 10.1) shows potential methods of rating the process itself. The concept is to give all those on the project, and impacted by it, the opportunity to comment on the process and its use. The type of internal questionnaire needed to provide good quality ratings will depend on the size of the company and the specific integration project. However, key areas to be covered are noted in the grey box, based on evaluating the commercial impact and separately the integration process itself and the learning gained.

Post integration – feedback, learning and communication Having obtained the feedback and rated the effectiveness of the integration project the team needs to drive refinements of the process itself, and how it should be implemented on future projects.

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Table 10.1 Measuring integration effectiveness 3 months prior to Integration

Integration Effectiveness

3 months after Integration

Existing Mainstream

Growth Proposition

Integrated Business

Synergy Achieved

10,000,000

500,000

11,000,000

500,000

25%

32%

26.50%

1.1% points

Commercial Revenue Gross margin Net margin Revenue per employee Customer Base Nos

10%

17%

11.40%

1.0% points

100,000

250,000

107,850

4,900

52

12

60

no loss

6

8

2

New customers Nos Customer fulfilment

92%

90%

95%

3% points

Customer satisfaction

88%

94%

96%

7% points

Integration Process & Learning Achieved the Vision as stated

90%

On time

100%

On quality

90%

Documented processes Accessibility to others Replicable

Yes – all Via intranet site and promoted internally Yes using ocumentation and training

Employee involvement score

85%

Based on specific questionnaire responses covering: Ease of use of Integration Process Relevance of Integration Process to delivering the objective Team dynamics and learning Individual learning

The team and the champion should communicate the results and the lessons learned to the company, and make sure they are documented for future reference along with the process itself. It is another great opportunity to discuss the benefits of the Two Hats approach with everyone, to demonstrate the ongoing commitment of the company to sustainable growth and to developing effective teams and individuals continuously. “Everyone” should include employees, shareholders and selected external audiences (e.g. financiers, suppliers, and customers).

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Summary The successful integration of a growth proposition into a mainstream business requires careful planning and an open attitude by the team and the company to produce a combined business that reflects the best of the existing mainstream and growth elements. A clear vision of what is expected and who needs to be involved is essential, as is clear communication and a well controlled integration project. To promote learning and increase the impact of the Two Hats approach, the effectiveness of the commercial result and the process itself need to be measured.

CHAPTER 11

Embedding Growth Management Objectives • To capture key lessons learned (process and commercial) • Define how to embed The Two Hats approach and Growth Management • Define the next growth projects – sustaining growth

The problem to be solved Many businesses have a short term focus that impacts their ability to grow sustainably. This can also, in some businesses, make people cynical around any new initiatives if immediate results are not seen. Many of us experienced the phenomenon of the “latest flavour of the month”. This is where a company moves regularly from one initiative to another and the frustration of not completing and delivering the expected result from any of them. “Flavour of the month” cynicism can be a powerful negative culture in some businesses and can only be tackled by changing the result. You need to break the cycle and succeed in growing new profitable and sustainable revenues. The emphasis is not on doing it once (cynicism in the light of a previous stream of failures will dismiss a single positive event as a lucky one off) but on being able to repeat the success consistently with no failures. The implementation of the Two Hats approach and Growth Management encourages a managed stream of new initiatives. Over time these embed the core principles, tools and techniques (practice makes perfect) and ensure that they are continuously refined and tailored to your company’s specific needs and sector. Embedding Growth Management therefore requires a long term commitment.

Sustaining growth Chapter 4 had the following chart (Figure 11.1). The chart shows that a Two Hats approach can improve the capability of a company to make 143

Sector leaders : Efficient & Effective Fast Accurate Decisions, Data driven, Subjective where needed Empowered Motivated teams

Pilot Phase: 1

2

3

Sign off Analyse data, fill in key data gaps, test assumptions and develop action plans by priority opportunity

Getting started

Underperformers: Low efficiency & low effectiveness Slow decisions, too subjective, data poor

Phases: Timing

Board Commitment to ‘‘Two Hats’’ setting the Scene Internally Thin Slice: don’t do too much Pilot : learn by doing Team Selection

4 Implement Priority plans. Feedback and adjust

Data collection Gaps Identified Identify business priorities

2–4 weeks

1–3 weeks

4–20 weeks

4–12 weeks

Phase 1 Focus on practical opportunities: Set basis for long term ability to grow. Use "Pilot" approach on few key business priorities.

Figure 11.1 Getting started: implementing growth management

Embedding Growth Management better decisions more often. This happens because Growth Management increases the capability of everyone in the business. It improves the quality of questioning and replies. It increases mutual support between employees and functions. It provides the basis for joined up thinking and better coordination of actions. But delivering one growth project effectively and efficiently does not mean that the company has now got itself a growth culture. Figure 11.2 shows in the dotted line how quickly the gains made from the pilot growth project can be lost if the company does not follow through and embed the Growth Management. The right hand side shows that by simply following through with a stream of additional projects, a company can produce sustainable long term growth. It also shows that it can increase its ability long term to be quicker to market with more relevant and customer valued propositions. How? Simply by being more sensitive to market changes and having a better ability to implement quickly and more effectively than the competition. But it’s not as simple as just running off and defining a stream of additional growth projects. You need to set the right basis for further growth based on what the pilot project has taught the company. Some of the lessons will be obvious; others less so. The temptation is to focus on the obvious and build quickly, steamrollering further growth projects into the business in a whirling dervish of activity. With no great surprise this is dangerous on many counts. It risks stressing the organization before it is fully ready. It risks picking inappropriate projects or at least getting them in the wrong sequence. It risks customer push back and rejection, and it risks employee support and retention.

Business emotional intelligence Avoiding these risks is not rocket science, but it does require the business equivalent of “emotional intelligence”. In his brilliant and eye opening book “Emotional Intelligence: Why It Can Matter More Than IQ” Daniel Goleman described how emotional intelligence can be a greater predictor of success in life than the traditional measure of IQ. The ability to see the bigger picture and weigh up the costs and benefits of short and long term gain, and the ability to delay gratification for a bigger gain later, are critical life skills for individuals and show emotional intelligence. The equivalent for businesses is the ability to see the long term gain. In the western business world the pressure for short term results has increased tremendously over the years. Technology and culture have

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Embedded culture Phase: 1

2

4

5

Sector leaders: Efficient & Effective Fast Accurate Decisions, Data driven, Subjective where needed Empowered Motivated teams

6

Operational Efficiency

7

Ongoing Growth Management: Twin Parallel Activities

Integration Refine Prioritise Roll out

Pilot Phase: 1

2

3

Implement Priority plans. Feedback and adjust

Analyse data, fill in key data gaps, test assumptions and develop action plans by priority opportunity

Phases: Timing

Refine Organisation structure

4

Sign off

Underperformers: low efficiency & low effectiveness Slow decisions, too subjective, data poor

Processes

Failure to consolidate and learn: benefits are short lived

Data collection Gaps Identified Identify business priorities Time 2–4 weeks

4–20 weeks

4–12 weeks

Phase 1 Focus on practical opportunities: Set basis for long term ability to grow. Use "Pilot" approach on few key business priorities.

Figure 11.2 Growth management increases competitiveness

Ongoing Phase 2 Consolidate growth capability. Wider organisation involved progressively in roll out of processes / culture of growth.

Embedding Growth Management pushed this to the limits. Tolerance of a poor set of quarter results was never good but it is getting worse. As consumers we are increasingly brand promiscuous. Products are less differentiated as features and quality equalize, but increasingly time, immediate gratification and being seen to be “in” on the latest craze, fashion or fad drives less tolerance and loyalty. Shares in companies are not immune. They are merely products with a proposition of financial return. The net result of all this however is very damaging. The short term focus is the business investor equivalent of low emotional intelligence. Ask the vast majority of investors what they want and they will tell you: “long term sustainable growth, managed risk and no nasty surprises”. A short term focus and knee jerk reaction does not deliver this desire. So let’s relate this to Growth Management. A company’s “emotional intelligence” in this context is its ability to consolidate its learning from the pilot project, and to use the learning to increase its ability to produce relevant and sustainable further growth, from which it will learn, consolidate and develop further growth, from which it will learn, consolidate and develop further growth in a virtuous spiral. The “spiral” is important. It reflects the upward development of the business – moving to the next level continuously. As the business develops it builds on its history, being respectful of it but not hide bound by it.

Build from the Pilot: before defining new projects Additional growth projects are needed to build on the success of the initial pilot and to help embed the Two Hats approach and Growth Management into a company’s culture. To make sure you build on solid ground you need to take all the feedback and learning from the pilot project and consolidate the business based on it. The need for feedback and learning has been highlighted at various stages in the Growth Management process. The chart on the next page summarizes the key areas to be reviewed. Some have been mentioned before and some are additional. In every case you need to take the time to review and analyze the (objective and subjective) inputs carefully with an open mind. The feedback splits into commercial elements, process elements and strategy. Keeping an open mind is really important: if you slip back into old views (paradigms) you can miss potentially critical interpretations. As a useful counter, try interpreting the data and feedback from another viewpoint – competitor, supplier, customer – and see what that highlights.

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Commercial feedback The starting point for feedback and learning from the pilot initiative is the commercial results. This is ideally based on data after the project has been integrated into the mainstream. However if the company is involved in “long lead” sectors, the commercial feedback can be done based on the launch phase data before the integration, provided that it is treated with extra caution as the project may not have fully established itself at this stage. What you need to concentrate on here are some key financials and analysis (see Figure 11.3). Did the project provide the revenues, costs, and margins as predicted in the Proposition Plan? Have forecast returns on investment and other KPI measures been achieved? In addition does the analysis show any key sensitivities in the new growth business? For

Commercial

Commercial feedback

Customer reaction

Competitor reaction

Process

Communications feedback

Team dynamics

Strategy

Organisation feedback

Strategic fit

Figure 11.3 Pilot feedback and learning

Embedding Growth Management example – what is the impact on profits of small percentage changes to key cost and revenue drivers, changes in investment or access to different processes? The growth project also needs to be placed in context with the mainstream business. What is its scale and use of total resources? Has the project reduced or increased mainstream business financial returns?

Statistics and lies It amazes me how the same company can produce wildly differing views about the success or otherwise of a project. Interpretations are subject to vested interests and politics. However, for a company to move forward and use the Two Hats approach effectively, it needs to agree on a single candid interpretation of the data. The project team, champion, and the main functional directors must hold the same view on the financials. This forces the group to work through different interpretations and arrive at a consolidated view of what worked well and not so well on the project. Without this single view across the company you run the risk of confusion, mixed messages and pouring fuel on the fire of cynicism.

Customer feedback Customer feedback is needed from all types of customers – mainstream and growth project. You need to get feedback on a number of important elements. The table below provides a thought starter list that you should adapt to your sector and your company’s needs. The feedback needs to be separated between the original mainstream proposition and the growth proposition, even though they may now be part of an integrated business. The suggested elements are fairly straightforward and allow direct questions to be asked through simple questionnaires to provide comparable and useful data analysis. You should also get feedback on how customers see the company following the launch and integration of the growth proposition. In growing the business it is important to keep customers “on side” ... well at least those that you want to keep. To grow effectively some companies may need to actively lose some of their existing customers to reposition the business properly for the future to take advantage of new sectors and opportunities.

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Back order fulfilment

In region

In store

Availability wholesale / delivery

over packs

promotional

Packaging

retail

Advice & support

Sales

Field staff

Events

PR

Media

Events

Promotions

Communications

Service

Marketing

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

"Winner"

Processes

Products

Brands

People

Image vs Competition

Relationship

Technical Support

Admin Support

Ordering

Enquiries

Easy to work with

Right Paperwork

Right Time

Right Place

Right Price

Right Product

Accuracy

‘‘Winner’’

Processes

Products

Brands

People

Company

Image vs Competition

Relationship

Access to senior people

Technical Support

Admin Support

Ordering

Enquiries

Right Paperwork

Right Time

Right Place

Right Product

Post Integration

Easy to work with

Company

Pre Integration Accuracy

Company Development

Branding

Product

offers

wholesale

retail

Pricing

performance

range

specification

Back order fulfilment

In region

In store

wholesale / delivery

over packs

promotional

retail

Advice & support

Availability Product

Packaging

Company

Growth Proposition Sales

Field staff

Events

PR

Media

Events

Promotions

Communications

Service

Product

offers

wholesale

range performance

retail

Marketing

Use questionnaires with simple rating scales (% or 1-5) to produce comparable data and analysis

Customer Feedback

Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer

Branding

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Right Price

Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer

specification

The Propositions

Pricing

Company

Mainstream Proposition Product

Access to senior people

Customer Feedback

Use questionnaires, focus groups or face to face interviews with simple rating scales (% or 1-5) to produce comparable data and analysis

Figure 11.4 Customer feedback

Obtaining feedback on how existing and new customers see the development of the business and its future relevance to their needs is essential in selecting future projects to reposition the company and grow sustainably. The second half of Figure 11.4 gives ideas for feedback on this area.

Competitor reaction In deciding which projects to focus on next, the company needs to get a clear view on how existing competitors have reacted to the pilot project and the business strategy behind it. Some growth projects may fall below the radar screen of your competitors, others will be noticed immediately and raise major alarm bells and substantially aggressive reactions – particularly

Embedding Growth Management if the company is moving into a sector previously held by a few powerful players. Getting good feedback on competitor reactions is important but needs to be kept in context. Just because a competitor reacted the way they did to your first growth project does not mean they will do the same thing again next time. Many factors influence competitor reactions: the level of threat, the level of available resources to fight back, internal company politics, strength of feelings, old alliances and enmities, market trends and customer reaction ... the list goes on. So a competitor that decided not to react to your pilot growth project may decide that your second growth proposition is a step too far and respond aggressively to protect its position. Likewise an aggressive reaction the first time around may not be repeated if the competitor saw limited benefit from it actions, or if its circumstances have changed. A key benefit from getting good feedback on competitor reactions is to use it to “war game” how they might react in the future. War gaming is effectively putting yourself in your competitors’ shoes and trying to predict what they would do in the circumstances, so you can act accordingly. To do this you need to know as much as you can about their strategy, their strengths and weaknesses, and their ability and desire to react. War Gaming is a great name for it. Business is a war of capability between enemies (companies) for the best customers. It is a fight based on strategy and tactics, involving skirmishes and battles. Eventually the war plays out when one or more enemies goes bust or moves away. Successful companies not only predict their competitors’ moves they actively use the information to adjust their own growth plans for maximum sustainable impact.

Communications feedback From Figure 11.3 you will see that this feedback is part of “process” rather than “commercial”. Communications here means feedback on how all the internal communications around the processes were received. It links directly to the next two elements: team dynamics and organization feedback. (This is not feedback on marketing communications – which was rated under customer feedback.) Communications feedback on the process gathers data and information on how well the Two Hats approach and Growth Management was communicated and understood through the company and key external audiences. Consequently you need to check the reaction of each of the

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Table 11.1 Internal feedback on communications surrounding the growth management process Subject

(Audience) Feedback expected on ...

Initial launch of Two Hats and Growth Management to the company

Clarity of messages, objectives and timings Clear understanding of need and rationale for Growth Management Level of concern/optimism Understanding of the key differences in managing Day To Day operations from delivering sustainable growth Understanding of choice of project and team (why, relevance, timescales, resources) Understanding of the roles and responsibilities of the Project Team and the rest of the company Understanding of the specific proposition and its fit to the growth opportunity and the mainstream business Understanding of the phases of the Take It To Market process and timetable Understanding of the need for additional “implementers”, their roles and responsibilities, to drive the market launch Understanding of the need for integration, the processes, and the Vision of the integration Understanding of the Integration Team’s roles and responsibilities, and those of the mainstream

Selection of the growth project and Project Team

Completion of the Proposition Plan and internal launch of the Take It To Market process

Launch of the Integration process and feedback on growth project launch success

communications during the process. Table 11.1 above outlines some of these areas for feedback.

Team dynamics Feedback on how the teams worked and communicated through the pilot project provides a huge amount of valuable information on how to help embed Growth Management. For each additional growth proposition you will want the teams to function more and more efficiently and effectively. Additionally you may want to use the experienced team members to be project team leaders on future projects to speed up the company’s ability to grow. Collating their feedback from the initial pilot into clear and concise information is therefore essential to learn the lessons quickly and reduce cost by avoiding earlier mistakes. However, it is not enough just to get feedback from the three specific teams – pilot project team, Take It To Market team and integration team. You also need to get feedback from the key links and people the

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Embedding Growth Management teams worked with – the Board, the project champion and the functional directors. The matrix in Figure 11.5 gives some thought starters on the types of information the feedback should be providing on team dynamics. To get comparable and usable data, everyone involved in providing feedback must have the same understanding of what each of the criteria is measuring. So it is important to take the time to explain the criteria and where necessary provide specific explanations to reduce any ambiguity.

As a team:

As an individual member of:

Delivery

What would you improve?/

Communications

Credible

Appropriate

Clear

Supportive

Timely

Truthful

On budget

On Quality

On Time

What worked really well? Results focus

Supportive

Questioning

Open

Operating style

Used

complete

Effective

Links in/outside the team Relevant

Used

Effective

Relevant

Clear

Roles and responsibilities

Clear

Team dynamics feedback

Free Form Comments

Project team

This is what we should improve

Implementation team

This is what worked really well This is what we should improve

Integration team

This is what worked really well This is what we should improve

Project team

This is what worked really well This is what we should improve

Implementation team Integration team

Use a simple 1-5 rating scale , but ensure a cle ar and consistent understanding on what each crit erion is measuring

This is what worked really well This is what we should improve This is what worked really well This is what we should improve

Champion

(individual)

This is what worked really well This is what we should improve

Board

As a team

This is what worked really well This is what we should improve

Functional directors

As a team

This is what worked really well This is what we should improve

As individuals:

CEO

This is what worked really well This is what we should improve

Finance

This is what worked really well This is what we should improve

Marketing

This is what worked really well This is what we should improve

Sales

This is what worked really well This is what we should improve

Manufacturing

This is what worked really well This is what we should improve

Supply

This is what worked really well This is what we should improve

Purchasing

This is what worked really well This is what we should improve

HR

This is what worked really well This is what we should improve This is what worked really well

Figure 11.5 Team member feedback

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Organization feedback The final area of feedback on the process of growth management is from the company as a whole. This includes those who have not been involved directly with the process but who have continued to focus substantially on the day to day operations. In embedding growth management you need to make sure that both day to day operations and growth are efficiently organized and that both deliver against their objectives. Specifically you need feedback on the knock-on impact that the pilot growth project had on the delivering the day job. In many businesses a single growth project can be managed alongside day to day operations for two key reasons: i. it usually only takes a short period of time to bring the project to market so the company will find a way of accommodating the extra workload generally by working harder or faster, and ii. growth is fun and positive, so it lifts peoples’ spirits and provides a “buzz” around the company that increases the teams’ capacity in the short term. Neither of these reasons will support sustainable growth. They are both based effectively on the day to day operations working harder rather than smarter. Merely working harder will ultimately undermine the Two Hats approach. A key component to embedding the Two Hats approach and Growth Management therefore is the ability of mainstream operations to use the added pressure of the pilot growth project (taking resources from day to day activities) to restructure how it operates. In downsizing organizations you will see businesses that, to start with, try to hang on to the old ways of working even with fewer people and fewer resources. Usually the organizations will work faster for a short period whilst they work out the real value that they add. Then

Embedding Growth Management they will work out what they can cut without affecting customer value. After that they tend to focus on the real benefit – changing the ways they work to produce better value at lower cost. This last stage delivers the new sate, working smarter not harder to deliver the same or better result. It is important therefore to understand how the mainstream business managed the day job with fewer resources. What did they do differently and what further actions could they take to be even more efficient to release even more resources to support further growth and build a stronger more sustainable business? This information can be reviewed against the feedback from customers to see if they noticed a change in the mainstream proposition and if so ... how did it affect their view of the value they received? Getting good quality feedback from the organization can be tricky. There is usually a natural reaction to hold back to make sure they don’t get “stiffed” with higher objectives. So the feedback needs to be brought out through praise and support for the changes made, to encourage further ideas and efficiencies. Merely asking the operations teams to feedback the impact of the growth project on them runs the risk of producing the obvious result – namely: “We are the heroes; we kept the cash coming in by working harder and picking up their slack.” So you need to be careful to bring out the positives from the experience and put any negatives into a balanced context. To get specific feedback you need to break the day to day operations into the main activities, in sequence. Against each main activity you can then ask people to highlight how running the pilot project “forced” changes in the day to day operations. Breaking the overall work down like this will allow you to get detailed feedback from those actually doing the work on the front line. The level of detail you need to go into will depend on your own business. You are not trying to re-invent the wheel here with microanalysis, you only need as much detail as is necessary to summarize the key benefits gained or issues left unresolved.

Strategic fit Surely the strategic fit of the pilot growth project was a key element in choosing it in the first place, so why review it again now? The answer is fairly straightforward. The growth project fitted the business strategy at the start of the process and unless there has been

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Growth Management some substantial unforeseen change it should still do so after it has been launched and integrated into the main business. However, the relative success of the company in developing, launching and integrating the pilot project changes its capability to adjust (for the better) the strategy or at the very least change the rate of progress. Additionally, the role of each project in helping deliver the business strategy can be very different, depending on the project itself and the changing marketplace. Each project will influence what you focus on next for growth, and consequently your ability to embed growth management into the fabric of the organization.

An example Company A has a major need to grow. It decides to launch a new product that it has not offered before. It has a number of potential sectors it could target, all of which use the product. The larger sectors have more competitors but have better margins. The company has two options. Option 1 targets the biggest sector, Option 2 one of three closer but smaller sectors (see Figure 11.6). Both of these options fit with Company A’s strategy: growth into new established sectors. However in Option 1 the company has targeted the

Option 2

Option 1

New sector

New sector

New sector

New sector New sector

New sector New sector

New sector Company A current positioning

Figure 11.6 Strategic fit phase 1

Company A current positioning

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Embedding Growth Management biggest opportunity but the sector is relatively far away from its current business. In Option 2 the company has selected a smaller opportunity that is relatively nearer and easier to target. The feedback you need on the pilot project is how successful the company has been in achieving its objectives and how this project fits into the overall business strategy. So in Option 1, successful completion of the pilot opens up additional opportunities: Company A could push on and go for even bigger sectors further away, or it could target the fill-in opportunities nearer to home (Option 3 in Figure 11.7 below). By comparison, choosing the less risky target of Option 2 might restrict Company A to less aggressive follow-on projects (Option 4 in Figure 11.7 below). In addition to feedback on the strategic fit, you will also need to check whether a change to the original business strategy for the company is needed following the results of the pilot project. In addition to changes in your own company’s capability, you should check that the assumptions on the market, customers and competitors are still valid based on the feedback you’ve gathered. At the very least you may need to speed up your growth assumptions following a successful pilot, or conversely slow them down if you need more time.

Option 3

Option 4

New sector

New sector

New sector

New sector

New sector

New sector

New sector

New sector

New sector

New sector Company A current positioning

Figure 11.7 Strategic fit phase 2

Company A current positioning

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Celebrating success Throughout the pilot project the company needs to celebrate its successes. This needs to be separated between success for the growth itself (commercial/financial growth) and success for the process of Growth Management and running the Two Hats approach. Celebrating success in the appropriate way at the appropriate time is key to embedding Growth Management. How the company acknowledges the successes and failures in working with the Two Hats approach will make a major difference to your ability to embed Growth Management quickly and effectively. So why is this so different from celebrating success “normally”? The answer is that any new initiative you take on is always bound to have its supporters and critics. Some will see the initiative positively others will be skeptical or worse still cynical. In the mainstream (day to day) business there should be established and recognized celebrations of great work and business success. Everyone is already “calibrated” to how the company recognizes good work or conversely underperformance. This calibration can be formal through performance management processes and reward/ recognition programmes. It is also informal through employees “knowing” what gets recognized and who to impress (politics/natural human interaction). In most companies all employees have a clear view of what gets recognized and what they think about it! So for good or bad every business will already be calibrated on celebrating success. Therefore how the business celebrates success on the growth project needs to be carefully thought through and implemented. You also need to acknowledge “failure” or mistakes. If you don’t do both, employees will question the company’s ability to make a balanced assessment of the project – the good balanced by the poor. Purely acknowledging the successes is tempting but dangerous for the credibility of establishing the Two Hats approach and embedding Growth Management. So it is essential that those involved in Growth Management are encouraged and supported particularly on the initial project. Those selected for the project team will be viewed closely by other employees – some with envy, other with cynicism. The company must support the team openly. It must avoid a blame culture. It must celebrate successes openly and also openly discuss disappointments and how these will be overcome. Assessments must be positive and honest to establish credibility for Growth Management. This is essential if the Twin Track approach is to be effective. Those employees more focused on running day to day operations must respect the importance of sustainable growth for the future strength of the company. Likewise those more focused on growth opportunities

Embedding Growth Management must respect and support the returns made by day to day operations and their importance in delivering resources for growth ... to fuel more growth. This “twin track” must be nurtured and developed to generate a positive culture throughout the organization. Consequently how you celebrate successes on growth (both commercially and on the process) must be viewed through the eyes of the employees, as well as the shareholders and other stakeholders. Overt celebrations can be as destructive as no celebration if it is disproportionate to the success gained. Potential methods for celebrating success are outlined below.

Rewards and recognitions As just mentioned, rewards and recognitions for those involved in pilot growth opportunities need to be proportionate to the success gained and the culture of your company. There are a wide variety of reward methods. At one end is the pure recognition of your fellow employees and the company for doing a great job. This can mean a simple “thank you” or inviting those involved to talk about their experiences covering both the commercial and process benefits from Growth Management and detailing lessons learned and the improved and new skills they acquired. At the other extreme, reward and recognition can include highly motivating “hard” financial bonuses and even promotions. It is important to recognize what went wrong as well as what went well. Rewarding failure is a difficult concept for some people to grasp. The key is to ensure that “failures” are placed in context. What went well; what didn’t go so well. This positions “failures” as part of learning to implement and develop Growth Management capability. The reward and recognition in these circumstances needs to encourage all employees to remain committed to viewing Growth Management positively, and to get involved and be supportive without fear of retribution if some elements are not as successful as hoped. Simple and effective individual and team rewards and recognitions include: financial bonuses, increases in basic pay, personal promotion, awards/prizes/certificates, letters of appreciation, coverage in newsletters and trade editorials, and senior management endorsement. The appropriate level of reward/recognition needs to be established as part of the pilot growth project from the outset. Subsequently you need to get clear feedback from those involved on how success has been celebrated and how appropriate are the rewards and recognitions so that you can adjust them prior to embedding Growth Management through follow-on projects.

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Generating heroes and careers One of the best outputs of successful Growth Management is successful employees. Growth opportunities and Growth Management allow individuals to shine and contribute on a broader basis than under mainstream operational day to day activities. Some people quickly understand and welcome the skills and structure the Two Hats approach gives them in delivering more efficiently and effectively on both day to day and growth work. These people will lead the way. They are the early adopters and as such are more likely to be personally successful as the business grows. As such, making heroes and careers is a core element of sustainable Growth Management and the Two Hats approach. Both elements develop people who are comfortable wearing Two Hats, and who can drive the cash and deliver sustainable growth by using planned and well executed processes, tools and techniques. They will be successful because they can replicate their success day in day out. With no great surprise such people are highly valued. They have the ability to “do” and to “manage”. In other words they drive efficiency and results and can adapt to changing and new opportunities faster and more effectively than most. Unfortunately, if the company at all levels does not understand and respect these new found skills, then the heroes are likely to walk as they will not be short of competitive offers. Consequently having provided the basis for people to shine and develop, you and the company need to adapt your thinking and processes to accommodate this new breed of employee. If you don’t, you won’t be able to embed the Two Hats approach and Growth Management in the organization and sustainable growth will not be delivered.

Selecting follow-on growth projects A steady stream of growth projects is needed to achieve sustainable growth and embed the Two Hats approach into the fabric of the business. Any business that can develop and operate Growth Management alongside running the base business has a major competitive advantage in most sectors. The capability sets them apart from their competitors and helps them provide a stream of compelling propositions to customers that provide excellent value. As the old saying goes, “one swallow does not make a summer”. So the key to embedding Growth Management is a controlled and managed set of follow-on projects that continuously builds the company’s ability to

Embedding Growth Management define and implement new initiatives. The key words here are “controlled” and “managed”. Metaphorically it’s a bit like the old farming days in the UK when after the grain harvest the farmers used to burn off the stubble before replanting. The farmer wouldn’t just light one fire; he’d set a whole series of small fires going and manage each one. Each of the fires would be set upwind, waiting for the breeze to fan them across the field. The farmer didn’t know which fire would burn quickest or best, but he knew that all of them together would clear the field and each of them could be controlled individually. Putting it another way ... very few companies are willing to bet the whole company on a single growth project. Most will want to establish a number of initiatives and see which one(s) deliver the financial return and stability the business needs. So you need to review all the feedback from the pilot project and take this into account when selecting the next projects using the same process tools and techniques from Chapter 5.

How many follow-on projects? The business needs a steady stream of follow-on projects, so the number required is technically infinite on the basis that the company delivers sustainable growth and the company continues to operate and grow! In reality the question of how many follow-on projects usually refers to how many can the company handle at any one time over the foreseeable future (say 3 years). The answer is that you will need to balance the desire to accelerate the roll out against the company’s real capability to manage a controlled development of Growth Management across the organization. It needs to understand how many roll out projects it can handle at any one time whilst still running the operational day to day needs of the company effectively and efficiently. In some cases this will be one at a time; in others, depending on the size of the organization, it will be two, three, four or more. The selection of a number of additional projects to run together needs to take into account: • the ability to transfer the learning and expertise from the pilot opportunity to other opportunities (products/sectors) and areas of the organization • the desire of other individuals and teams to participate in Growth Management • the continued support of senior management and the Board to enable roll outs

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Growth Management • the timescale and expectations of the Board and shareholders have for Growth Management and the twin track approach to improve the bottom line and the quality of earnings • the availability of relevant financial, technical and human resources • competitor activities, reactions • customer and market trends • infrastructure support (e.g. systems and reporting) capable of managing multiple growth opportunities • the capability of the organization to integrate effectively multiple growth opportunities once the launch phases are successfully completed. Choosing the follow-on opportunities to embed Growth Management needs to be done carefully. The roll out should be based on sequential opportunities that deliver the business strategy and progressively refine and tailor the twin track approach to the needs of the organization. Ultimately the processes, tools and techniques used should become second nature in effect ... “this is how we work now”. Setting and sustaining a supportive culture is essential for teams to operate the Two Hats approach successfully and for managers to guide, motivate and control both tracks of the business. Over stressing the organization with too many roll out opportunities is as bad as losing momentum through too few projects.

Tailoring and refinement of the tools and techniques The final part of embedding Growth Management is to refine and tailor the processes, tools and techniques to your company’s specific needs. This needs to be done consistently to pick up on new ideas and better ways of working. It also means that you should document and make easily accessible to everyone all the processes, tools and techniques that you find work well in your business. In documenting Growth Management you should have one person who is responsible for the overall control of the documents and a process that is followed whenever updates are to be made and issued. However, everyone who has been involved has the potential to guide and support the development of your company’s version of Growth Management. Some key principles to consider are: • a clear listing of the selected processes, tools and techniques • using your own company’s “language” – tone and style – to make it relevant to your employees and customers

Embedding Growth Management • ensuring the employees do the tailoring so that they: • take ownership of the company’s growth management • add their own insight and examples (relevant to their experience and the company’s business) • promote Growth Management as the way they want to work, not the way they are told to work • continuously look for ways to improve and develop the processes over time. The level of tailoring required will vary. Additionally over time as the processes, tools and techniques should become natural and used day to day, the written documents should be mainly used for coaching and teaching new employees. A simple method of tailoring is to allocate each one of the growth management processes, tools, and techniques to each individual who was part of the pilot team. Each of them should take individual responsibility for tailoring their allocated element to fit organization’s needs, and branding. But each team member should not run off and “do their own thing”. Tailoring requires input from the full team and should reflect the needs of the organization. Consequently you need to provide clear direction on the level of tailoring required (agreed by the pilot team) to make sure that all the elements fit together when the tailoring is finished. For example: you may want to give clear direction on the tone and style, examples for illustrations, the level of explanation/detailed back up required, objectives of the documents, their uses, “do’s and don’ts” (including skills required to use the element), description of the role of the specific topic/element and how it links to other elements, the “written” format to be used (printed, electronic, interactive, etc), and how the documents are to be accessed by company employees (e.g. hard copy binders, electronic shared drive). It will also be important to detail authority levels for amending the documents and the process for review and update frequency.

Ongoing growth management Having embedded the Two Hats approach and Growth Management there is a real need to make sure that the company keeps up the momentum. Keeping the processes fresh and forward thinking ensures that the client stays focused on the market, its customers and their changing needs.

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Growth Management To help do this you need to drive an ongoing company-wide commitment to the Two Hats approach, at all levels, and across all functions through regular communication and recognition of new initiatives. As the company develops your recruitment policies need to reflect the balance of individuals needed to deliver the day job and define and implement growth. This is really important as people tend to recruit people who are like themselves. So if the business has been operating the day to day operations very efficiently but struggling to achieve sustainable growth, it is likely that it will be hiring new people who are also good at operations but who may not be so good at the open thinking needed for growth. Consequently your recruitment policies and processes need to make sure that any new people you hire fit the needs of the future business – the combination of the mainstream operations and the new growth projects.

An example My first “corporate” job was with Ford Motor Company. In the mid 1980s it was a great place to work and a great “university” of business life. Towards the end of the decade there was a big push to understand the personality profile of the employees. The company assessed its people using Myers Briggs profiling. What was interesting was that whilst approximately 40% of the UK population are Myers Briggs profile “ESTJ”, the Ford population at the time was almost double that level. Clearly the issue of hiring like-minded people was alive and well! Embedding Growth Management over time requires the ongoing development of employees as individuals, with the skills needed to work on both day to day and growth activities. Their development should also reflect the changing core competencies required by the company to compete effectively and efficiently over time.

Realizing shareholder value The initial benefit for the business and shareholder value comes from the improved revenues and profits of the growth project. However the other major benefit for shareholders comes from the increased capability to deliver sustainable growth and higher quality earnings. These benefits materially increase the value of the business to other investors. Consequently to help realize the full benefit of Growth Management you should make sure all your current investors understand the ability of the business to identify opportunities and deliver growth efficiently.

Embedding Growth Management Obviously for some businesses it will be important not to give away trade secrets in how you deliver growth. But the fact remains that realizing shareholder value requires the shareholders to understand what Growth Management brings to the business. Keeping them in the dark will limit the company’s access to additional shareholder funds that could be used to develop further growth, faster. Table 11.2 summarizes some of the value that the company (as employees) and the shareholders receive for the Two Hats approach and Growth Management.

Table 11.2 Employee and shareholder value Element

Employee “value”

Shareholder “value”

Day to day efficiency

Ease of doing the job Less stress and frustration Clearer roles and accountabilities

Increased profits More healthy workforce Lower “total” employee costs (less absentees, higher retention, lower recruitment costs)

Day to day effectiveness

Greater stability/security More impact for each activity

Increased profits and increased revenues

New growth project

New competencies New skills Greater knowledge Broader opportunities More stability Greater personal growth Working for a “winner”

Increased revenues and profits Increased Intellectual Property Increased personnel retention Lowered recruitment and retention costs per employee More capable workforce Greater adaptability and flexibility of employees Increased company image

Growth management process

Predictable processes and methods Better decision taking: speed and quality More supportive company Clear focus between day to day and growth Reduced stress Increased interest in job Greater opportunity to improve (self and company) Broader roles/business exposure within a controlled structure

Greater predictability of returns Confidence in ability to grow as well as day to day Confidence in management decisions Increased quality of earnings Increased predictability of earnings Increased company capability to predict and respond to opportunities and threats

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Summary The real benefit of the Two Hats approach and Growth Management comes from the ongoing delivery of growth projects against a clear and appropriate business strategy. Having completed an initial pilot project, the company needs to embed the processes, tools and techniques throughout the business. This starts with clear feedback from all interested parties on what has worked and what still needs improvement, as the basis for identifying follow-on projects that continually drive growth and learning. A steady stream of follow-on growth projects will change the culture and behaviour of the company to provide sustainable and continuous growth alongside existing operations. Shareholder value is increased through the specific projects themselves and the increased capability of the whole company to identify and fulfill growth opportunities better than competitors.

PART 3

No Excuses

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CHAPTER 12

Growth in a Recession Objectives • • • •

Define a recession and tough times Outline the economics and psychology of a recession Outline the role of Growth Management in a recession Define the opportunities for growth in a recession

Definition There is a definition of an economic recession – two successive quarters in a year when the economy shrinks rather than grows. A lot of western journalists and economists refer to “negative growth”, and although it may seem a bit crazy to talk of a negative positive instead of using the simple term “a decline” it is actually a very good description. Economies are a mixture of a huge number of organizations conducting business funded through customer revenues and government spending. At any one time some are doing well and others badly: some are contracting and others growing. So whilst the economic definition is fine for watching the nightly news and getting a flavour of what is happening overall it needs to be treated very carefully in most companies. No one comes along with a lawn mower and says “oh look we’re in a recession so let’s take 2% off everyone”. Recessions are not linear. Their impact is felt far more in some parts of the economy than others as different sectors move through the business cycle at different times and at different speeds. Some sectors will continue to grow whilst others decline. The term “recession” is a straightforward measure, but for many businesses the issue of good times and tough times has more to do with the rate of sector growth (or decline) from one year to the next. The impact of an annual growth rate change from 6% down to 2% is greater than the reduction from 2% growth to –1% representing a decline or negative growth. Yet one is a recession, the other is not. Both however are slow downs. So it is the relative change in the rate of growth (or negative growth) that affects your sector that is the important factor for businesses. The economic 169

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An example Early in 2008 before the economy was in recession a UK based civil engineering company saw its revenues fall by 50% in the space of a few months as the construction sector responded aggressively to the warnings in the house and commercial building sectors. No amount of comment that the UK economy was still growing was going to change the fact that for this sector, for this business they were in a fast and precipitous recession that needed managing aggressively. Their action was to restructure the company and fight hard to reinstate “lost” contracts – fortunately they succeeded in part (reducing the impact to “only” a 25% decline in revenues) – and in doing so they took business from their competitors. The construction sector has been seen as the first into a recession and the first to come out. It is a lead sector for the economic cycle due to the significant investment funding it requires. When times are economically good or benign, investment continues and major building projects thrive. As soon as investor confidence starts to wane, major long term projects are the first to be cut back as concerns about the long term returns from major investment projects increases. The global recession of 2008 started with investors being shaken by the credit crunch, coupled with major increases in raw material and energy prices. In early 2007 the construction sector in the US was already in tough times – the same sectors in other countries were to follow rapidly as the foreclosures in the US sub-prime market impacted the wider (global) economy. This recession is a tough one! After well over fifteen years continuous growth this recession will be tough. Not only is the global economy due for a correction, it is a very different global economy from the prior (western) economic recession of the late eighties/early nineties. At that time, different attitudes to financial services existed. Consumers had still borrowed heavily, but not to the extent of the multiples seen by 2007. Additionally, the 21st Century brought continued growth off the back of a booming late nineties. The continued economic growth saw major changes in global economics from developments in China, India, and Eastern European countries as major investment moved into these lower cost economies. The result was a long, some would argue over extended, period of growth and prosperity. The prosperity drove many new opportunities and

Growth in a Recession “differentiated” products as customers increasingly put higher values on convenience, novelty and difference for difference sake. Such propositions need a high sense of customer financial well being and confidence to be successful. Premium products are amongst the first to feel the pinch of recession as customers hold off: talk to any premium car retailer, or domestic gardener: their businesses are amongst the first to enter the recession as discretionary purchases of “indulgent” propositions stumble. From the turn of the century to 2007 individual financial well being was stoked up by continuing house price inflation driven by excessive borrowing as mortgage providers offered deals on high multiples of earnings at relatively low rates of interest. The aggressive competitive nature of the financial services market, particularly in the US, drove sales into higher risk sub-prime sectors to maintain “growth”. (This is a salutary lesson for us all – growth at any cost is not sustainable growth, it does not add to long term shareholder value.) Technology and the desire for growth has changed the financial industry over the past 15–20 years. Financial institutions now operate in a complex global web of transactions with highly sophisticated products traded around the world. This has changed how this recession will run versus the last one – it made it easier for bankers to hide high risk investments until it was out of hand. It has made it impossible to see where all the risks are – even for the banks themselves. The “fall” after this “rise” will be greater because of this level of interactivity and reliance. It is impossible to predict where the risks are at the transaction level of company share dealing. So investors worry and worry lowers share prices, let alone the impact of co-ordinated short selling on specific companies and sectors. However it is not just the business cycle and the financial service sector issues that are driving this recession. Significant political and cultural changes are also at work. The shifting balance of relationship between many countries and Russia, the increasing economic power of India, Eastern European countries and China, social shifts towards immediate gratification in consumption and work, changing attitudes to personal responsibility and the increased impact of sound bite comments in the media will all add to the depth and longevity of the recession. Energy and commodity prices are likely to remain volatile as the social and economic trends produce intended and unintended consequences. A small example: global warming has been responsible for crop failures and low yields, at a time when some production has shifted from food to growing crops for biofuels. At the same time there is a large population of increasingly wealthy Chinese people who increasingly want to eat more meat as a sign of their wealth (and because they like it). But as we know

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Growth Management meat production is relatively less efficient than vegetable/crop production: increasing further the inefficiency of farming for food at a macro level. These tensions and structural differences from the prior economic downturn create their own implications for the global economy, for national growth rates and for specific sectors. This recession is likely to be tough also because since we have had a long period of economic prosperity, a lot of employees and business owners have not experienced one before. They were too young to have been around in work in the early nineties. Additionally, many economies have high numbers of small businesses providing products and services that did not exist even ten years ago. These young businesses did not exist in the prior recession. Think of the massive growth of Google as a company. In 2008 it was only 10 years old. It was incorporated at least five years after the last recession! So not only are a good many employees “recession virgins”, so are the companies they work in. How these employees and businesses react will be important to you and your business. Don’t Panic! Just because the economy is in recession doesn’t mean you have to roll over and follow suit. For most companies, their share of their available market tends to be small – often it is in single figures, and it gets to be even smaller as you include relevant adjacent sectors. So you in your business can avoid negative growth by taking business from your competitors or restructuring. It may not be as easy as it is to say, but it is by no means impossible. By definition, most companies can’t be winners. The key for you is to target weaker competitors and their major customers – to trade your way out of the tough times. Consequently in a recession the biggest impact on your business is not necessarily the macro economic recession itself, but what you, and your team, do by comparison to the actions and perceptions of your competitors, suppliers and customers. This is patently true because in recessions some companies win and some lose. We all also know that in good times some companies win and some lose. Those that win in the good times also tend to win in the bad times. Their relative competitive performance however can be better in a recession than in the good times. Recessions provide the basis for restructuring and provide a great opportunity to develop and reposition the business successfully to come out of the downturn. The key is how your company is managed through the tough times – does it respond with a knee jerk reaction or through a series of planned thoughtthrough actions. It’s a bit like the two guys who are really good friends who are walking through the savannah, they are chatting away, reminiscing about the good

Growth in a Recession times together, enjoying the walk and admiring the views, flora and fauna. All of a sudden they see a cheetah, the fastest predator and a darned big cat. They both freeze and stare. The cheetah has seen them ... it looks hungry. Slowly, very slowly, one guy takes off his rucksack and replaces his walking boots with running shoes. “What are you doing!” cries his close friend, “you’ll never out run a cheetah!” “I don’t have to” replies the first guy, “I only have to out run you!” In recessions friends can quickly turn to enemies, and predators come in new forms. You need to be prepared. There is a difference between the technical term “recession” and the street understanding of “tough times”. The street definition is what drives most businesses, it is their sense of company well being. Tough times are not defined technically as a sustained period of negative growth. They are periods when customers are much harder to find and when customers re-evaluate their view of “good value”, wanting something substantially more/different. This significant re-appraisal of what they (customers) can afford and the benefits they want from any purchase means that you have to adjust what you offer and how you offer it. It impacts directly on what you do, and how your business is managed. Tough times can happen for sectors when economies are still growing – one sector can be in decline when many others are still buoyant. The reverse is also true. Against this background operating a Two Hats approach and Growth Management gives you a great advantage against your competitors: in both good times and bad. The Two Hats approach recognizes the critical need to drive cash through the business and operate the mainstream business efficiently and effectively. The growth management processes, tools and techniques help you recognize market trends and changes in customer needs and how your customers’ views of value for money change through the economic cycle. So what do you need to think about differently in a recession (or tough times) than during growth times? The first element is to understand the changed context for the business economically and psychologically.

The changed context: market and competitor economics Having said that you need to keep a national/economic recession in perspective, the obvious starting point is to be clear about the rate of growth or decline in your specific sector. Sometimes this can be easier said than done.

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Growth Management Obtaining good quality data on the sector you work in is often difficult. Many sectors do not have high quality research data or quantified statistics on market size, shares and trends. The data rich sectors such as high street retail, vehicle sales and others are often the exception. Even in the auto industry where great data exists on new vehicle sales, data for the aftermarket and parts in particular is very patchy. Most sectors rely on trade bodies, syndicated research and pure judgement to provide “data”, much of which is general rather than specific and accurate. Nevertheless all companies have the ability to get a good understanding of how the market is performing, and can translate this into trends and growth rates (up or down). Your own sales and margin data, plus input from customers and suppliers and more general industry knowledge should provide sufficient information for most businesses to act on. Having worked out a probable rate of growth or decline for your sector from historical data, you need to get a clear forecast for the foreseeable future. Sales and revenue forecasting is normally put in the hands of the Sales and Marketing team due to their closer relationship with customers than other functions. However in times of recession accurate forecasting becomes a problem! Markets are much more difficult to predict in the early stages of a recession. Will the rate of decline increase, stay the same or reduce? Also by definition most sales guys and gals tend to be optimistic and positive about life: it is in their nature and is a critical element of their sales and marketing skill set. Additionally, the pressure to minimize the “hit” on the company puts enormous pressure on the sales team and marketing to buck the industry trend – to do better than the competition. As a result forecasting accurately how the sector is performing is tricky and fraught with danger. For Example: I recall in the early nineties my sales colleagues (and I) at Jaguar trying to forecast the bottom of the market, and the point at which customers would start buying again in greater numbers. In sales meeting after sales meeting, month on month, sales did not meet expectations. No one wanted to reduce targets any more than was absolutely necessary to manage production and avoid high stocks. But at the same time this desire not to call the market worse than it might be actually drove the company to take decisions later than it could have done. It ended up with higher stocks than it needed and used stock pressure to push sales hard. Whilst hitting higher sales volume, margins were considerably reduced for the company and the dealer networks. This is not an isolated example: many of you will recognize the same issues in your sectors and businesses. In many cases taking an aggressive “hit” early is the best course of action. Often the first loss is the

Growth in a Recession best loss, since as the market continues to decline, sales opportunities fall – as do prices. So there is a fine balance, keeping Sales Divisions “feet to the fire” to maximize sales is the natural reaction of most companies in tough times. The key though is to separate the motivational aspect of objective setting from the key business planning needs of accurate market forecasting. The two are linked but not the same. Developing accurate assumptions on market growth rates needs a cool head and a realistic approach. Without accurate data you can easily over or under cook your actions. Table 12.1 below provides a thought starter list for getting the information you need on how your sector is performing. Some parts of it will provide verifiable quantitative data; others will be subjective and open to interpretation.

Competitor economics The data and information you get from this work needs to give you not only a view on the economics of the market, but also your relative position versus competitors. You need to know how competitors are performing to predict how they might react, and work out which ones are more of a target for your actions than others. Getting specific information on competitors needs to be handled carefully to stay the right side of Competition Law. You will need to use publicly available data and information combined with interpreting their actions in the market to form a picture of the relative strength of each main competitor. As already stated, business is a war with the enemy (competitors) fighting for high value customers using different but similar weapons (products and services). In the tough times you need to pick which battles to fight with even more care than during the good times. Tough times make it both easier and more difficult for you. Tough times reduce the resources you have, but they also do the same for your competitors. Having a clear understanding of the relative strength of each competitor will help you work out what you need to do. That way you can target your resources more carefully to get the best result in pulling customers from competitors to you.

Customer economics Changes in the customer economics are directly driven by changes in their disposable income (retail customers) or the financial strength of the

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Table 12.1 Data sources for market growth rates Source

Types of data

Internal sales and financial data

Sales trends by customer/geographic region/business sector Sales trends by proposition (is there a move from high to lower priced products) Margin trends by customer/geographic region/business sector

Internal “knowledge” Many sources: sales teams, buyers, call centres etc

Collated input from sales staff on customer sentiment and feedback on changing needs Assessment of how customer value is shifting over time Selective research if needed Competitor activity in the market: tactical marketing and sales actions. Market knowledge on competitor financial stability and actions (lay-offs, expansions, change of channels to market etc)

Suppliers

Price movements from suppliers New products offered (lower spec/higher spec) to increase customer (your) value, tactical offers Changes in their channels to market: going direct, opening up new distributors in competition Advertising and marketing support: changes in the level of marketing support offered Direct data/market information on their view of the market and future sales trends Supplier capacity/availability Lay-offs, plant closures/expansions Increases/decreases in R&D, and introductions of new technologies to cut costs/improve product offers

Customers

Direct feedback on how financially confident they feel (retail customers or business customers) Direct feedback on how their businesses are performing and how their changing needs and views on “value” affect what they are buying Anecdotal feedback on your company and your competitors’ relative position and performance in the market Anecdotal feedback on themselves and their competitors: provides early warning signs of opportunities and risks

Trade Associations/ conferences/trade shows and events

Collated views of the sector on sector growth rates Syndicated research Attendee numbers at trade events, what subjects are being discussed and covered in detail, what are the conclusions reached

Competitors

From publicly available sources: review their PR, sales & marketing activities: changes in advertising strategy/execution (move to tactical offers?) introduction of special product offers, lay-offs, plant closures new channels – opening low cost routes to market etc price offers/changes

Growth in a Recession business (business customers). In both cases tough times and recessions make customers re-evaluate the value they get from everything they buy. In many companies, there is insufficient understanding of how the products and services they provide impact their customers. Most companies can tell you what their product or service offers in terms of features and benefits, but not how the products are used by their customers and the different values that different customers get from them. Understanding customer value is a key element of marketing at all times, but especially so as market economics shift through the economic cycle. In tough times and in recessions, existing and potential business customers will quickly reappraise their cost base to retain margin themselves. But the impact of this on your business will be very different depending on each specific customer type. For example: in Business to Business (B2B) markets, if your product represents only 5% of the cost base of one of your customer’s offers, the relative pressure on you will be a lot less than with customers where your product represents 50% of the cost of your customer’s offer. Similarly the level of “necessity” customers place on your product or service will also have a major impact. In retail markets luxury and indulgent propositions tend to be hit harder during a recession than “essentials” for living. At this early stage in the current recession (mid 2008) we have already seen substantial shifts in customer buying patterns from mainstream supermarkets to specialist low price brands as customers try to get more for the same money as food prices increase significantly and their disposable incomes are squeezed. The impact of these changed customer economics – their own feeling of financial well being – is really interesting and provides great opportunities for growth. For example: the established mainstream supermarkets have spent years fighting over middle market customers, not really drawing significant volumes of customers who shopped at low cost supermarkets. Quite simply they (middle market supermarkets) were in a different sector and they did not want to reduce their margins by offering prices and products that competed at lower price points. They fought hard with each other: middle market supermarkets competing with other middle market supermarkets for similar customers. However in the increasingly difficult financial times, large proportions of the customers of these middle market supermarkets are downshifting to lower cost own-brand produce, and shifting their allegiance to low cost supermarkets. It is now “in” for middle market customers to save money and prove they are great at negotiating bargains and seeking out better value offers. They are trading the time saving and convenience of using a single middle market supermarket for the pure price benefit of buying a proportion of their shopping basket from low costs stores.

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Growth Management The key for the middle market supermarkets is to react positively to this trend: many are doing so with specific offers showing that they care and understand the economic squeeze most of the customers are facing. Adverts showing feeding a family for £5 with a great meal and tasty recipe have already hit our TV screens. This is to be expected. The interesting element will be the reaction of the lower cost supermarket brands. All of a sudden they are being visited and used by a new customer base: middle market people who previously would not have stepped over their threshold. Instead of simply saying “Oh great – we’ve got more revenue”, they are working out how to increasingly attract more like minded middle market customers and retain them even when the good times return. These changes in customer economics today in the tough times of a recession have the potential to change the way a significant proportion of middle market customers shop for a long time. The changes can materially help reposition lower cost supermarkets as the “responsible choice” as customers shift their attitudes to “waste” in all its guises.

Supplier economics During recessions, marketing and advertising costs tend to fall as companies reduce their spending on marketing communications. Some people argue strongly that in a recession costs need to be cut back quickly. One of the easiest areas to cut is the marketing and advertising budget. Other people will argue equally strongly that despite the economic downturn companies must keep promoting their businesses. The truth is that in recessions your relative marketing and advertising costs should be far more effective. The whole economy will reduce its promotional spending, meaning that media owners and agencies do “deals” to attract business. So increasing your advertising and marketing spend in a recession can be a great tactic provided you continue to check that you are getting excellent returns on your investment. But supplier economics go well beyond lowered costs in marketing communications. A recession or tough times in your sector will affect each of your suppliers as well as your customers and you. However, the relative impact on your suppliers may be greater or smaller depending on the other sectors that they supply. The car industry provides a clear example. Most suppliers to vehicle manufacturers are specialist component suppliers to the whole of the industry. They tend not to supply other sectors to a great degree, being heavily reliant on the car industry. They may have other customers in the

Growth in a Recession aerospace and defence sectors, but in the main these do not provide the balance in revenues needed to overcome a downturn in the auto sector. By comparison, suppliers that cover a wide variety of sectors have an ability to spread their risk and not be so negatively impacted by tough times that exist in one particular sector – but this can be a double edged sword for you. Whilst the spread of risk is good in that it means your supplier is likely to be able to continue to supply you, their desire and need to respond to the tough times of your particular sector is not as great as those who are equally reliant on your sector. So when you are working out how the recession is impacting your ability to meet the changing needs of your customers, you also need to take a good long look at your own supply base on two counts: i. their financial stability and capability to continue to supply your company and ii. their ability to work with you to lower your costs through innovation or reduced prices. You also need to bear in mind that even though you may be working in a sector that has yet to feel the impact of the recession, this may not be the case for your suppliers. In effect this is exactly what has happened with the global credit crunch. Illustration Let us go back to early 2007 and the UK. At that time the credit crunch had yet to hit. The economy was strong and although borrowing had been high, funding was readily available for businesses and mortgage customers. In this UK market, at that time, in this sector there was no credit crunch. But the suppliers to the market – the UK banks and building societies – were part of a highly intricate global financial market place with derivatives traded in complex deals around the world. The shock waves in the over-extended US sub-prime market initially impacted US financial institutions and then very rapidly affected the financial businesses in many countries, including the UK. The impact on the UK took time to be fully realized, but as it became clearer the supply of funds dried up rapidly. It was the supply base (banks) that was the driver of the tough times in the UK, as they were in turn driven by a situation in a market on a different continent (USA). This is all very well and good but it misses another key point. That point is the impact of the prior reorganizations and process engineering

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Growth Management in banks (and many other businesses). Another real world example illustrates the issue. One of our clients was growing rapidly in 2008, entering a new market with a new product. The company needed additional funding to grow. It was in talks with its bank, in the week of September 15th 2008. History lesson – the collapse or takeover of Lehmann, AIG, HBOS were all in that one week. Not a great time to ask for help. But as the client said to me ... “if they’d asked me for sign off to go bust that week I’d have told them to hold off a while!” However the issue that faced the client was twofold. First there was the general lack of funding available. Secondly the people in the bank could not make a decision, not because they didn’t want to (they personally supported the request) but because they didn’t know how to. It was explained by a broker like this: “30 years ago the banking business was local. You had a local branch manager who knew the local market and made decisions. He’d spent his whole working life in the bank and at the age of 45 had all the knowledge and experience to run it profitably and make excellent decisions. Today the authority levels are dramatically reduced at the local level. Branch managers are far younger (30 years) but everything has to be referred to central teams applying centralized processes.” This has clearly been driven by the need for efficiency and cost out. “Fine” we say ... “We’ve seen this in many businesses – this is not new news”. True, but whilst the bank has been shifting its processes and procedures to eliminate waste and centralize, they have not lifted their eyes to look at the market. If they had, they would have seen a major new segment emerging. The segment is the rapidly increasing number of small businesses and owner drivers, operated by young entrepreneurs or local business people. This segment works daily with fluid and low level processes; they work off relationships and fast decision taking. They are empowered and nimble. The bank should have also developed relationship processes to complement the volume centralized processes to be used in appropriate cases to retain business. But they did not lift their eyes sufficiently. One bank did however. It got the business. The message is clear. Efficiency and effectiveness on the day job can lose you business if you don’t open your eyes to emerging customer trends. Growth management helps you check your market assumptions and develop additional relevant propositions. If we are seeing it in banks and other sophisticated businesses it could be closer to home as well. So check your own back yard first!

Growth in a Recession

The changed context: psychology In addition to understanding the changing economics that impact how customers, competitors and suppliers are impacted by the tough times, the other key element to consider is the psychological impact of tough times. For people who have lived through a number of economic cycles, the initial reaction of most is to predict how long and deep the recession or tough times will be. Clearly the economics are crucial, but so is the psychological impact on individual businesses. A simple illustration: a basic assumption behind businesses is that companies provide ongoing operations. The simple assumption being that the company wants to keep going – to keep providing shareholder value through day to day operations and employment to those involved. For some businesses this is not necessarily a valid assumption: they may see shareholder value through sale of the business or merger with others, or even simple closure and mothballing of the facilities. Additionally for family businesses where the owners have already been through a number of economic cycles and seen both the good and the tough times, another recession may give them the impetus they need to sell up or close operations. Some owners simply will have had enough, another recession is one step too far, they cannot see the point in pushing themselves through all the hard work and extra personal pressure that managing in the tough times produces. At the opposite extreme are companies that see recession as a great time to restructure, to hone their capabilities and address the new opportunities that tough times give up to the market. Such positive and aggressive organizations are likely to be winners. They will use the recession to test the prior assumptions, check and adjust their business strategy and target opportunities in all aspects of their business. From letting go of underperforming employees to consolidating their supplier base, from hiring and poaching key people from competitors to dropping low margin poor paying customers and from reducing waste to restructuring processes and policies, such winning companies use the recession aggressively to take charge and deliver incremental competitive advantage. The first impact of tough times on the psychology of a business is to give an excuse for failure. “Oh we couldn’t do that because of the recession”. It provides a cloak to lessen the impact of personal and team failure as the recession is seen as something they as individuals cannot possibly be expected to fix. Naturally of course such psychology is missing the point. Individuals are not expected to control the recession; they are expected to manage their company’s fortunes despite it.

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Growth Management The second impact follows swiftly on: generating a belief that because as individuals and teams there is little they can do to overcome the recession, so it gives them the automatic right to lower expectations for the business. These lower expectations can rapidly take hold. This in turn allows under-performers in organizations to justify their (poor) results and take the opportunity to breed a wider culture of acceptance of poor performance. The result is employees with a greater sense of lack of control and inevitability to the negative impacts of the recession. With no great surprise these two initial impacts lead to the most damaging of all: personal fear. Following a long period of stability and growth, many people have extended their borrowings in the belief that they can manage the interest payments. The recession means that those interest payments are not as easy to pay as before and that continued employment is essential. The alternative is horrible to think about: repossession of homes, cars and other assets. Worry, stress and “fear for my job” is quickly translated by employees into increased competition in the workplace. Unfortunately but naturally enough, fear tends to bring out the worst in people. Some will put their heads in the sand and hope it will all go away. Others, fearful of how they are seen relative to their colleagues, will try to impress – either by working harder (good) or by denigrating the work of others (very bad). Whichever way it goes, in times of recession you have to manage a very different team culture, dynamics and psychology. In the same way that the recession impacts the psychology of your company it also has similar impacts on your customers, competitors and suppliers. So you need to keep a clear perspective and identify which of them are less likely to panic, and try to predict their actions. You need to work out those that are likely to panic and take aggressive or disruptive action – for example dramatic price reductions by a competitor, non payment by a customer, or excessive price rises from a supplier. Understanding the economics and psychology of the tough times helps you make better decisions and deliver better results through more productive action. Refining your focus on day to day operations and retaining a clear structure for delivering sustainable growth through the Two Hats approach will help you and your company make the most of the recession and deliver a sustainable competitive advantage. Don’t be tempted to put Growth Management on the back burner in a recession or when times are tough. It is a critical time of opportunity as new trends and markets emerge, both for organic and acquisitive growth (for example Lloyds TSB takeover of HBOS, or Tata’s takeover of Land Rover and Jaguar).

Growth in a Recession

Action: what to do differently with growth management Recessions and tough times will drive you to make decisions differently from those you make in the good times. However just because the economic cycle is negative doesn’t necessarily mean that everything has to change in the way you do business. There are some exceptions of course but in the main most companies will see a recession as reduction in revenues rather than a total cancellation of all orders. As such you need to reduce the scale of the business to the match the lower revenues to continue to be profitable. Reducing the scale of the business to match your new revenues is key for survival in all businesses. The issue is how best to achieve it, and what else to do to maximize your capability to win both during the downturn and when the economics start to improve. The thought starter list in Table 12.2 below outlines some of the common actions taken. Some of the actions require you to work harder (more of the same), others to work smarter (new ways of working), and some a mixture of both. Whatever are the specific actions you need to take to manage your way through a recession, you need to retain the Two Hats approach through tough times to provide the basis for sustainable growth. It’s a bit like gardening in the autumn. We all know that winter is on the way so we set the garden up for the cold snap. Good gardeners prune and cut back the dead wood; they clear out weeds, dig out dead plants and replace them with new varieties. They also protect new plants from the frost and critically they fertilize the garden ready for the first signs of spring – and the growth it brings to well established and new plants. Identifying new plants and fertilizing is the role of Growth Management. It makes sure your base business is ready for accelerated growth and provides all-new revenue streams. In any recession or tough times the above actions are common and because they are focused on cutting back waste and reducing risk they can easily be seen in the company as “overtaking” the Two Hats approach. This is a dangerous and misleading perception. Recessions are great times for companies to grow. As we saw with the great JM Fangio right at the start of the book in Chapter 1, winners know how to grow and take advantage in tough times. So you must keep the Two Hats approach throughout the economic cycle. A closed view that only operates with a “cost cutting” mindset is dangerous. It can easily lead to a downward spiral: lowered revenues drives cost cutting which cuts resources; cut resources leads to lower revenues which leads to more cutting of costs and even fewer resources, which lowers revenues ... The result is a negative mindset that drives the business down.

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Table 12.2 Common actions in a recession Work Smarter

Work Harder

Renegotiate supplier terms (on all elements of the offer suppliers provide) Refine product specifications to lower costs Refine all logistics processes (just in time, high cost warehousing) Change processes and procedures to reduce resources needed (all operational elements) Increase operational flexibility Increase quality/reduce scrap/reduce waste Attention to detail: from preventative maintenance to switching off the lights Renegotiate supplier terms: all overheads (utilities, rents, outsourced services & fees) Sub let/moth ball any unused space Change processes and procedures to reduce resources needed (including headcount) Reconsider all outsourced/internal processes Cut back all non essential spending Cut back all entertainment and travel expenses Increase targeted and tactical marketing Renegotiate costs of marketing communications Restructure advertising and communications messages to changing customer needs Increase sales activities, refocus incentives and offers (deals, price reductions, ...) Refine the total product and service offer Sell more to existing customer (get a higher share of their spend) Attract new customers from the competition Introduce derivatives of existing products Develop all new products to existing and new customers Introduce low cost brand(s) for existing products Develop complementary services and added value through combined (one stop shop) offers Delete under-performing products to simplify the business Close down under-performing divisions to avoid financial losses Reallocate appropriate resources to growth opportunities (facilities, headcount, finance)

Y

Y

Y Y

Y Y

Y

Y

Y Y Y

Y

Y

Y

Y Y

Y Y

Y Y

Y

Y Y

Y Y

Y

Y

Y Y Y

Y Y Y

Identify all customers who may be at financial risk (not paying invoices): introduce new payment terms; collect outstanding invoices; delete at risk customers

Y

Elements

Actions

Cut direct costs

Cut indirect costs

Sell more current product

Introduce “new” products

Review poor performing business

Review loss making and high cost customers

Y Y Y Y Y Y Y Y

Continued

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Table 12.2 Continued Elements

Actions

Restructure

Review all high cost customer accounts: renegotiate terms or delete as required Focus on the 20% of customers that drive 80% of the profits: ensure they continue to receive excellent support Review and simplify existing organizational structure: Reduce levels of management Simplify reporting processes Increase spans of control Renegotiate financial structure of the company: reduce interest costs, reduce debt

Refinance

Work Smarter

Work Harder Y Y

Y Y Y Y Y

Y

The opposite of the negative mindset is one that gets more from the same resources either by working smarter or just plain harder. To work smarter you need to employ all the skills of growth management. From broadening you perspectives on the way you work and the processes involved, to problem solving, generating creative solutions, and testing, refining and embedding the new smarter methods and products. This makes sure that the natural downturn of tough times and recessions is put into context as you respond to the changing market. To keep perspective the comments and suggested principles in Table 12.3 will be useful.

Why are recessions and tough times great for growth? Firstly, recessions are great times to grow because they force you to reexamine your business, to work out what is really making money and what is not. It requires a detailed understanding of the business and the real value that you provide to customers relative to your competitors. It requires you to truly understand how customers’ needs are changing and what this means for existing and emerging market sectors. As already mentioned, this means providing better customer value through lower prices and/or better products and services. If done properly, this provides the foundation for long term sustainable growth during and after the recession. Secondly, a recession will change the way your competitors operate. Some will be less financially stable than your company. They will be less able to respond to improved customer value from your company, as their pockets aren’t as deep. They may be able to match an offer at first, but may not be able to continue it for as long. Every competitor who is not as

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Table 12.3 Be positive in a recession Element

Comments

Principles

Media “Full of Fear”

Mass media Press and TV are everywhere! Their comments exaggerate issues to sell their papers and programmes Doom and gloom is emphasized through sound bites and selective use of the facts Stress and fear of recessions produces standard human behaviour: run faster, just do something (anything!) different

Don’t believe everything you read and hear Seek out balanced opinions and data Don’t give in to the gloom, keep positive and push back Don’t accept that what is happening to others will automatically have to happen to you and your business

How you work

What you work on

Good times tend to drive highly segmented and marginally differentiated propositions

Renegotiating

Tough times change customer needs and the basic assumptions around the business

Restructuring hiring and firing

Recessions increase the need for different skills and competencies

Retain core competencies and skills of the Two Hats approach (running the day job and growing the business) Keep perspective, stand back from the issues Focus on efficiency and effectiveness Keep processes and reporting simple and direct (not filtered) Use the 80:20 rule to reallocate resources Respond to the changed customer needs. Focus on the new definition of customer value and differentiate your offer on specific tangible benefits Use intangible benefits such as long term customer relationships to show commitment and support to long term and valuable customers Define the value to customers of each of your processes and actions, change inefficient and low value added activities Use the market changes to renegotiate your terms of business with customers and suppliers Actively develop a skill in renegotiation , work with customers and suppliers to redefine their needs and develop wider and better solutions for all parties Restructuring involves changing the capability of the organisation Recessions are good times to find excellent people who have been made redundant by your competitors, suppliers or customers “The first loss is the best loss” – so cut back quickly and give the company “room to breathe”

Continued

Growth in a Recession

Table 12.3 Continued Element

Comments

Working smarter

Cutting costs includes changing established processes and procedures

Energetic culture

Tough times can quickly negatively hit the culture of an organisation reducing its ability to respond and increasing the risk of slower and poorer decision taking on what to do and how to act

Principles Avoid continuous small cuts in resources: larger cut backs provide clear direction to those remaining in the business Have a clear view of the future needs of your business for specialist skills and competencies and recruit against these future needs to accelerate your growth in and out of the tough times Evaluate each process element, check how it adds value and if it can be done better Use the people who use the process to work out how to improve it, top down reviews should be balanced by bottom up input, and third party objective reviews Use the recession or tough times as a rallying cry to focus the whole of the company on fighting back Use small cross function teams with a broad remit to work quickly on cost reduction and revenue improvement actions: focus on quick wins to gain momentum and a belief in being able to manage the recession proactively Take action but plan first; don’t delay Ensure that you delete only poor performing products and people; at the same time as encouraging new opportunities

financially strong as you provides opportunities for growth. Every competitor that is financially stronger than you provides an increased threat. Against the increased threat, you need to differentiate on relationships, service and added value not pure price. Thirdly, in recessions some businesses will fail to fulfill the needs of all or some of their customers. Customers actively look for new suppliers in recessions to lower their total costs. Redefining your offers to target your competitors’ customers is great for growth – but don’t fill the bucket with new customers only to lose your loyal customers at the same time! Fourthly, the tougher economic times will reduce the value of businesses which you may want to buy. This book mainly concerns developing growth through a Two Hats approach that focuses on the capability of the company and organic growth (from within). But recessions increase the opportunities to acquire under-performing customers, suppliers and competitors to grow your own business. Under-performing businesses in

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Growth Management a recession suffer a triple whammy. Not only is their value marked down because of their relatively poor performance, investors are far more difficult to find, and money supply is far tighter. Shareholders in under-performing businesses during a recession want to find a way of minimizing their risk quickly. They are more likely to take a low offer than carry on hoping for a high price in a falling market. Fifthly, some company owners will just not want to go through the recession. They have either been there before, and are at a time in their lives when selling up and moving on is preferable to going through the changes needed to restructure the business, or they have not faced a recession before and want to get out now. Either way they may be financially strong, but they are just not up for the fight. Attitudinally they want out, and “out” provides growth opportunities for those who want to stay “in”. Lastly, “good managers” are disproportionately more effective in bad times. Good managers react more quickly, they develop opportunities more quickly, they keep core competencies and skills intact, they acquire new skills, they build on the failure of others and they invest additional time, thinking power, and resources against emerging trends. For them the potentially increased financial risks of a downturn are outweighed by their planned actions and vision. By comparison poor managers delay decisions, make poor decisions, fail to act and sometimes panic.

Summary Recessions and tough times require businesses to change their approach to the market. They need to react quickly to customers’ changing needs. They need to restructure and position the company for the tighter economy and be ready to capitalize early on the upturn as soon as it arrives. In recessions companies have the opportunity to re-invent themselves, to redefine the value they provide customers and to adjust their core competencies and skills to meet new markets and opportunities. Recessions are great times for planned growth. The Two Hats approach remains as important during a downturn as it does in a booming economy. The need to focus on the day job to drive cash increases during a recession, but so does the need to re-evaluate the market and your company’s propositions. Managing the psychology of tough times and recessions is different from boom times. Companies that manage their teams well in a recession give themselves at a clear competitive advantage.

CHAPTER 13

You, Your “Two Hats” and Growth Management Objectives • Outline the benefits of Growth Management and the Two Hats approach to you as an individual • Define the implications for individuals • Identify how to get the best from Growth Management and the Two Hats approach

Definition Many of these chapters have started with a definition. In this case the definition needs to be of you. Thankfully you can fill in the definition yourself. In my experience most people tend to have a broadly accurate definition of themselves (sometimes more critical than others would see them, in other cases less so), sufficient at least for the purposes of this chapter. Your starting point for getting the most out of the Two Hats approach is an understanding of your main strengths and weaknesses. Are you good with people, are your technically excellent, do you love admin, are you great at operations, are you creative, are you all of these and more!? You also need to think about the different roles you have in your company. You don’t necessarily need to know your specific personality profile, you just need to consider your own strengths and weaknesses in how you work and what you like to work on. The Two Hats approach provides the framework for you to be far more productive in supporting the ongoing growth of your company. It also provides a great opportunity to contribute in different ways; playing to your strengths and using the processes and team support to overcome and address any weaknesses. 189

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Complexity at work Some people will work in complex businesses with complicated processes. Most businesses use processes and structure to reduce complexity and make it easier for us to perform well. Some succeed; others seem to make it more difficult. Additionally in many companies the real complexity doesn’t come from the processes, or the sector in which they work, it comes from the personalities involved. Company politics are hated by some, enjoyed by a few, and impact everyone. Politics can be positive but mostly people see them as unhelpful and disruptive. Politics are based in different views of what has been and needs to be done. Politics are driven by a lack of agreement on what to do and how to do it. Different ideas, against differing objectives, produce factions and inefficiency. Even great businesses that run well structured operations linking directly to a clear and agreed business strategy still suffer from politics. Politics are a fact of life. The Two Hats approach however can help reduce politics if it is implemented properly and consistently by providing clear focus and agreed priorities between the day job and growth actions. But as with everything, the Two Hats approach is only as good as the people who work with it – you – and your ability to influence those around you to implement the approach consistently and fully. In Chapter 1 we talked about the case for Growth Management: the issues and comments that a lot of people raise about their work. Comments such as: • • • • • • • • •

“The company is too slow to react” “We’re not trusted to make decisions: everything goes upstairs” “People take things too literally: they don’t think and interpret” “Lack of joined-up thinking” “That’s the latest flavour of the month: we just rush into stuff without thinking” “Decreasing experience and knowledge in the company” “Making too many wrong decisions” “Just not implementing properly” “We’re just fighting fires!”

The common denominator in all of these comments is people – both as teams and as individuals. Additionally, also as noted in Chapter 1, a number of key trends have changed the way people work and the values they place on their work. Irrespective of your work, the sector that you work

You, Your “Two Hats” and Growth Management in and the company or organization you work for, the Two Hats approach gives you the opportunity to be significantly more effective in delivering sustainable growth: for you as well as your organization. Chapter 1 also discussed the different attitudes and values people have to work, in part depending on when they were born and specifically the times when they grew up. Currently there is a significant mix of different attitudes. The Baby Boomer generation are retiring and leaving work, or at least moving away from their first career into new lives. The Generation X are hitting the boom time of their working lives, and Echo Boomers are just entering work. But the difference in their expectations and attitudes to work is significant, and varies by location and culture. What is also interesting is how peoples’ attitudes also vary by age and country. I first came across this when researching attitudes across Europe to advertising and communications messages in the early 90s. A conclusion was that as people age they tend to develop deeper ties and respect for their local cultures. Consequently people in their late teens and early twenties will have more in common with people of a similar age than they will with people of the same country but who are a generation or more older. Put simply a 22 year old Austrian will have more in common with a 22 year old Italian, French, or English person than with fellow Austrians of their parents’ generation. However, a 50 year old Austrian is likely to have more in common with another Austrian than with people of the same age in other countries. These differences also occur within countries. The major cities of the world are growing closer together. Just think about the cultural differences between London, New York, Paris, Sydney, Beijing, Frankfurt, Tokyo, Mumbai, and think about the increased similarities compared to ten years ago. Is the attitudinal base of London closer to New York than the UK’s second city Birmingham? Is London the capital of the UK, or a multi-cultural microcosm of the developed world which happens to hold the seat of government? Why does this matter? It matters because it impacts how you relate to the people around you in business. It matters because even if we do not work in a large multi-national, we are far more likely to be conducting business with people in other countries than was the case ten years ago. Markets and customer needs are being increasingly influenced by the global village – either directly or indirectly. Competitors can spring up from other countries. Market opportunities can emerge in one country and rapidly sweep across the globe to others. So as an individual your ability to see trends beyond your current market and to be able to work across cultures and age gaps are increasingly essential skills. It is essential not only for the day job, but for delivering sustainable growth against existing and new competitors.

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Growth Management Flexibility and adaptability are essential. Unfortunately for some people who see work as a simple means to an end flexibility and adaptability are rude words. They come to work to earn money, and with historically high employment, they were more demanding in their expectations. They want to turn up, do what’s in front of them and go home. As the recession bites, these attitudes will change rapidly as competition for well paid stable employment increases considerably. You obviously work with and around people who may not share your attitudes to work. To succeed and grow as an individual you need to get the best out of the teams you work with – as a key member or as a supporter.

So specifically what does this mean to you in how you work and what you do? This book has outlined the case for a Two Hats approach and Growth Management. Successful implementation requires a long term commitment to respecting the need for operational efficiency and effectiveness on the day job as well as respecting the need for continuous review of emerging trends that change customer needs and competitor activities. This long term commitment requires your support. You have the ability to make a considerable contribution to business growth, and in the process develop valuable skills.

You and your Two Hats In addition to the “day job” hat that you wear, Table 13.1 below outlines roles you may take in managing growth; they relate directly to the individual stages of Growth Management covered in the preceding chapters. You may well need to get involved at various stages in various ways. The roles you do depend on your current position in your current organization, but also on the future roles you want to do. You may also be surprised and a bit doubtful about the last two elements in the table on page 194 – supplier partner and customer long term partner. You may agree that technically you could be asked as a supplier or customer to work on growth management for another company, but you will probably be skeptical about the chances of it happening. A real world example: in Chapter 1 under the section “Two Hats In Practice”, the Jaguar UK Scale Shift was described. The programme directly involved suppliers and customers working with Jaguar UK to deliver the changes

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Table 13.1 Potential roles for you in managing growth Element

Role

Champion

The key supporter of a specific growth project (one/two champion/s per project) To be committed to Two Hats and Growth Management Remove blockages to progress Represent Growth Project to the Board with the project team leader Encourage and support of Project team as individuals and as a team Collate and feedback learning and team development on the Two Hats approach: Growth Management and Day to Day operations

Project team leader

Project co-ordination and leadership: business plan and launch plan Key link to Project Champion and the Board Delivery of functional input, support for full project team Co-ordination of feedback and learning from the pilot Development of team and company capabilities in growth management

Project team member

Delivery of the Implementation/Launch Plan Delivery of functional input: sales and voice of the customer Support for full project team achievements and development

Project team supporter

Support for the Two Hats approach and personal development in Growth Management Delivery of specific tasks against a specific plan

Implementation team member

Transition of the Project Team to include the larger Implementation team: selection and motivation of team members Delivery of internal and external launches through the Take It To Market process Clear understanding of the links between the actions of the different members of the team: respect for the links and delivery of solutions on time and quality

Implementation team supporter

Functional focus (sales, production, purchasing, etc) against specific support actions in the Take It To Market plan Individual delivery of quality solutions linked to the implementation team’s delivery on time, on quality

Integration team leader

Integration of the growth business with the existing core business to produce a sustainable new business Selection of Implementation Team members and supporters

Integration team member

Integration of the growth business into the existing core business Development of improvements to functional operations (sales, marketing, production, logistics) arising from the integration

The board and functional directors

Board commitment to running Two Hats as part of the Company’s Business Structure and Strategy: running the day job and delivering growth Individual, personal, sign off as a team to Two Hats: openly stated and acted upon (walk the talk) Board and individual interest and support to the pilot project Board and individual interest and support to all follow on growth projects and opportunities

Continued

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Table 13.1 Continued Element

Owners and shareholders

Supplier partner

Customer long term partner

Role Mutual support of each of the board and senior directors to each other to deliver a Two Hats approach Agreement to selected (prioritized) growth projects Agreement to allocating the necessary resources and tools techniques and processes to drive growth projects continuously Support for integration of growth businesses and the embedding of the Two Hats culture over time Policy support and commitment to the Two Hats approach and the core need for continued sustainable growth Support for developing growth management skills and competency within the company to deliver competitive advantage Providing specific support to a customer/client company that is actively using Growth Management and needs controlled input from key valued supplier partners to develop and launch new propositions Providing specific support to a supplier company that is actively using Growth Management and needs controlled input from key valued customer(s) to develop better solutions for the customer(s)

needed for growth. In this case customers were the Jaguar dealer network and the suppliers were the key marketing and communications agencies. Other similar examples exist where companies are substantially dependent on relationships with companies upstream and downstream from its own activities. Just think of major retailers and their suppliers, and how they share information to lower costs on the day job and work together to build new markets with exclusive deals. Exclusive deals and distribution rights are clear examples of where customers and suppliers work together to grow their joint businesses – think of Apple’s iPhone and its initial exclusive distribution deal with O2 in the UK. What should be clear from the list of roles involved in Growth Management is that there are various and wide ranging opportunities to get involved in growth. Check through the roles and recognize the skills you already have which you can use to exploit your value to the company, and which ones you don’t have but which are important to your future value.

Your future value Your future value is an important concept, not only to you but also to the people and organizations you work with and around. In the same way as

You, Your “Two Hats” and Growth Management businesses look at customer lifetime value (the financial benefits a customer will continue to provide to the company for the foreseeable future) you should assess and develop your future value. Developing your abilities in running the day job and in managing growth will materially impact your contribution. This in turn impacts your earnings, your working “shelf life” and your ability to work on things that interest you and give you personal satisfaction. Your working shelf life refers to the length of time your business skills and competencies remain valuable to others. Developing a clear ability to work on both operational efficiency and effectiveness and at the same time to deliver sustainable growth is bound to increase your shelf life. It proves an ability to see and adjust to changing conditions. It shows you can keep learning and apply the knowledge to help transform a business. Increasing numbers of Baby Boomers have retired from their “first careers” but have started a new business life in other areas of interest. They are not content to retire, they are fitter and healthier than the prior generation at the same age, they consider themselves as still young and frisky in their late fifties and sixties, and they want to keep learning. They grew up in an era of developing opportunities and they are not going to let go of that just yet. They have maintained their “shelf life”, and are highly valued for their experience. To get the depth of experience they need organizations are re-employing the very people they allowed to take early retirement only a few years ago. Companies such as B&Q are employing a significant proportion of older staff just because of their life and business experience. At the same time the Generation X group have been used to a much more “project” mindset to work than their parents. They have driven their own careers, they have moved between companies and sectors more than the prior generation. They have managed their own careers without corporate help. In the postwar period many major companies developed formal and informal corporate “ladders”. Managers were expected to develop their people and those who were good could climb the heights of senior management and directorship without having to leave the company fold. By the mid-nineties successive economic cycles and intense competitive pressures reduced organization structures, flattening reporting lines and changing the concept of top down management. The result is far more nimble and informal organizational structures, reflecting customer needs and competitive pressures. Perhaps the most striking example is the development of semi-formal associations between individuals and businesses that meet together to work

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Growth Management on a particular project and then at completion disintegrate back to tie up with different people and organizations to work on the next project. The advertising sector has clearly developed this model with fragmented agencies bringing in specialists and associates as work increases and disposing of them quickly as accounts are lost. What all this means is that as individuals people need to develop flexibility, adaptability and an ongoing desire to learn – why? The answer is simple. Customers are demanding that they do. Customers will not pay for non value added corporate structures. They will not pay for inefficient companies. They will not pay because they don’t have to. “They” are also “you”. You are a customer and a worker – use that knowledge carefully. The research sample of one is dangerous, but as a backstop of common sense it is very useful. There are plenty of other options around in most walks of life to make it easy for consumers to change allegiance between brands and companies with little risk. The implication for you is simple. You have to be able to “do” and “grow” to maximize your business value. Just “doing” will leave you liable to being sidelined by changing customer needs. Just “growing” could leave you sidelined by more efficient competitors. Your competitors are not just company competitors, but your co-workers (remember the tale of the two friends and the cheetah in Chapter 12), competing for the same plumb jobs and opportunities. Clearly though even in large organizations the trend to project centred working and less formal structures increases your need to look after your own career. But developing your career is not a solitary role. It means working in teams in complex or loose structures. Growth Management helps you make the most of team achievements that drive both the day job and growth. In describing how people should operate in teams there is the well used (English) phase – “There is no “I” in team”! True. But to stretch the analysis further: there is a “me” and a “mate”, and in most walks of (western) life people describe themselves by their teams or “tribes”. I am a Leicester Tigers supporter, I am part Welsh, mostly English, I am European, Western. I know Fred Bloggs and Jenny Wren, we worked together on project Purple in the good times of 06. The phone company Orange launched a new global ad campaign in September 08 entitled “I am”. It describes Orange customers as the amalgam of all the people who have influenced their life – partners, brothers, work friends, teachers, etc. It seems to resonate extremely well with its target market.

You, Your “Two Hats” and Growth Management Some people hate the advert – it is a focus on individual uniqueness that inflates the sense of self importance. As such it reflects to those people the “me” culture that avoids responsibility and accountability for personal actions. Others see the advert positively. It is a reminder that we are little different from our early homo sapiens ancestry. We grew up in a tribe, were influenced substantially by those around us and by our experiences. We owe a debt of gratitude and have an obligation to the tribe and its rituals. You influence them but abide by them. In delivering Growth Management, you have a significant opportunity to help develop the capabilities of the company, the teams involved, and yourself. This emphasizes the need for controlled and managed team work at all levels – driving respect for others, being true to your own responsibilities and accountable for your own actions. So in a team “I” exists as “me” (true to my capability) and a “mate” (supportive of others and the processes). Growth Management helps here. It helps develop both sides of your capability – running the day job effectively and efficiently, and working creatively to deliver sustainable growth.

Summary The Two Hats approach works at the company level to ensure that both the urgent and the important get done. Growth Management does what it says. The clue is in the name! But the Two Hats approach and Growth Management also work at the individual level provided you choose to take an active role. Some aspects of your work need to be improved continuously, increasing your own personal efficiency. However to increase your value over time, you need to develop growth management skills that help you identify, develop and bring to market new business with the people around you and by yourself for yourself. Working out how and what you need to do differently must be a personal decision based on your own assessment of your current skills, and your future needs. Without doubt this means you have to have a clear personal vision for your “business” self that is realistic, credible, appropriate to your true self and relevant to the market. However, by operating with Two Hats you can substantially improve your value in the market and widen your ability to be successful in driving efficiencies and new business. Growth Management gives you the structure to change how you work on delivering sustainable growth.

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BIBLIOGRAPHY

Ansoff, Igor. Ansoff Matrix, Harvard Business Review, September 1957. Braben, Eddie, The Morecambe & Wise Show, BBC TV. Goleman, Daniel, Emotional Intelligence: Why It Can Matter More Than IQ, Bloomsbury Publishing PLC, 1996. Kennedy, John F., Inaugural Address, January 21, 1961. Obama, Barak H., Inaugural Address, January 20, 2009. Welch, Jack, Winning. Harper Collins, 2005.

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INDEX

Note: Page numbers with ‘t’ and ‘f’ denote tables and figures, respectively. accountability, 11 see also responsibility American, meal illustration, 98 Ansoff, Ygor matrix, 51–3 “ask not what your country can do for you …”, xiv auto industry, 16–18 baby boomers, 6, 195 banks crisis in financial markets, 170–1 restructuring, impact on customers, 179–80 barriers to entry, exit, 61–2 bespoke, tailoring tools, 162–3 bet the farm, 125 blame culture, no, 117 BMW, 17 Braben, Eddie, 11, 12 careers, making, 160, 196 cars, see auto industry cheetah, illustration of new predators, competitors, 172–3 choice overload, 8 cohorts, 6 communications, consistency, 42 company sayings, internal, 5 competencies, 54–6 matrix, 55f competitors information, sources of, 63–4t mapping, positioning, 62, 65

concept Two Hats, 3 conflict, day to day vs growth illustration, 33 management styles, 3, 31–8, 32t, 35t, 36f, 37f continuous improvement, 21 creativity briefing document, 76, 76t contributors to, 78–82, 79–80t ideas, 78 process, controlled, 73–84, 74f roles, 78–80 scope of, 75–6, 76t timetable, 73–4 tools, 82, 83f culture, 31, 162, 184–5t, 187 customer economics in recessions, 175–8 customer service, illustration of, 98 day job, 15, 16 decisions taking, 12, 13 definitions day to day operations, 31–4, 32t growth, 16, 19–22 growth activities, 32, 32t Growth Management, 18 Proposition Plan, 85 recession, 169 Take It To Market Plan, 95 Two Hats, 18 diagnostic matrix, 59f downsizing, see re-organisations 199

200

Index echo boomers, 6 e-mails, 10–11 embedding, see Growth Management, embedding emotional intelligence, 145–7 employees attitudes, 5–7 experience and understanding, 56 good managers, 188 recruitment, 164, 186–7t rewards & recognition, 159–60 value gained, 165, 165t values, 5–7 enthusiasm managing, 14, 15 unbridled, 14, 15 expectations inflation, 7 lowered by recession, 182 failure, in context, 158–9 Fangio, J. M., 3 fear, personal in recession, 182, 186–7t feedback, 147–55 candid, 149 commercial, 148, 148f communications, 148f, 151, 152t competitor reaction, 150–1 customer, 149, 150f team dynamics, 152–5, 153f flavour of the month, 143 follow on projects, 161 Ford Motor Company, 16, 164 forecasting, illustration, 174 gateway meetings, 36–7, 37f, 122 General Electric, 19 generation X, Y, 6, 7, 195 Goleman, Daniel, 145 Google, xiii, 172 green house plants, illustration, 137 growth culture, 31–5, 32t, 35t

integration of, 123–42 activities, 130–5, 131f business rhythms, 133–4, 134f communication, 138–9 customer expectations, 137–8 factors influencing, 123–5 feedback, 140 impact on mainstream business, 124, 126–8 initial actions, 128–30, 129f measurement of success, 139–41, 141t rules of engagement, 136 scale differences, 125, 126f, 127f synergies of, 140, 141t timing of, 123 see also definitions growth in a recession, 169–88 changed context, 173–82 definition, 169 rates of decline, data sources, 176t rationale, 185–8 see also recession Growth Management embedding, 143–66, 144f, 146f initial phases of, 41f internal communications of, 42–4, 43f management versus budgeting, 25 prerequisites, 40 see also definitions growth operational, 21 growth opportunities identifying, 50–66, 51f, 59f prioritising, 67–72, 70t sources of information, 61 growth projects champions, 48 composition, 46 disproportionate scale, 125–8, 126f, 127f integration of, 123–42, 129f, 131f pilots, 44 scale, 21

Index growth projects – continued team roles, 47, 47t teams, 45–8 heroes, generating, 160 horse and rider illustration, 135 integration, of Growth Project, see growth; growth projects internal launch, 109 Jaguar, 16–18, 31, 42, 174, 182, 192 joined up thinking, 85, 95, 145 Kennedy, John F., xiv key learning box, illustration, 91 knowledge management, 8–10 launch, see Take It To Market plan Lawson, Geoff, 17 Lean, xvi meal, customer service illustration, 98 meetings, mapping growth, 37–8, 37f operations, 36, 36f Mondeo, 81–2 Morecambe, Eric, 11, 12 motorbike industry USA illustration, 9 Mycoted.com, website, 82 Myers Briggs, 164 naming, illustration, 81–2 negative growth, see recession Not Invented Here, (NIH) syndrome, 107–8 Obama, Barak H., xiv opportunities see also growth opportunities organisation, differences day job/ growth, 32, 32t feedback, 154–5

paradigms illustration motorbike industry, 9 personal development, 189–97, 193–4t future value, 194–7 roles, 193–4t you and your Two Hats, 192–4 pilots choosing the pilot, 45 see also growth projects playing all the right notes, 11, 12 Previn, André, 11, 12 prioritising meeting for, 68–71, 69t opportunities, 67–72 projects follow on, 161–2 see also growth projects proposition plan, 85–94 contents of, 86–8 definition of, 85 format, 88–9, 88f purpose of, 85–6 working tool, 93 racing driver, illustration, 3 recession actions in a, 183–5, 184–5t changed contexts, 173–82 definition, 169 discretionary purchases, 171 global 2008, 170–3 great for growth, 185–8, 186–7t psychology of, 181–2 virgins, 172 winners, 172 see also growth in a recession re-organisations, 11 responsibility personal, xiv, 11 team, 78, 89, 98–9, 108 rewards and recognitions, 159 roles personal, 189–97

201

202

Index roles – continued who works on what, 26–31 Rover Group, 17 “rubber hits the road”, 96 scale, danger of disproportionate, 125–7, 127f scale shift, 16–18 shareholder value, 164–5, 165t, 181, 188, 193–4t, 194 short termism, impact of, 27, 147 slot machine, illustration, 33 strategic fit, 50–1, 155–7, 156f, 157f substitution, customers of, 97 success can kill, 13, 14 celebrating, 158–60 nothing fails like, 13, 14 supplier economics in recessions, 178–80 tailoring, 162–3 Take It To Market Plan, 95–122 definition of, 95 do it, 110–16 first impressions count, 97 internal launch, 109, 110, 111–13t measuring success, 119–22, 119t, 121t, 122t phases of, 96, 96f, 99–116 purpose of, 95–9 quality of, 115, 116t rules of engagement, 117–18

sign off, 99 timetable, 104, 105f translation from Proposition Plan, 101–4, 102–3t Tata, 182 team dynamics, 152 feedback, 153, 153f multi functional, 44 one, single, 117 selection, 45–8, 78, 108, 130 you as a team member, 196 timeframes, 26f, 27, 27f tough times, see recession Two Hats definition, see definitions illustration, 16–18 wearing, 4 urgent and important, 3, 25 value added work, 29, 30 walk the talk, 109 war gaming, 62, 151 Welch, Jack, 19 widgets, illustrations, 45–8, 90–1 Wilkinson, Rod, 17, 18 winning organisations, 3, 13, 15, 19 Wise, Ernie, 11, 12 work, harder/smarter, 184–5, 187, 184–5t, 186–7t