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Perspectives

How can you optimize to drive growth?

The BIG question

While many transformations are undertaken to cut costs or make incremental improvements, growth-focused transformations have the potential to directly enable the business strategy.

How can you optimize to drive growth?

The success of a company's strategy depends on its ability to deliver on its value proposition for customers. While a distinctive competitive position is important, it will count for little if a company lacks the operational capabilities and focus on executing its chosen strategy. At many companies, efforts to improve operations have consisted of simply looking for ways to cut costs or make incremental improvements, unrelated to the company's strategic objectives.

Senior executives should focus instead on growth transformation—optimizing the operational capabilities that directly enable the company's business strategy. Rather than having their vision limited by their current processes, talent, and technology, executives should expand their horizons to envision the operational capabilities that their company truly needs to be successful.

What's the point?

Transformation is a big topic—one that encompasses business processes, regulations, the workforce, technology, external stakeholders, and more.

It's also a topic that comes with big questions. The Deloitte Business Insights and Guidance (BIG) on Transformation series seeks to help leaders rapidly understand the issues at play—one big question at a time—so they can make big, bold changes that allow them to own the disruptions taking place in their markets.

The big question right now: How can you optimize to drive growth?

How do you know if you need to launch a growth transformation?

Companies often undertake growth transformation projects when they are at an inflection point and recognize that their current operating structure does not support their strategic goals. For many companies, the driver for a growth transformation project is either cost pressure, driven by competition or unprofitable growth, or pressure to scale, when the current talent, business processes, technical infrastructure, access to information and decision rights all lack the ability to handle the increasing transaction volumes generated by growth.

In other cases, the catalyst is investment pressure, where a company seeks to generate funds to invest in new business initiatives. For example, a large newspaper conglomerate needed to fundamentally rethink its traditional print business model when faced with the market transition to digital content. The company reduced expenses by transforming capabilities that were no longer central to its business model, such as reducing home delivery of its print newspaper from seven to three days a week and reinvested the savings in capabilities needed to support its expanding digital media business.

But isn't it always a good idea to cut costs if possible?

​All too often, companies take a scatter-shot approach to operational improvement, scanning the organization for isolated opportunities to cut costs by such tactics as reducing headcount, redesigning processes, installing new technology systems, outsourcing, or relocating operations to lower-cost countries. While these steps may generate savings, initiatives that are not directly linked to a company's strategy run the danger of actually eroding value. Consider a company that markets itself as providing a superior customer experience. Reducing customer service center staff may lower costs, but could also lengthen wait times and degrade service quality, undermining the company's value proposition for customers. Executives need to clearly articulate and align the organization on the operational capabilities required to strengthen the company's competitive position.

How can you align the leadership team around profitable growth?

An effective growth transformation project needs a clear ambition—objectives that will steer the company toward attaining its strategic goals. As an example, a company seeking to migrate from a declining market into growth markets may have an ambition of reducing expenses in mature markets to free up capital that can be reinvested in new product development in its growing businesses. The growth transformation ambition defines the value the transformation will deliver and identifies the capacity to be freed up to invest into growth drivers. Creating this common understanding is critical to keeping everyone focused on achieving the desired ambition.

Securing the commitment of employees throughout the organization requires the active support of the company's senior executives. It's not enough for the executive team to simply approve and fund the transformation project. The support of senior management needs to be consistently visible to help the employees understand that the improvements are critical to the company's continued success.

Let's talk

Want to learn more about how to improve your company's operations while fueling growth? We should talk. We have a strong record of helping organizations navigate effectively through the challenges of transformation to deliver new value. Our global network of business and technology professionals, as well as extensive industry-specific experience, means we can rapidly collaborate with you to develop a transformation vision and strategy that makes sense for where you want your business to go.

Contact:

Christine Anderson, managing director, Deloitte Consulting LLP

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