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Illustration by Paul Wearing
Is your company fit for growth? Many companies today are not. The way they manage costs and deploy their most strategic resources is preventing the expansion they need. But they don’t realize it — at least not yet.
To be sure, many of those companies are in better financial shape today than they’ve been in for a long time. Having implemented cost-cutting and austerity programs during the recession, they have relatively healthy balance sheets and sizable reserves of working capital. They have strengthened their ability to weather downturns and improved their productivity in ways that could potentially last for years. All these restructuring actions were required for survival between 2008 and 2011.
But as they shift their focus from the cost side of the ledger to the revenue side, searching for ways to move beyond cost cutting — entering new markets, commercializing innovative products and services, offering more compelling customer value propositions — these companies are strategically and financially out of shape. They have not made the hard choices involved in channeling investments to the capabilities that are needed most, and deemphasizing or eliminating their other expenses.
How can you tell if your company is fit for growth? Here is a simple, three-question diagnostic:
- Do you have clear priorities, focused on strategic growth, that drive your investments?
- Do your costs line up with those priorities? In other words, do you deploy your resources toward them efficiently and effectively?
- Is your organization set up to enable you to achieve those priorities?
The easiest way to answer these questions is to imagine the opposite.
If you do not have clear growth priorities, there are several warning signs. You have so many initiatives that you...
Read more: http://www.strategy-business.com/article/12205?gko=ebe6b
To be sure, many of those companies are in better financial shape today than they’ve been in for a long time. Having implemented cost-cutting and austerity programs during the recession, they have relatively healthy balance sheets and sizable reserves of working capital. They have strengthened their ability to weather downturns and improved their productivity in ways that could potentially last for years. All these restructuring actions were required for survival between 2008 and 2011.
But as they shift their focus from the cost side of the ledger to the revenue side, searching for ways to move beyond cost cutting — entering new markets, commercializing innovative products and services, offering more compelling customer value propositions — these companies are strategically and financially out of shape. They have not made the hard choices involved in channeling investments to the capabilities that are needed most, and deemphasizing or eliminating their other expenses.
How can you tell if your company is fit for growth? Here is a simple, three-question diagnostic:
- Do you have clear priorities, focused on strategic growth, that drive your investments?
- Do your costs line up with those priorities? In other words, do you deploy your resources toward them efficiently and effectively?
- Is your organization set up to enable you to achieve those priorities?
The easiest way to answer these questions is to imagine the opposite.
If you do not have clear growth priorities, there are several warning signs. You have so many initiatives that you...
Read more: http://www.strategy-business.com/article/12205?gko=ebe6b
