ACHIEVING BREAKTHROUGH GROWTH
ACHIEVINGBREAKTHROUGHGROWTH
Established businesses often struggle to achieve industry-leading
growth rates because their sector is mature or highly competitive,
or because they become stuck in the rut of incrementalism. Firms
become convinced that they need to compete in the same way as
their rivals: minimizing risk, maximizing resources, and making
acceptable returns. There is another way: fundamentally re-conceive
what drives your profits, build a better business model, and achieve
breakthrough growth.
The idea
Research by business school professors Rita Gunther McGrath
and Ian C. Macmillan highlights how companies in a range
of industries achieve exceptional growth (see Market-busters:
40 Strategic Moves That Drive Exceptional Business Growth,
published by Harvard Business School Press). The key is to revise
your business, taking a new, different, and radical approach from
that of your competitors and finding better ways to drive profits.
It is essential to be flexible and creative, and to understand what
customers value.
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Cemex transformed its small commodity business in Monterrey,
Mexico, into one of the largest cement companies in the world
through a radical reassessment of what would drive profits. It has
outperformed its international rivals, Holcim and Lafarge, in share
price, operating margins, and return on assets. Cemex moved from selling concrete as a product by the yard, to selling timely delivery
of a commodity. Delivery was what mattered to customers: getting
the right amount, in the right place at the right time, without
workers waiting or the concrete spoiling. Using methods employed
by Federal Express and ambulance crews, Cemex developed digital
technology to manage the location and dispatch of its trucks.
Now, Cemex uses GPS technology to guarantee delivery of ready mix cement within a 20-minute window.
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In practice
For Cemex, success was based on a cultural change across
the business. This required a proactive approach to meeting
commitments, developing new ways of serving customers, and
ensuring efficient operations. Using the following techniques can
achieve breakthrough growth:
• Transform the customer’s experience and find new ways to meet
their needs—eg Microsoft developed Office software, and
whatever you think of their business it’s definitely got the edge
over typewriting!
• Transform the product or service offered to customers so it reflects
what they value. One approach is to compare your offer with
competitors’ by sorting product attributes into three categories:
basic, differentiated, and exceptional. Then consider how to
develop new advantages and strengthen existing ones to make
your product exceptional.
• Change your performance metrics so you can monitor and improve
your customer offer.
• Redefine your business, possibly by altering the fundamental unit
that customers are charged for, or by revising key metrics used
to measure how well you are selling. For example, some lawyers-departed from the traditional method of selling their time to
selling services on a “no win, no fee” basis.
• Capitalize on changes in your sector. For example, Amazon.com
recognized the potential for the internet to redefine retailing.
Also, HSBC bank was the first to recognize that immigrants in
Britain had specific banking needs (eg to repatriate funds from
overseas) and circumstances (no banking history in Britain), and
offered products tailored to suit this market.
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