One third of business leaders in the dark on organizational issues, survey shows
We’ve found 34% of the leaders of UK big businesses don’t fully understand their organisational issues. Those that do are most concerned about growth. We were intrigued, so ran a series of in-depth interviews with business leaders which identified practical ways to un-lock the growth challenge. The interviews reveal the importance of connecting with the customer and developing people within the company, rather than buying-in technical process prowess. For more top-tips on managing one of the most tricky current business challenges read on.
Leaders of large business don’t always have the answers
It’s somewhat comforting that our recent survey of 201 UK large business decision makers by YouGov reveals nearly 60% either, “need to better understand the challenges facing my business” and, or “don’t feel my business has the capabilities to tackle them.” Worryingly, 10% believe they don’t either understand the issues facing their business, or have the capabilities to tackle them. This could place them at particular risk from new 'disruptive' market entrants who force incumbents to radically change the way they operate to survive.
Managing growth is the critical concern
We were interested to find, when asking about the number one challenge that kept large business leaders up at night, it was all about growth (24%), and productivity (15%). Growth for large companies is clearly just as important as for small organisations, and reflects a worrying national picture. The Office for National Statistics latest ‘output per hour’ data has registered its biggest quarterly fall since 2008. The UK has the weakest productivity of any nation in the G7 with the single exception of Japan.
David Cather, CEO Avocet Mining, echoed the quantitative findings, “We have banked the low-hanging fruits and need to tackle the more difficult challenges by improving productivity, which requires dealing with resistance to change.”
Clearly, understanding how to tackle the barriers and drivers to growth is high up on the business agenda.
Customer connection key, for a differentiated proposition
We decided, in May 2016, to find the answers, through holding 20 in-depth interviews with UK business leaders. Our aim - to identify how successful companies are tackling the growth challenge. The single practical tool, the most confident leaders were using, was regular, robust and credible customer insight. Those that had the most unblinkered vision of their operating environment also had the strongest customer connection.
Zak Meziane, Clarus Consulting partner, commented: “The customer is not the last but the centre piece in the strategic jigsaw and the starting point for success and sustainability.”
Confidence was bred by identifying the most important customer segments, clients and prospects; understanding their expectations and view of excellence; and honestly benchmarking any offer, in its entirety, against competitors. The use of an independent party to challenge and support is seen as vital in developing an objective and balanced appraisal of market dynamics. Interviewees used non-executive directors and consultants for this role.
Kevin Keaney, Chief Executive, The Work Stores, commented, “We take a lot of confidence from being close to our customers and understanding their needs. Our loyalty programme is relatively unique in the discount value sector and provides us with very valuable insights.”
How to make a growth strategy work? It’s buy-in…
It was noticeable, from our interviewees perspective, the absence of an actionable growth strategy was less about insight shortages and more about low involvement and buy-in.
At Clarus, we find our most successful clients set the vision and then collaborate with others from across the organisation, from shop floor to board, to evolve a strategy. Seemingly, the process takes longer but avoids the subtle hi-jacking of the uninvolved who reject a plan they perceive as imposed.
Giovanni Gorbetta, Managing Director, JFD agrees, "The biggest challenge in improving productivity is managing resistance to change. It’s about making people understand why we need to change as an organisation and why it would be a good thing for them too."
We were also struck, to find business leaders identifying a lack of fresh, creative and innovative thinking as a barrier. This was particularly true of highly regulated and prescriptive industries, such as financial services; or sectors with low staff turn-over such as engineering.
Company culture in some sectors didn’t always reward lateral thinking. It could repress risk taking. Fear of failure, or the lack of exposure to people ‘doing things differently’ can create an inherent under confidence in trying something new. So, what to do? Invest in the latest IT sharing software, or popular process methodologies such as Six Sigma or Lean?
Leadership is the single most important ingredient
Our insight found the most successful businesses developed managers who could lead their teams through the change journey and didn’t take on more than they had capacity for. It had little to do with technological tools.
Such ‘change leaders’ ensure external customer needs are genuinely at the heart of the value proposition and involved in every step of the design process; just as people within the business have a voice in designing any growth plan. They build a safe environment for their people to think laterally, to experiment and learn from their failures – to iterate rather than procrastinate.
Zak Meziane, one of our partners, commented: “Our most innovative clients are those who are willing to try new ways of generating ideas and create a safe environment for people to experiment and learn. Failure is ok."
What we’ve discovered about growth
As always, we find conversations with business leaders extremely revealing. Their insight about how to manage growth and increase productivity has identified the following top 5 tips:
- Objective and continuous customer insight into the proposition and the competition is vital
- It’s all about investing in management ability, not the latest process methodology
- Build a case for change with buy-in from across the organisation. Remember WIFM – What’s in it for me
- Create a safe environment where the status quo can be challenged, and failure supported
- Don’t do too much too quickly. Reduce the scope but accelerate the delivery
If you’d like to comment, or share your own experience of managing growth please get in touch using our contact form.