Customer-centred leadership, clear capability strategies and a focus on more than profit are the top three factors in generating sustained growth in business today, according to a new study entitled Growth Drivers, conducted by consultancy Brand Learning in partnership with Marketing Week.
The report’s advisory panel includes business chiefs such as former Unilever CEO Niall FitzGerald, BT CEO Gavin Patterson, Pernod Ricard CEO Alexandre Ricard and Aviva CMO Amanda Mackenzie. Researchers surveyed nearly 1,000 executives across 42 countries and interviewed 70 board-level directors across sectors and business functions.
A company is defined as a growth driver if it has a track record of 6% or higher annual growth over the past three years, is confident in its ability to meet growth goals and is admired for its performance by business leaders globally.
The research reveals that professionals from companies with above 10% growth for the last three years are more likely to agree that their leaders empower employees to serve customers well, that their organisational strategy ensures the right capabilities are present across departments and that their business is equipped for the digital age.
An unrelenting focus on the customer is top of mind for many brands but the study shows that it has to come from higher-level executives. The stats reveal that 81% of respondents in growth driver companies say that customer-centred leadership at the highest level is part of the business, compared to 55% of people at other companies.
Businesses have to be innovative, flexible and adaptable, according to Brand Learning chairman Niall FitzGerald, previously chairman and CEO of Unilever and chairman of Reuters. He adds that this will “flow from whether you are customer-centric” and whether a brand is “really listening to and understanding what customers want”.
FitzGerald advises businesses to “never stop being curious about customers” because “the moment you stop being close to your customers, is the moment you will be beaten by someone else who is closer” (see Q&A, below). But he adds that this also requires a business environment that allows for experimentation. “[The leader’s] job is to create the right environment; the atmospherics where growth prospers, where people are innovative, where people take risks and try new things,” says FitzGerald.
Of course customer-centricity should not be new or ground breaking to brands, according to Aviva CMO Amanda Mackenzie, who is currently on secondment working on Project Everyone – an initiative to promote the United Nation’s global goals for sustainable development.
She says: “I find it extraordinary that we are still even talking about [customer-centricity], and that people wouldn’t [say the key to growth] is to be really clear about customers, and how to serve them better and more appropriately, so we keep their lifetime business.”
Mackenzie doesn’t believe anything has changed in business in this respect. She adds: “If I was running a chemist in the 18th century, I would apply the same thinking. What has happened is our tools, the scale and the way in which we do it have fundamentally changed but what we are trying to achieve has not.”
New capability structures
But the ways teams work together across the business are being altered, suggesting a need for leaders to assess company structures and corporate priorities. The happiness of customers is the factor that needs to be addressed most, cited by 69% of respondents in the Growth Drivers study, followed by the talent and effectiveness of staff (65%).
“I am personally a big believer that traditional organisations will no longer be viable in the future,” says Alexandre Ricard, chairman and CEO of Pernod Ricard. “I do not believe in geographical boundaries; I do not believe in hierarchical boundaries; and I do not believe in functional boundaries and silos.”
He adds: “While functions are still viable from an administrative point of view, when it comes to operations, I believe in communities of different experts; be they from markets or from functions. And in this new model, organisations are going to have to see how best to leverage technology and digital to accelerate their business.”
The Growth Drivers report shows that respondents from companies with above 10% growth for the last three years are more likely to view their organisation as inclusive and agile. Growth driver companies also score higher at having a clear strategy for putting necessary capabilities in place across the business (76% versus 46% at other companies).
Matt Shattock, chairman and CEO at Beam Suntory, which owns alcohol brands such as Jim Beam, Maker’s Mark and Courvoisier, says: “We try to empower multifunctional teams that are as close as possible to our consumers and allow them to translate and turn our strategy into an action that is right for them and their market.”
For Shattock, people are a priority: cultivating the right talent, the growth mindset and the capabilities required to succeed in a rapidly evolving digital economy. But it’s also important to align those people with the company’s strategy and empower them to “get on with it”.
Investing in the right people and ensuring they buy into company goals is an important part of growth, as the study shows differences in levels of confidence in the business according to how senior the person is in the organisation.
Overall, 69% are confident about their company’s ability to meet growth goals. It is highest among board-level, C-suite professionals at 79%, with managers not far behind on 71%, but this falls to just 60% for vice-presidents or directors.
Hayley Spurling, group brand and content director at Brand Learning, believes there could be a disconnect between the board and the directors and vice-presidents, who often have hands on responsibility for executing business strategy.
“Do the C-suite not recognise the complexity of really delivering change?” asks Spurling. “Is it that boards are not investing enough to equip directors to lead the change, or are they less motivated or less engaged generally?”
She suggests it’s a combination of the three because it’s harder for people at director level to put change into action than for those looking in from above to dictate it. “If you invest more in equipping them to make change, the confidence increases,” she adds.
Future talent and growth
The increasing number of tools available to marketers, changing consumer behaviour and the development in technology and digital marketing means the pace of change is a challenge for many businesses today. However, these also affect what skills businesses require to stay ahead.
“You need people who know how to respond instinctively rather than reach for the manual,” says BT’s CEO Gavin Patterson. “In the world of transparency and access that we have today, you don’t have time. It’s important that those who are appointed in key roles are reliable enough to think and respond, rather than wait for orders,” adds Patterson.
Ikea marketing manager for UK and Ireland Peter Wright believes that it is up to leaders to inspire staff to think in this way and that if staff “rely on somebody at the top to dictate all the changes, [businesses] are missing out on opportunities for everybody else to think in the process”.
But he adds: “Despite the fact that we want [staff to act on initiative], not enough people do it, so there’s a legacy. If you work in British retail, you expect to be told what to do. A lot of what I find myself doing is trying to encourage and inspire others to think in the right way.”
Agility to keep up with the pace of change will also be a key focus for future talent. FitzGerald says: “The people who are really good at growth are those who are prepared to live in an environment where there is a degree of ambiguity. Those who want certainty, security and want everything [to be] predictable are unlikely to be drivers of growth.”
But he warns that businesses “have to have a blend in talent” because “you can’t have everyone running around doing adventurous things when no one is minding the shop”.
The study shows that 63% of employees at growth driver companies think they harness the skills of new generations, compared to just 41% at other businesses. At Beam Suntory, the leadership team each have a millennial digital mentor to keep their knowledge current.
Shattock says: “A millennial digital mentor keeps us current in how the world is evolving, because that is not the world we grew up in. While we try to understand it, there is nothing better than having someone who is in, and of, that world – describing and challenging you to think differently about it.”
For Max Conze, CEO at Dyson, looking outside of the business is key for talent in digital. He says: “If you want to lead in digital, you very often need to hire external people; those who have a completely different mindset, having previously worked in entrepreneurial start-up environments, unencumbered by rigid structures or established ways of doing things.”
Pernod Ricard CEO Alexandre Ricard believes traditional organisations will no longer be viable in the future
He adds: “With the right support from the very top, these people can be catalysts for positive change when they are brought into more traditional companies. They can bring about greater agility and better understanding of how to connect with a consumer who now lives and breathes digital.”
The Growth Drivers study shows clear correlations between training and confidence in the organisation to achieve business goals. Almost three-quarters (73%) of people who are not confident receive less than one day per month of training, compared with 50% of the respondents who are confident.
It is important for businesses to look at what is required internally to ensure that future and current talent is attracted to working for them, and to make sure that people stay within or consider the organisation as a career opportunity.
Mackenzie says: “Vote with your feet: if you don’t like the policies or the way a company is operating, don’t work there. If we don’t create the right environment for people, they won’t work there and therefore growth will suffer.”
A large part of becoming an attractive employer is being able to demonstrate your company has a positive role in society, and this is also key to winning customers, the study shows.
“Companies that choose to have growth at any cost, ultimately won’t succeed because consumers will say that is not the company I want to do business with,” says Mackenzie.
The study shows that 79% of growth drivers have a clear brand purpose compared to 61% of other companies. Mackenzie describes the movement as “intelligent growth” and believes that “it’s not sensible nor is it good business” for companies to ignore the impact of their growth on the planet.
Roger Carr, chairman of BAE Systems, believes the pursuit of growth for its own sake is “quite dangerous”. He says: “You’ve got to be very careful not to be bewitched by growth – it has to be part of a business model that has more thoughtful outcomes than just revenue increases.”
Consumers are attuned to how companies behave in the pursuit of profit and are conscious of harmful practices, which is leading to a change in the philosophy and language of growth, according to Brand Learning’s Spurling. “People are more thoughtful about growth now and it’s not just growth for growth’s sake,” she adds.
Spurling says this is a struggle “for the leaders of big PLCs because of the short-term goals of the city and the rush for quarterly results, [however] some of them are starting to resist the city pressures” by talking about growth beyond hitting financial numbers.
It is less of a challenge for private limited companies such as Ikea, Wright says: “When you’ve got a purpose, then you’re quite clear it’s not about growth at any cost. We’re a private company, and we can take a long-term view on things and that gives you a freedom that maybe others don’t have.”
Clearly there are numerous complex reasons why some organisations grow faster and more consistently than others, with huge variations between sectors, geographic markets and stages of business maturity.
However, the experience of the growth driver businesses in the study can be summed up by the ‘seven Cs’, the hallmarks of growth-ready organisations identified by Brand Learning. They are: customer-centricity, conscious speed, cultivating talent, collaboration, commitment, curiosity and courage.
Businesses that put customers at their heart, structure teams to attract and make the most of talent, and are not afraid of risk are businesses that ultimately grow
What are the key ways of driving growth as the leader of a business?
There are four ways in which you get growth. [The first is] if you are positioned where the waves are; one of the decisions the leader has to take is where to position the business.
You can get growth from taking market share from other people. You wouldn’t call grocery a great growth market but Lidl is getting great growth out of grocery because they are taking share.
[Third is] creative destruction. Go back three years and no one had heard of Uber, or 20 years ago, Amazon. They are in two conventional areas but they are not new markets. They have come in and destroyed the existing model and created new demand for the same service
[Fourth is] new markets. What was the market for Google before Google, Facebook before Facebook? Nothing. If you find, invent and create a new market, that also creates growth.
What barriers exist in business today that prevent growth?
The bigger the business becomes, the more inward-looking and concerned with their own processes [they become and] the more bureaucracies [there are]. I’ve always challenged people: I’d not necessarily ask you what you do in the business but instead, I’d ask which movie you saw last [or] what you are watching on TV in order to get a sense of whether you are somebody that is engaged in the world.
If you are not engaged in the world, how can you have an understanding of where the world might go or where people might go?
What is the tension between long-term and short-term growth for businesses?
Profitability can get in the way of investing in growth. You have to be courageous about setting out your long-term ambitions because it’s not always easy to get people to buy into it.
None of us can predict the future with any degree of accuracy. We can have a view and as much data as we can gather, but the future is always unpredictable. Doing things now that are going to be a sacrifice to profit in order to get something five years down the line – that is important.
What is required from staff to drive growth?
To some extent, the fact you know you are going to be around and you’re building your career in one environment can be helpful in taking long-term decisions. [My] 37 years at Unilever is almost unheard of. If you are flitting around every three year, you won’t be there to live with the consequences of those decisions.