The 90% success recipe: Beating the odds and the market with digital and analytics
Pressure is mounting on CEOs and their leadership teams to deliver above-market growth. However, consistently beating the market over time, requires a top-performing commercial engine underpinned by a new wave of digital and analytics capabilities.
While hiring new talent is a crucial component of building necessary capabilities, you also need to facilitate change within the organisation itself. Business executives today need to focus on building capabilities with the same level of commitment they showed when transforming their businesses through lean operations in the 1980s.
However, when considering that, traditionally, up to two-thirds of transformations fail, that prospect is daunting. The high failure rate often is due to an organisation’s inability to adopt required new behaviours quickly and completely.
A new approach to commercial transformation (embedding digital, analytical, and agile skills into marketing, sales, and pricing capabilities to drive revenues and margin improvements) is turning that failure rate on its head. We have found that an astonishing 90 percent of companies embracing this new approach to overhauling their commercial drivers are not only delivering above-market growth but also sustaining it over time.
Making the case for change
While most major companies understand the need to adapt to the marketplace, we find that they often don’t have the level of commitment needed for a commercial transformation to succeed over time. Increasingly, however, the decision for change is one that leadership cannot put off. Better commercial capabilities are necessary to respond to something that we observe more and more often in the marketplace: Competitive advantage just doesn’t last very long anymore. Competitors spot and adapt to innovations and new products quickly, and that reality is just going to accelerate as companies build out more digital and analytical capabilities.
Our research demonstrates that companies with more advanced marketing and sales capabilities tend to grow their revenue 30 percent more than the average company within their sector. What’s more, those companies with leading digital capabilities, are growing five times faster than their peers.
The case for change is clear; how to do it is less so. Our experience leading over 100 commercial transformations in the past five years has distilled the recipe for success into the following six components:
Know where you are and where you are going: You need to have a compelling reason for change, but also clearly understand the current state of the organisation. A clear vision is essential and should be based on insights from data rather than on hunches.
High-performing companies systematically assess their capabilities at a granular enough level to allow executives to take meaningful action. The best companies are deliberate about identifying their strengths and weaknesses against all capabilities (e.g., the ability to create and manage high quality leads) and then mapping them against their goals so they understand which capabilities to prioritise.
Create and transform a team built on trust: With the aspirations and fact base in place, the next stage is to create a resilient commercial- transformation team. While it is typically led by either the CEO, head of sales, CMO, or sometimes even the COO, it should include marketing, sales, operations, data analysts/scientists, and business-unit leaders. It is also important to include HR and communications professionals alongside a project manager who keeps everyone focused on the next step of the journey and tracks the relevant metrics.
Score quick wins: Transformations will not succeed unless they deliver substantive short-term wins within six to twelve months. Typically, therefore, the best companies build momentum by focusing first on initiatives that have early impact—and help fund the transformation—then on building a case for further change efforts.
Activate the organisation: Working with leadership, the transformation team has to structure a plan for pushing change throughout the organisation. That requires a clear vision for building new habits at every level of the business. For the C-suite, it’s about mindset change and developing new leadership and change-management skills. For managers, the focus needs to be on coaching, product knowledge, and problem solving. Frontline reps need specific selling skills like consultative selling and using pricing and upselling analytics. You can’t do everything at once, of course, so the team needs to carefully sequence the effort, from rolling out training sessions to doing field work to reinforcing habits through e-learning, for example.
Commit to coaching: Coaching is so critical for success that it earns its own place. Good coaching is much more than going on a ride-along with your buddies or doing a sales pitch while someone watches. It’s about a real commitment to improving your people by providing constructive feedback, empathising, helping them work through issues, and reinforcing their strengths ... at the right cadence. It’s also about role modelling new behaviours, something that rarely happens in practice. And its success is not measured by training participation but by the impact it achieves on the business.
Hardwire a performance culture: The reality of today’s economy is that change is constant. Hard-wiring a high-performance culture into a company’s DNA is the only way to assure growth above the market year after year.
Building this culture requires putting in place specific processes and tools, such as digital dashboards and control towers, to redirect the organisation, reinforce behaviour, and build new habits. But the really critical component is putting in place the right metrics to track and adjust performance. Without them, it’s virtually impossible to understand what is and isn’t working.
A recipe for success
A new breed of commercial transformation is rewriting the playbook on how to deliver successful, sustained, above-market growth. At least as much investment is needed in organisational culture and health as in the intricacies of what will change on the ground. This makes transformation challenging, yes, but it also means the rewards are substantial.
Not only do all the pieces of the transformational jigsaw have to fit, but the picture they create has to be clear and easily understood by everyone. A strong leader needs to ensure that the enthusiasm, energy and momentum is sustained throughout the process. It’s likely to be one of the most challenging things a company undertakes—but it has the potential to be the most rewarding both for your people and for achieving above-market growth.
The author would like to thank Homayoun Hatami, Candace Lun Plotkin, Kevin McLellan, and Patrick Schulze from McKinsey & Company for their contributions to this article.
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