grow profitably and sustainably with less

how organisations can balance cost
grow sustainably & profitably efficiency with innovation to grow
profitably with limited resources
with less © excell growth partners 2009. All rights reserved.

Sunday, 22 November 2009

Many organisations run into :: costs grow faster than revenues
:: cost-efﬁciency v growth tension
trouble when growth slows :: difﬁcult to get balance right


Case 1: Cost-efficiency focus / stifled innovation

“Defenders of Six Sigma at 3M claim that a more systematic
new-product introduction process allows innovations to get to
market faster.

But Art Fry, the Post-it note inventor, disagrees. He places the
blame for the recent lack of innovative sizzle squarely on Six
Sigma application in 3M research labs.”

A Struggle Between Efficiency And Creativity - BusinessWeek 2007

“3M’s share of revenue from new products introduced
in the last 5 years fell from a third to a quarter”

Case 2: Growth focus / lack of cost-discipline
Company X financial performance 2004-2008
• Excessive emphasis on
top-line growth

30000
• High level of unfocused
20000
innovation activity

10000
• Achieved growth, but at

£ thousands
0 a cost - due to
inefficiency
-10000

-20000
• Only made an operating
-30000
2004
profit in one year
2005 -40000
2006
2007
2008
• Sustainability?
Revenues Operating costs Operating profit


Often the biggest tension is for mid sized companies

Next S curve

Tricky middle Late stage
Early stage
ground market
market
Revenue Revenue
Revenue
growth growth
growth
slowing potential
is key
limited
Costs
Cost base
become Cost focus
relatively
more becomes key
small
important


How can companies
grow sustainably?

• excell growth partners undertook
research into best practices in
Summer / Autumn 2009

• The research / analysis drew on:

• Our own industry & consulting
experience over the last 20
years

• An extensive literature review of
previous research

• Interviews with selected
organisations to explore current
best practice & learning points


Leadership and execution
Strategic focus Learning and
and innovation growth (people)

Internal focus External focus
(operations) (ecosystem)

Financial management
and measurement

It’s a complex puzzle, but :: like rubik’s cube
:: 6 dimensions need to be aligned
there are ways to solve it :: beware of multiple solutions!


Three solutions - but only one is ultimately sustainable

1. Cost-efficiency focus 2. Revenue growth focus 3. Profit growth focus

Revenue

R R

Profit P P

Cost C

C

- Revenue growth not a priority - Cost growth not a priority - Cost and revenue are priorities
- Profitability may decline - Profitability may decline - Profitability grows
- Potentially unsustainable - Potentially unsustainable - Sustainable


some best practices for :: extracts from research ﬁndings
:: whitepaper provides detail
sustainable proﬁtable growth :: see later how to access this


Leadership & The right Leadership Team to build and nurture a diverse
execution organisation that can both create and execute.

Strategic focus & Learning rapidly and pragmatically about the best areas for
innovation profitable growth and innovating up to business model level.

Learning & growth An ideal mix of people,in terms of personalities and know how,
(people) within a culture of positive challenge and improvement.

Internal focus An operational set-up that is carefully designed to balance needs
(operations) of growth and efficiency in different parts of the organisation.

External focus Orchestrating an ecosystem of alliances that complements core
(ecosystem) capabilities to deliver high value at low cost to customers.

Financial management & Smart acquisition and balanced allocation of financial resources.
measurement Managing risk and reward between growth and cost-efficiency.

what good looks like:
summary

a closer look at each
side of the cube

Leadership &
execution

• Diversity & integration

• “Whole brained” approach

• Balanced external & internal focus

• Exploration & execution

• Management of failure

• Role modelling


Strategic focus &
innovation

• Strategic ambition & priority

• Balanced portfolio of innovation

• Capability-driven and ecosystem-
drive idea generation

• Pragmatic testing of new ideas

• New business models / partners

• Discovery driven planning


Learning & growth

• Ranges of diversity with integration

• Coach rule following vs. breaking

• Doing right things vs. getting results

• Engage / involve in strategy

• Zoned working environment

• Performance management


Internal focus
(operations)

• Depending on scope / type of
innovation:

• Differentiated organisation

• Differentiated processes

• Innovation “model”

• Management control alignment

• Practical ways to manage risk

• Knowledge management systems


External focus
(ecosystem)

• Balanced portfolio of customers

• Balanced portfolio of alliances

• Clarity on what can be shared

• Modular offerings / ﬂexible supply

• Smart outsourcing

• “Open innovation” philosophy


Financial management
& measurement
• Understand ﬁnancial growth drivers

• Aligned ﬁnancial / strategic priorities

• Appropriate reinvestment of savings

• Understanding the value of
innovation as well as the costs

• Balanced scorecard with problem
solving tools to address tensions


some tools for assessment & :: self-assessment questionnaire
:: white paper/detailed ﬁndings
performance improvement :: leadership team workshop


excell growth partners contact us to explore further
phone :: +44 7768 171334
email :: research@excellgrowth.com
grow sustainably & proﬁtably with less web :: www.excellgrowth.com


grow profitably and sustainably with less

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