The wise pivot
Growth. It’s something most business leaders are confident about achieving. In fact, an overwhelming majority (84 percent) anticipate achieving their next three years’ projected growth rates. And a full 79 percent think their organizations will grow revenue by five percent or more. While growth targets remain ambitious, the ability to achieve them is elusive at best. Consider this: The average GDP growth for OECD economies barely exceeds three percent. Clearly, most of those business leaders will fall considerably short. This reality is driving a pivot toward new business and operating models that will enable companies to remain competitive and drive growth. Embracing the challenge means answering some critical questions: How do we transform businesses while continuing to meet shareholders’ expectations? How do we minimize risk along the way? And, one of the most difficult questions, where do we get the resources for it? The answer to all these questions lies within adopting a Zero-based Mindset.
Companies have one group of people in the enterprise planning for driving growth, one group of people planning for people and one group planning for reducing costs.
While 82 percent of companies are focused on freeing up funds to invest in growth initiatives, only a quarter of executives believe their company’s operating model has evolved quickly enough to align to their strategy.
So, once a company is clear on the big bets it wants to place, it must ensure it has the right operating model and the capabilities in place to execute them. Consider a leading tire manufacturer. They moved from selling tires to selling kilometers. Or Hepsiburada, the Turkish e-commerce leader. Hepsiburada organizes its business around defined consumer personae including, “Working Mothers”, “Techies”, “Sports Man”. And brings them physically to life within the working environment.
No stone unturned
If the pivot the business needs to make is significant, it’s likely the investment required to fund it isn’t available in the normal course of business. ZBx uncovers the savings opportunities that exist across the full P&L—in direct materials, the supply chain, trade spend, SG&A, and people—that can help fund the big-bet investments. Importantly, it also recognizes that within every P&L, there are “good calories” and “bad calories.” The former are costs that are critical to growth, the employee value proposition, and a sustainable operating model and trust in the company—and are objectively optimized for maximum return. The latter are simply waste and are removed. This enables a company to continue to grow its core business and reallocate bad calories to fund the wise pivot.
The wiZest pivot
For most companies, the question isn’t should they pivot to new businesses, but how quickly can they do it. With a ZBx approach, companies now can tackle the planning, cost reduction, resource allocation, and organization impact of a wise pivot simultaneously. Here’s how:
Make it a growth story
The biggest challenges around transformation concern change management. Communicating the trade-offs involved in the pivot to growth, in real time, reinforces the sense of ownership and entrepreneurship company-wide, and makes transformation an integrated growth story, not a cost story.
Establish closed-loop planning
To sustain changes wrought through ZBx, companies need to establish one integrated closed-loop team that looks at future profit pools, the big bets required to access them, the operating model required, and where in the cost base can fund those investments, all at the same time.
Accelerate through AI
Another important tool supporting the wise pivot: an artificial intelligence-driven dashboard that enables executives and the board of directors to quickly understand the implications, risks, and trade-offs inherent in any decision. It answers the questions: How does cost optimization impact growth opportunities? How do different mixes of capabilities affect potential operating models? What’s the best balance between new and existing markets? With AI, these and many other possible scenarios can be modeled in real time at the enterprise level.