Why competitive agility is critical for growth

Digital is upending businesses. Industry lines are evaporating. New competitors arise. Traditional companies need to do far more than just try to survive. Many have cut costs to just stay in business but have not ignited growth. To thrive, companies need to be able to flex, to have competitive agility. They need to pursue new ways to increase margin and fund investments that will drive new growth.

Ninety-one percent of zero-based budgeting (ZBB) programs have met or exceeded their targets.

Increase margin and fund new initiatives

To drive new growth, look to what companies born in the digital era—and some progressive traditional companies—are doing. They are disrupting themselves. They know where their businesses need to go and are investing in new capabilities. At the same time, they are delivering returns to shareholders. For example, some leading companies are reducing payroll costs while adding needed skills to better meet customers’ needs. How? By developing their future adaptive workforce, including harnessing automation and AI. As transactional, repetitive tasks are pushed to machines, these companies are elevating humans through reskilling and an adaptive workforce. Another example is companies that are partnering with their ecosystems to be asset-light and cost-efficient, while offering to customers new capabilities and services.

Successful businesses are bridging today and tomorrow. They know how to keep the core business strong and efficient while making informed investment decisions about the right capabilities to create new revenue streams. They are making a “Wise Pivot” to growth.

Make a Wise Pivot

The digital age calls for a new approach to organizational change that enables companies to make a Wise Pivot to their new businesses.

1. Transform the core

Transforming the core business to increase investment capacity.

2. Grow the core

Grow the core business to sustain the fuel for growth.

3. Scale the core

Scale the core business to identify and scale new growth areas at pace.

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Three steps to create the foundation for growth

Companies need to do three things, all while maintaining an attractive ROI for investors:

  1. Get fit
    Successful companies get ultra-efficient in their core business, i.e., by using methods such as zero-based budgeting (ZBB)—budgeting from zero each year. A zero-based mindset is critical to gaining full visibility of all processes and spend. By evaluating each through the lens of what’s most important to meet customer and business objectives, the unnecessary items, or fat, can be identified and cut. Many companies have taken this approach to the back office, but they also need to apply the same mindset to the front office.
  2. Build muscle
    Cost cutting fuels investments in essential new capabilities. Companies need to create intelligent functions by harnessing data and analytics, humans and new technology. Resources and processes should be organized around desired customer outcomes. Building muscle means never losing sight of the need to deliver a differentiated and consistent customer experience across all channels. It also requires a mindset centered on continuous innovation.
  3. Flex your muscles
    Once muscles are developed, they can be flexed to scale new businesses and aggressively fuel growth. With intelligent functions, resources and processes are reconfigured around customer outcomes. Companies can realize incredible value by working across the “seams” of the functions. The ecosystem enhances the strength of an individual business; i.e., increased customer data and insights and combined strengths to collectively offer customers more convenience and better experiences.

Pivot to profitable growth

Every business has different needs and is at a unique stage of maturity, so there is no single blueprint for next steps. However, the leaders will be the ones that transform existing businesses while decisively expanding into new businesses. They will make a Wise Pivot by identifying and scaling new growth areas at pace to not only survive, but also thrive.

Don Schulman

Senior Managing Director, Lead – Supply Chain and Operations​

Shiv Iyer

Senior Managing Director, Lead – Products NA Functional Consulting

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