BUSINESS SPECIAL ..................Growing by adapting at speed

Growing by adapting at speed

How do companies stay ahead when everyone is accelerating? Not by merely adapting to changing conditions, but by doing so quickly and decisively, according to McKinsey’s Marc Singer.

Driving growth in evolving industries has never been easy. But companies today are being challenged as never before not just to adapt but to adapt at speed in the face of relentless innovation. In this interview with McKinsey’s Barr Seitz, Marc Singer, a leader of the McKinsey Digital Practice, discusses the importance of adopting a strategy of rapidly implementing and testing ideas in order to maintain and accelerate growth. An edited transcript of his remarks follows.

How to match innovation’s metabolic rate

The recurring issues that come up when I’m talking to clients about their digital agenda and related marketing and sales agendas are largely about the metabolic rate of innovation. I don’t mean just ideas, but getting the ideas implemented, tested, and refined. Even where they feel they’re having some success, they’re worried—and they should be—about the thing they don’t know yet that’s going to surprise them. As one of my clients said, “I know we’re fine for the next three years, but ten years from now I have no idea whether my kids and grandkids will think what we have is relevant.”

One approach is a bifocal strategy, which means I do the stuff right in front of me fast and experiment and learn by doing and testing. That’s how you bring near-term strategies to life. Then you try to have a view of industry structure, the likely competitive environment in five to ten years; as I’m doing all these things in the short run, it’s with a view toward the important questions about how I’m going to win in the long run. I’m not as focused on overly precise five-year plans that are appropriate in less dynamic environments.

Engage, and then see

Napoleon was asked why he was viewed as such a great strategist. His answer (which sounds much better in French) was, “We engage and then we see.” That was an agile approach to battle. For a company to be agile, there has to be a rapid cycle time between strategy and feedback, between an idea and having it in market or in use, in order to figure out what works and what doesn’t.

But being agile doesn’t mean being careless, reckless, or irresponsible, particularly with the scale that organizations have today. You can do a lot of damage by getting ahead of yourself. The main lessons of an agile approach are to test in a sandbox of appropriate size and then have a plan for scaling that mitigates risks.

Use consumer insights to drive growth

Marketing’s most important role in driving digital growth is through insights from a consumer perspective about the opportunities and threats that the organization faces. One way to do that is with a sharp view of where a company is winning or losing in the consumer decision journey. Marketing should be the agent or catalyst for cross-functional coordination in the organization to capitalize on where you’ve got real opportunities and help mitigate the challenges.

Marketing can also complement that role with a customer-based performance scorecard that is part of the ongoing planning and performance management of the company. I’m not talking about customer satisfaction. I’m talking about real revenue and even P&Ls by customer segment. In a consumer context, it’s what I call the “Monday morning sales meeting.” In the old days, you would talk about how we did by store and region and category. Now, marketing can also tell you how we did by customer segment so that we understand which things are going well or not going well through a customer lens and can be much more granular about reallocating our marketing and other resources.

Let marketing be an integrator

Marketing has always had to play an integrator role with a lot of indirect influence, and at some level that job has gotten more complicated as we’ve developed more ways of interacting with consumers. As a result, it’s more important than ever that marketing bring the integrated view of the customer to the table and help the organization—which often deals with customers in a pretty atomized way—have that integrated view.

The additional power comes from understanding what’s happening on a longitudinal basis. For example, how are new customers behaving over the first month, quarter, year, or two years compared with customers who were new to my franchise a year or two or three ago? To the extent the actions are positive, it’s important to make sure that the organization acts on that to do more of it; and if they’re negative, the organization has to abandon them quickly.

http://www.mckinsey.com/Insights/Marketing_Sales/Growing_by_adapting_at_speed?cid=other-eml-alt-mip-mck-oth-1505