Growth transformation: Delivering on a diversified set of
e-commerce growth strategies
Successful marketers
shift strategies and roles to develop the technology, capabilities, and
mind-set for growth.
Growth can come in
many forms but it requires a new kind of corporate dexterity
to capture it in today’s market. Lila Snyder, executive vice president and
president of global e-commerce at Pitney Bowes, spoke with McKinsey’s Barr
Seitz about the growth-transformation strategies she has spearheaded, with a
focus on where she’s focused her energies and what capabilities she’s invested
in to provide her business with the speed, scale,
and agility to grow.
A
diversified approach to organic growth
At its core, Pitney
Bowes is a technology company. We’re a ‘Creator.’ That’s in the DNA of who we
are, so that’s probably the predominant trait for Pitney Bowes. We pride
ourselves on innovation, and we focus a lot on the new products and services
we’re bringing to market.
What are the strategies
Pitney Bowes uses to drive growth?
At the same time, the
‘Investor’ component has been critically important for us, because we’re going
from declining markets to growing ones. But our declining businesses generate a
lot of cash, so we’ve had a great opportunity to repurpose that cash into the
growing spaces.
Also, all of our
businesses should perform at or above market growth, even if they’re in
declining markets. You always want to be ahead of where the market is going.
And that’s all about being a ‘Performer’ and optimizing the go-to-market model
for commercial success.
Driving
new growth with new technology
We’re using data from
the whole base of clients to understand consumer trends, and then helping
customers think about how to take advantage of those insights to grow their
sales and merchandise value, which turns into growth for Pitney Bowes.
How have you used
technology to help drive new growth?
We’ve implemented
Internet of Things technology with our old analog postage meters. So imagine a
postage meter that sits on the desk in an office. It used to not be connected
in any way. But we can now understand if clients are having issues with it,
service it remotely, see if they’re low on postage or ink, and help them refill
it automatically.
That digital
connection with the client is using Internet of Things technology to bring
old legacy technology into the modern era. That drives
growth through the opportunity to sell new services, new supplies, and new
value to those clients.
Developing
foundational capabilities to support a growth transformation
When we started the
transformation, one of the most important decisions at the outset was to bring
together all of our systems and infrastructure into a common enterprise
business platform. We were running on many different billing systems,
client-information systems, and customer-relationship-management systems, many
of which were relatively old and couldn’t keep up with the modern requirements
of a digital client relationship.
What sort of foundational
capabilities have you developed to support your growth transformation?
We’re about 80
percent through the implementation of that platform, which gives us the ability
to do a couple of things: gain a single view of our clients across business
units, so we can see both client data and financial data in one place in an
easy-to-use system, and create products on a platform that communicates with
clients in a much more digital way. When we thought about the company we were
becoming through our transformation, we recognized that we wouldn’t be able to
do what we needed to do from a creation and innovation perspective without
revamping those back-office systems and the related business processes.
Changing
how we create to boost growth
In Pitney Bowes’
global e-commerce business, we developed a set of five big growth ideas, and in
four of those five big initiatives, we were testing a new product within six
months. It happened that fast for a couple of reasons.
One is that we’re
very agile in the way we do product development now. We don’t have a 12-month
product roadmap. We think about the product roadmap as a fluid, living,
breathing document that changes at least monthly and sometimes more often than
that, depending on the constraints imposed on us by our opportunities.
How has Pitney Bowes
accelerated its pace of innovation?
But part of it is
also taking advantage of the foundation we’ve built with some of our core
capabilities. We have a common way we do cloud, a common way we do application
programming interfaces, and a common way we handle data. That allows us to
bring new ideas to market a lot more quickly.
The global e-commerce
unit, which is the business that I run, will generate about $450 million in
revenue as part of a $3.5 billion company this year. Just five years ago, this
business did $12 million in revenue. The trajectory’s been pretty amazing.
Organic
growth lesson: Go faster
I’ve had the great
opportunity to lead a business in a declining market and to lead a business in
a growing market, and I can tell you it’s a lot easier to grow if the market
itself is growing. So picking your spots, knowing where you want to invest, and
knowing where the market is growing so you can piggyback on that is really
important.
What are the most
important things to consider to drive organic growth?
But just being in a
good market doesn’t mean you’re going to grow. The growth comes from the ideas,
the opportunities, and the way that you go after them. And from what we’ve
experienced over the last few years, the pace at which you get those ideas into
the market is probably the most important thing.
It’s not how perfect
they are when you launch them. It’s not about having a perfect model on the
back end. It’s about making sure you’re putting out ideas at a velocity that
allows you to test
and learn and improve. The reality is, the more you’re in the market, the
faster you learn.
Speed comes primarily
through the mind-set that it’s better to err on the side of failing fast than
it is to have every risk completely buttoned up and thought through to make
sure it’s perfect before you launch.
The
importance of budget-allocation discipline
I think we’ve done a
good job of being clear about the role that each of our businesses plays in the
portfolio, and we’ve been very clear that, as a business is growing and
scaling, we don’t expect it to achieve the margins that the other businesses
make.
What processes do you have
in place to invest in growth winners?
We’ve set pretty
explicit metrics for each business around the types of margins and the types of
investments that we’re willing to make. It’s been very important to have that
in the background, because it’s easy to get distracted one quarter to the next
when you’re seeing growth, but maybe not seeing margin.
It’s important to
understand what your opportunities are, so that if more or less funding becomes
available, it’s very clear what gets cut off the list first and what gets put
onto the list next.
One of the things
that we try very hard not to do is stunt next year’s growth. The easiest
decision to make is to put your money toward this year’s goals, because they’re
right there in front of you. But we recognize that without the innovation and
the investments in the forward-looking growth opportunities, next year will be
a struggle.
Developing
the corporate dexterity to manage multiple growth strategies
We give each of the
business units, each of the general managers, a view of what role they play.
We’re not all trying to be Investors, Creators, and Performers at the same
time.
How have you developed the
corporate dexterity to manage multiple growth strategies?
Secondly, inside my
e-commerce business, for example, it’s much more about who has accountability
and responsibility. I’ll think about how much we are investing in performing
versus creating, and how we are moving the capital around.
But I’ve got
individual leaders who are more solely focused on what their objectives are.
For example, the person who leads revenue for me and is out selling and dealing
with clients is performance-focused. On the other hand, the Creators are
usually less worried about the current year and about performing. So you get a
sort of natural split between those two groups, requiring agility in how you
invest.
Jump-starting
the growth mind-set
When I took on this
role leading e-commerce, I put in place a much more disciplined client-facing
organization, both for upfront selling and ongoing client management and client
growth. We got everyone using Salesforce. It’s been a journey, but now we’re
able to track what’s happening in our business across all of our clients in a
way we couldn’t before.
How did you jumpstart a
growth mind-set in your business?
We also put place in
a much more disciplined process for reviewing what’s in the pipeline on a
weekly basis, took a really hard look at people’s compensation, and changed the
way we thought about paying our teams.
In a business that’s
growing at the rate ours was, that may sound very basic. But sometimes those
basic management systems don’t exist when you’re in that first rapid-growth
phase, and you reach a point in the evolution where you realize that if you
don’t start putting those simple processes in place, you can’t continue to mana
Capabilities and
mind-sets necessary to strengthen organic growth ‘DNA’
When I think about the capabilities that we’re building
as part of this transformation, they really sit underneath four cultural
attributes:
Play
Video
Video
What capabilities and
mind-sets have you developed to build up your organic growth "DNA"?
Client: The
capabilities we’re building are better data and analytics around our clients,
as well as understanding our clients’ businesses on a deeper level. It’s very
much about understanding sales trends and understanding, in a test-and-learn
environment, which of the promotions our retailers are running work, versus
those that don’t. The other part we’re trying to work into our DNA is making
sure the client is at the center of every conversation. Whether it’s a product
we’re developing or a back-end process that we’re talking about, how is it going
to make it better for the client?
Team: Business is
complex enough now, and there’s no way to grow unless we’ve got good
collaboration across all the different parts of our business. So we continue to
focus on capabilities around how you manage and collaborate across multiple
functions to get things done.
Mind-set: There’s a
mind-set around winning. You want to be competitive and move quickly so you can
win in the market. To do that, you have to be willing to fail along the way.
Innovation: We’ve
really focused on big data. We’re building capabilities and making investments
in training and in partnerships to make sure that we’re not trying to create
everything on our own. Whether it be in the cloud, across application
programing interfaces, across data, or across the Internet of Things, we’re
forging partnerships that help us enhance our own capabilities on that path.
November 2017 INTERVIEW
https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/growth-transformation?cid=other-eml-alt-mip-mck-oth-1711
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