Most CEOs believe they make growth a top priority, setting it above market targets.
But there are significant gaps between their stated ambitions and the actual results.
Here are five growth mindsets that define the actions of outperforming leaders.
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CEOs today face a changing world order: intensifying geopolitical changes, shifts in trade policy, fluctuating interest rates, stretched customers, and revolutionary technological innovations like AI. Each wave of change can heighten a leader’s desire to lean into productivity growth or cost cutting. But that’s not enough. There’s an urgent need to grow company revenues – or CEOs risk being asked to go.
This call for above-market growth isn’t just about the next quarter, it’s an important facet of long-term resilience. But cracking the growth code remains the reserve of only a few: just one in 10 S&P 500 companies reported growth above GDP for more than 30 years. What separates these top performers from the pack is how they act in times of volatility; how they avoid the temptation to retreat, and instead, invest when turbulence hits.
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Turbulence exposes new opportunities
Previous cycles of economic uncertainty have shown that growth is shaped by the industries and regions in which companies operate, alongside individual corporate characteristics. For example, 80% of corporate growth comes from within a company’s core industry. But growth is also defined by the actions companies take before, during, and after times of uncertainty. That’s because uncertainty presents opportunity – and those that move early can carry that advantage into the next cycle.
Take the reconfiguration in global trade patterns. These trade flows are being rebalanced across geographies – radically changing the growth pools of the next cycle. Trade policy changes are now nearly on par with geopolitical conflicts as a perceived disruptive force in the global economy. And CEOs are making trade policies a primary agenda item. They are recognising that this new reality calls for them to look beyond the risks posed by such global shifts to execute on new growth pathways.
One pathway to growth is to create a breakout business. Companies that invest 20% of their growth capital into business building achieve revenue growth two percentage points higher than those that don’t.
Click to enlargeImage: McKinsey & Company
Turning growth ambitions into reality
Many leaders believe they’ve got a growth mindset, but their ambitions and intentions don’t always translate into action. Only 30% of leaders of large organizations, for example, choose to increase resourcing for new growth initiatives when market volatility hits.
Now that volatility is increasingly seen as the “new normal’, CEOs only have one option – to find new ways to ride the waves of uncertainty instead of being overwhelmed by them. It means taking five bold actions to navigate the “Grow or Go’ mandate:
1. Make growth a top priority
Saying “growth is a priority” is easy but putting it ahead of everything else is much harder to do. Growth-focused CEOs don’t hesitate to take calculated risks. They go out of their way to foster a culture where they can experiment with bold risks that ignite breakthrough ideas. And, to get there fast, they favour speedy action over perfection.
Around 64% of growth outperformers act with speed when faced with market shocks or internal changes, enabling them to capture a first-mover advantage. They encourage their teams to test new ideas, fail quickly and affordably, and learn from the results. And they allocate resources to those long-term investment areas, even when budgets are tight.
2. Become the first mover
Taking the first-mover advantage isn’t just about investing in growth. It is about refusing to accept silos and inefficiencies. This can come through a talent-first approach – focusing on elevating and redeploying top-performing employees into visible, growth-focused roles. For example, 36% of outperforming leaders say they have an agile talent model that allows frictionless movement of key personnel throughout their organizations.
Growth leaders also actively seek out talent from unconventional sources, ensuring the perfect combination of people are always on hand to keep growth initiatives running like clockwork. And they leverage advancements in technology and analytics to act swiftly.
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3. Rewire with AI to outcompete
With AI advancing at an unprecedented pace, there are evolving opportunities to win in the next cycle of growth. Organizations capturing value from technology advancements and AI are “rewiring to compete”. They are moving beyond specific use cases to adopt AI across a few important business domains, such as a production process or the customer journey, and transforming them from end to end.
The most complex aspect of a digital and AI transformation is developing the right operating model to bring business, technology, and operations closer together. So, it is important to have a quantified road map and to shift the organiZation’s operating model to support new, AI-driven ways of working.
4. Keep the customer top of mind
Many of the domain transformations in AI relate to the customer. Growth outperformers are using predictive analytics to not only learn but predict needs. They are using data and AI to truly understand their customers’ core desires, then create products and adjust services accordingly. Around 45% of outperformers indicate that they use technology to better understand customer needs.
But it’s more than that. They are deploying autonomous AI agents to quickly respond to customers, and to improve service levels by customising interactions and automating complex tasks. By augmenting autonomous agents with human intelligence, they can listen more, converse more, and turn customer insights into new growth initiatives.
Click to enlargeImage: McKinsey & Company
5. Don’t forget the fundamentals
It’s important to not forget the fundamentals. Ensuring that targets are set for customer acquisition, cross-selling, and retention across the business and different markets is an important baseline measurement. This enables CEOs to track performance against market shocks and visualise growth at the most granular level.
Preparing for the growth journey
The evidence is undeniable. Business leaders need to get ready for the growth journey ahead. Those who take action amid today’s changing global landscape, will lay the foundations to thrive in the future.