How CEOs Manage Growth Agendas

Businesspeople across a wide range of industries have increasingly begun to identify maturation and commoditization as emerging challenges. Whether because of globalization, maturing technologies, ease of imitation, decreasing barriers to entry, open standards in technology markets, or pressures from customers who are themselves being squeezed, more and more companies are feeling the intensity of their businesses as commodity markets. It’s one thing if you have an inherent cost advantage, like Dell or Wal-Mart. But most companies don’t, and for them, commoditization is a deadly game. When you’re constantly scrambling to make your margins, you have to strain to think about the top line. Everyone wants to find ways to grow, but real power lies in doing so profitably – and that takes serious work.This is a theme common to the essays that follow. Five years ago, everyone talked about top-line growth; then the focus became tightening the belt; and now it’s back to growth – but this time with profitability. Executives are raising the bar on themselves, which is a good thing. To meet their goals, however, they must find ways to distinguish their offerings. The authors of these essays discuss three interrelated approaches to differentiation: innovation, deepening of customer relationships, and bundling of products and services.Innovation has long been the primary basis of advantage. Indeed, if you have a unique, first-mover product or service, you can get far ahead of the competition. Every one of the essays in this collection points to the need for innovation. John Tyson, CEO of Tyson Foods, discusses his company’s expanding line of protein products, for example, and Quest Diagnostic’s Kenneth Freeman is going as far as handing over the CEO title to a scientist who can drive the company toward invention and organic growth. Robert Greifield, Nasdaq’s CEO, tells us that the most dramatic top-line growth opportunities come from finding new ways to make, do, or sell.But it’s getting harder to stand out through product innovation alone – and the advantages, when they occur, are becoming more ephemeral – so we come to the second differentiation tactic: sharpening organizational focus on customers. This approach can help a company distinguish itself in a number of ways, from creating new products or services for specific customer segments to personalizing service. A shift in emphasis from products to customers can be challenging, as it might entail fundamental changes in a company’s structure, processes, and, ultimately, culture. Nonetheless, even industries that have relied primarily on product innovation are discovering the importance of gearing their organizational processes more directly to the needs of end customers. For instance, although the pharmaceutical industry has traditionally been driven by the development of unique drugs, marketed primarily to physicians, companies such as Eli Lilly and Pfizer have begun investing heavily in consumer outreach. Becoming more customer oriented is in vogue in other industries as well."How CEOs Manage Growth Agendas?", Ranjay Gulati, Harvard Business Review, July-August 2004. Visit CJPS-Enterprises for more information.

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