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    Is Your Growth Strategy Flying Blind-Group 2

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    Rishav Dugar
    This document discusses how companies can take a more granular approach to growth by examining finer market segments and sources of growth. It recommends that companies 1) identify micro market segments to invest in, 2) restructure their organization to manage business in a granular way, and 3) use tools like a "Growth MRI" to benchmark performance and prioritize investments and divestments at a more granular level. This granular approach can help companies make smarter strategic decisions and take advantage of growth opportunities during economic downturns.

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    Is Your Growth Strategy Flying Blind-Group 2

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    Rishav Dugar
    272 views17 pages
    This document discusses how companies can take a more granular approach to growth by examining finer market segments and sources of growth. It recommends that companies 1) identify micro market segments to invest in, 2) restructure their organization to manage business in a granular way, and 3) use tools like a "Growth MRI" to benchmark performance and prioritize investments and divestments at a more granular level. This granular approach can help companies make smarter strategic decisions and take advantage of growth opportunities during economic downturns.

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    Is Your Growth Strategy Flying Blind-Group 2.pptx

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    This document discusses how companies can take a more granular approach to growth by examining finer market segments and sources of growth. It recommends that companies 1) identify micro market segments to invest in, 2) restructure their organization to manage business in a granular way, and 3) use tools like a "Growth MRI" to benchmark performance and prioritize investments and divestments at a more granular level. This granular approach can help companies make smarter strategic decisions and take advantage of growth opportunities during economic downturns.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    272 views17 pages

    Is Your Growth Strategy Flying Blind-Group 2

    Uploaded by

    Rishav Dugar
    This document discusses how companies can take a more granular approach to growth by examining finer market segments and sources of growth. It recommends that companies 1) identify micro market segments to invest in, 2) restructure their organization to manage business in a granular way, and 3) use tools like a "Growth MRI" to benchmark performance and prioritize investments and divestments at a more granular level. This granular approach can help companies make smarter strategic decisions and take advantage of growth opportunities during economic downturns.

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    IS YOUR GROWTH STRATEGY FLYING BLIND?

    MEHRDAD BAGHAI, SVEN SMIT, PATRICK VIDUERIE (MAY 2009)


    -Presented by Group 2

    What many CEOs lack Granularity Today possible to target finer market segments

    and the sources of growth (growth momentum, M&A, market share gains) Lack in firms to use the ocean of data to look for best markets of growth. Belief in traditional aggregated data. Need of new strategic direction to: 1. To allocate the resources 2. Deploy people 3. Review results, important in economic downturn

    Granularity of Growth
    World a granular market due to 1. Global expansion of markets & impact of

    technology 2. Challenges in these markets tending firms to go for new ways of understanding it. Granularity + Economies of Scale Competitive advantage Only need to master this balancing act. Idea in practice: to grow your business follow a. Identify micro segments b. Invest c. Restructure your organization

    Growth is granular but most companies arent


    Organizational form in 20th century-

    Multidivisional company Coined by DuPont, effectively used by Sloan in GM. Effective in employee management, performance management and decision making. Unearthing hidden growth strategies(exhibit). Cost of innovation & new changing information technology (Amazon, Ping An)

    Building Granular Understanding


    When companies take Granular Approach: They make smarter decisions regarding: R&D Investments. Target Markets. Marketing or Advertising Mix.

    Building Granular Understanding


    Granular Approach can be taken up by firms by examining two major things in greater detail:
    Market Potential. Company Performance.

    Building Granular Understanding


    Market Potential: Building granular understanding isnt simply assessing segments & markets at lower levels of aggregation. Three distinct categories of growth: Mergers & acquisitions. Market share gains. Portfolio momentum.

    E.g.: Construction equipment & service company.

    Building Granular Understanding


    Company performance: Growth MRI The concept of this approach is the relationship between shareholder value creation & three growth components. Net Growth Rating: This offers best correlation with shareholders value creation.

    Building Granular Understanding


    Growth MRI: It exposes the relative performance of each part of the business by benchmarking its net growth rating against a relevant industry threshold. This enables companies to identify areas of strong and weak growth and quickly point to priorities for investment or divestment.

    Managing Business in a Granular Way


    Granular Management can lead to changes in

    how business units are grouped It Influences how many layers of management are needed & which functions are shared or devolved to BUs People & Process issues are more important than structural challenges Reallocating Resources Assembling a Big Leadership team Reviewing Performance

    Granular Management
    During a downturn, granular mgmt. can

    leverage advantage in three important ways: Cut cells discriminately and free up capital so that high performing pockets can be spared Pounce on acquisition opportunities that the downturn creates Take advantage of competitions weaknesses

    Reallocating Resources
    Goal target pockets of higher market momentum

    & increasing company growth rate Principles: It must be derived from insights about where growth pockets will be & not where they are now
    eg: GE CEOs announcement of future investments Use of zero budgeting to unfreeze & correct past misallocations
    Zero budgeting will free up resources, allow

    investment in rapidly growing areas and boost underlying market growth M&A

    Assemble a big leadership team


    Inner circle in not well positioned generally Allot executives who can lead product clusters,

    geographic slivers or special initiatives Will lead to focus, build sense of ownership, personal involvement with subordinates Understand how individual goals fit with the companys strategic priorities Measurement approaches growth MRI

    Growth MRI
    Components of organizational growth M&A Market Share Momentum of markets Chart depicts companys performance in these

    categories broken down in 5 regions and 16 BUs

    Reviewing Performance
    CEOs need breadth of vision and also a clear

    view down through the organization This needs periodic operation reviews Key questions about cell performance, resource allocation, market potential, exit decisions need to be addressed Thoughtful applications of granularity and tools like growth MRI can save time & resources as well as improve the quality of discussion

    THANK YOU

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