The BIG question: How can you optimize to drive growth?

The BIG question: How can you optimize to drive growth?

While many transformations are undertaken to cut costs or make incremental improvements, growthfocused transformations have the potential to directly enable the business strategy. 2 Deloitte Business Insights and Guidance (BIG) on transformation

How can you optimize to drive growth? The success of a company s strategy Senior executives should focus instead on depends on its ability to deliver on growth transformation optimizing the its value proposition for customers. operational capabilities that directly enable While a distinctive competitive position the company s business strategy. is important, it will count for little if a Rather than having their vision limited company lacks the operational capabilities by their current processes, talent, and and focus to execute its chosen strategy. technology, executives should expand At many companies, efforts to improve their horizons to envision the operational operations have consisted of simply capabilities that their company truly needs looking for ways to cut costs or make to be successful. incremental improvements, unrelated to the company s strategic objectives. What s the point? Transformation is a big topic one that encompasses business processes, regulations, the workforce, technology, external stakeholders, and more. It s also a topic that comes with big questions. The Deloitte Business Insights and Guidance (BIG) on Transformation series seeks to help leaders rapidly understand the issues at play one big question at a time so they can make big, bold changes that allow them to own the disruptions taking place in their markets. The big question right now: How can you optimize to drive growth? Still have questions after reading this piece? We can help. We re big on transformation. Contact us to get the conversation started. 3 Deloitte Business Insights and Guidance (BIG) on transformation

How do you know if you need to launch a growth transformation? Companies often undertake growth transformation projects when they are at an inflection point and recognize that their current operating structure does not support their strategic goals. For many companies, the driver for a growth transformation project is either cost pressure, driven by competition or unprofitable growth, or pressure to scale, when the current talent, business processes, technical infrastructure, access to information and decision rights all lack the ability to handle the increasing transaction volumes generated by growth. In other cases, the catalyst is investment pressure, where a company seeks to generate funds to invest in new business initiatives. For example, a large newspaper conglomerate needed to fundamentally rethink its traditional print business model when faced with the market transition to digital content. The company reduced expenses by transforming capabilities that were no longer central to its business model, such as reducing home delivery of its print newspaper from seven to three days a week, and reinvested the savings in capabilities needed to support its expanding digital media business. 4 Deloitte Business Insights and Guidance (BIG) on transformation

But isn t it always a good idea to cut costs if possible? All too often, companies take a scatter-shot approach to operational improvement, scanning the organization for isolated opportunities to cut costs by such tactics as reducing headcount, redesigning processes, installing new technology systems, outsourcing, or relocating operations to lower-cost countries. While these steps may generate savings, initiatives that are not directly linked to a company s strategy run the danger of actually eroding value. Consider a company that markets itself as providing a superior customer experience. Reducing customer service center staff may lower costs, but could also lengthen wait times and degrade service quality, undermining the company s value proposition for customers. Executives need to clearly articulate and align the organization on the operational capabilities required to strengthen the company s competitive position. Sustaining rapid growth at a global data center company With a goal of doubling sales over the next three years, a leading global data center company realized that its operating systems lacked the standardization and flexibility required to support profitable growth at this pace. In addition, clients reported inconsistent experiences when interacting with the company s local offices around the world. The company needed to enhance its operations to support its value proposition of being the premier provider of advanced data center services to sophisticated global companies. An assessment of its operating model identified the problem: Business processes varied from country to country, and many were out of date and unable to scale. Its growth transformation project was designed to standardize operating processes and systems and to gain the ability to handle rapidly increasing sales volumes. To date, the company has implemented consistent global processes and platforms unlocking savings to fuel investment in strategic growth drivers and enable the organization to better serve global customers. 5 Deloitte Business Insights and Guidance (BIG) on transformation

How can you align the leadership team around profitable growth? An effective growth transformation project needs a clear ambition objectives that will steer the company toward attaining its strategic goals. As an example, a company seeking to migrate from a declining market into growth markets may have an ambition of reducing expenses in mature markets to free up capital that can be reinvested in new product development in its growing businesses. The growth transformation ambition defines the value the transformation will deliver and identifies the capacity to be freed up to invest into growth drivers. Creating this common understanding is critical to keeping everyone focused on achieving the desired ambition. Securing the commitment of employees throughout the organization requires the active support of the company s senior executives. It s not enough for the executive team to simply approve and fund the transformation project. The support of senior management needs to be consistently visible to help the employees understand that the improvements are critical to the company s continued success. 6 Deloitte Business Insights and Guidance (BIG) on transformation

Let s talk Want to learn more about how to improve your company s operations while fueling growth? We should talk. We have a strong record of helping organizations navigate effectively through the challenges of transformation to deliver new value. Our global network of business and technology professionals, as well as extensive industry-specific experience, means we can rapidly collaborate with you to develop a transformation vision and strategy that makes sense for where you want your business to go. Want to know more? Want more answers to big questions about transformation? Contact us to get the conversation started. Christine Anderson Managing Director Deloitte Consulting LLP christinebanderson@deloitte.com This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication. As used in this document, Deloitte means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Copyright 2017 Deloitte Development LLC. All rights reserved.