In order to keep up with the ever-changing global economy, businesses should possess superior internal capabilities, most notably commercial capabilities in marketing and sales, McKinsey & Company points out. According to the firm, businesses should engage in new approach to business transformation when upgrading their marketing, sales, and pricing capabilities. Consultancy.uk provides a summary of the six components of this approach.
When the global economy is weak, the need for businesses to deliver above-market growth becomes more pressing. To achieve this growth, several routes can be taken, such as engaging in mergers and acquisitions or hiring new talent. According to McKinsey & Company, however, this is not enough. With the marketplace constantly evolving, businesses should be agile and constantly innovating, spotting and reacting to new opportunities. To achieve this, business transformation with a focus on developing and nurturing commercial capabilities in marketing and sales is needed.
Changing for success
With two-thirds of business transformations failing, as a result of a business’ inability to adopt required new behaviours quickly and completely, the global management consulting firm has recently set out a new approach to commercial transformation*. This new approach is based on its experience leading 100 commercial transformations in the past five years together and the results from a survey of 2,300 executives.
Consultancy.uk provides a brief summary of the six components of successful business transformation:
1. Know where you are and where you’re going
Businesses should identify their strengths and weaknesses against all commercial capabilities and then map them against their goals to understand which capabilities to prioritise. Connecting a visionary goal with a clear and pragmatic time line creates, according to the firm, great energy to start the transformation.
2. Create a transformation team built on trust
Once the aspirations and fact base in place, the business should create a commercial-transformation team, which includes marketing, sales, operations, and business-unit leaders. The team should be based on trust, with 63% of successful commercial transformations balancing team health with performance.
3. Score quick wins
McKinsey points out that as businesses that fail to deliver substantive wins within 6 to 12 months don’t succeed, transformation teams should focus first on initiatives that have early impact. These wins will build a case for further change efforts as well as help fund the transformation.
4. Activate the organisation
Change should be pushed throughout the organisation. To achieve this, the transformation team needs to have a clear vision for building new habits at every level, this could include training sessions, doing field work and reinforcing habits through e-learning. Imaginative communications are also important, including internal or even external advertising campaigns, and social media.
5. Commit to coaching
Coaching is, according to McKinsey very critical in the commercial transformation as it is about role modelling new behaviours, through the provision of constructive feedback, empathising, helping people work through issues, and reinforcing their strengths.
6. Hardwire a performance culture
The last component is the hardwiring of a high-performance culture into a business’ DNA. Only by doing this, the firm notes, can a business assure growth above the market year after year. This hardwiring requires putting in place specific processes and tools to redirect the organisation, reinforce behaviour, and build new habits, as well as putting in place the right metrics to track and adjust performance.
Looking at businesses that embrace the new approach, McKinsey found that 90% delivered above-market growth, compared to the average success rate of 30%, with 28% being able to sustain this over time. Around two-thirds of businesses achieved this growth in either profitability or revenue growth, and a quarter in both.
The authors conclude by saying: “A new breed of commercial transformation is rewriting the playbook on how to deliver successful, sustained, above-market growth. At least as much investment is needed in organisational culture and health as in the intricacies of what will change on the ground. Not only do all the pieces of the transformational jigsaw puzzle have to fit, but the picture they create also has to be clear and easily understood by everyone. A strong leader needs to ensure that the enthusiasm, energy, and momentum are sustained throughout the process. It’s likely to be one of the most challenging things a company undertakes—but it has the potential to be the most rewarding, both for your people and for achieving above-market growth.”
* Commercial transformation is the process of upgrading marketing, sales, and pricing capabilities to drive revenue or margin improvements.