Achieving, balancing and reinforcing the imperatives
In order to avoid becoming locked into a destructive mindset, a business leader must not only achieve the four imperatives, but also ensure that they are balanced and reinforced. We provide guiding objectives for each of the imperatives below:
The interaction of these objectives is illustrated in the diagram below.
Healthy business: optimizing stakeholder value
We described how value evangelism can lack sufficient internal support and can be applied in a way that is inherently short-term. In this way, longer-term investments in key relationships, systems and people may be sub-optimal. More about the healthy business.
So, what are the key elements of the long-term perspective? In essence, PA believes that the goal of management should be to optimize the stakeholder 'value pie', without destroying shareholder value, thus creating virtuous growth.
Attractive positioning: establishing a platform for growth
During our interviews with respondents we noticed that many profitable organizations experience great difficulty in extending their profitability into new markets. Indeed, we concluded that some sources of competitive advantage might imprison growth.
For example, incumbent telephone companies enjoy the asset advantage of their local loop monopoly, but profitability is poor elsewhere in the business. Such asset advantage may also foster a growth-resistant culture with dominant career paths in engineering and finance, rather than marketing or product development. More about attractive positioning.
Continuous innovation: ensuring a distinctive growth message is understood and acted on
Innovation is more than product development responsibility. It is an organizational responsibility. The whole organization must be 'on-message', otherwise too much will be left to too few, providing competitors and new entrants with an easy, sitting target.
Rather than prescribing indistinct visions for the future, the board must deliver a flexible 'growth message' – rich in detail about customer needs, competitive imperatives and shareholder expectations. More about continuous innovation.
Sustainable momentum: aligning the organization
How can business leaders ensure that the important decisions are made? Adherence to our first three imperatives will equip managers with the information and confidence that they need to make important market and business trade-offs.
In addition, we believe that to sustain momentum, the company must focus on long-term competencies, a balanced structure and establishing an enduring competitive mindset. We explain how to achieve each of these in our Long-term profitable growth report. More about sustainable momentum.
