While much of the EU is struggling to deliver sustained growth, here in the UK we have enjoyed a series of quarters of growth. But, there are signs that some companies are struggling to capitalise. At a macro level, productivity is staying stubbornly low, and at a micro level, we have spoken with a number of companies whose initial growth has stuttered as the recovery continues.
I think the causes of this stem back to the nature of the financial crisis we have survived. Put simply, it lasted too long and hit too deep for many companies to just hold their breath for a few quarters before returning to business as usual. They had to make quite fundamental changes to how they operated to survive, and this has resulted in them forgetting how to grow.
Delivering growth isn't going to be as simple as unleashing the restraints and letting the business flourish. It's going to require a relearning of how to grow and a resetting of the business controls to actually promote growth.
Clearly, there's not just one path to growth. It can be through organic growth in core markets, entering new markets, developing new offerings, acquisition, or a mix of each.
Each have specific business capabilities that will deliver them. Companies may have shed resources to reduce costs and may struggle to find the capacity to grow. Some will have a cadre of managers who have grown up in the crisis and just aren't used to the kind of decisions and risks associated with investing for growth or uncovering new markets. These leaders and managers will need business controls that recognise how to spot growth opportunity and back it, either with funding or space to try new things. Businesses will need to remember the different risk assessments that are needed to assess growth business cases compared with cost control business cases. It may even require learning completely new skills: at the same time as the financial crisis we also have a revolution in digital business where accepted norms in customer engagement have shifted.
All in all, there is a fair chance that many businesses that had to take pretty drastic action in the financial crisis will just not be designed to grow. So when it comes to resetting the strategic agenda onto growth, it's going to need a re-evaluation of the way the business is designed and the capability it has within it to get it into a fit shape to deliver that growth.
My suspicion is that there will be a fair number of frustrated execs who have reset the strategy, reset targets, developed a growth plan and are thoroughly underwhelmed at their organisations’ response. This frustration is set to grow as they see more agile businesses soak up the new potential markets.
What's going to be the difference between the successful execs and the frustrated ones? I don't think it is likely to be the quality of the strategy, but the understanding that businesses need to be redesigned to enable them to deliver that growth.