Most companies that attempt to simultaneously grow and expand their margins don’t succeed. In this video, McKinsey senior partner Duncan Miller discusses how companies can beat those odds with the right team. An edited version of his remarks follows.
Growth has always been important, but it’s particularly important today. The first reason is the speed at which competitors are attacking is astounding. It’s a constant challenge for CEOs.
The second reason is that we’re moving into less certain economic times. Investing for growth in uncertain economic times is actually a big driver of long-term performance. And it’s tough to do when the economy is uncertain. Building that ability to grow is critical to help you endure through good times and bad.
Many of our transformations on the growth side start off as a one-time event. Growth has either faltered at a company or the top team believes there’s more potential than is currently in the plan. Often, these one-time transformations turn into a continuous transformation. The top team continues to run the business through the transformation office, through regular reviews and performance management, and continues a rigorous approach to target setting, initiative development and execution. That’s exciting for us because it’s a key part of enduring impact and sustained growth.
When McKinsey transformation is applied to growth, a number of things come together. We bring our best marketing and sales practitioners. Perhaps you have a great person on pricing and revenue management. We combine that with a chief transformation officer to run the overall transformation. We’ve got functional expertise, transformation expertise, and committed clients. That’s when the virtuous circle happens and McKinsey transformation in growth is at its best.
Working with clients on growth is an incredible amount of fun. You’re on the same team as the CEO and his or her executive group. When you’re trying to grow the business, everybody wins.
The other thing that’s fun is the challenge. Growth is hard. There’s a reason why only 15% of organizations over a decade have grown and expanded their margins. So we have to be on our A game every single day. We have to bring the best of the firm every day, and we have to partner. One of the thrilling things for me personally is learning new client organizations, learning new industries, and solving new sets of problems that I’ve never seen before.
It’s exciting to partner with a team for an inspiring objective and bring the best of both organizations together to deliver upon it. It’s a rollercoaster sometimes, but it’s a thrilling ride.
We love to partner with clients on growth. It inspires our people and the client. But at the start, we need the right conditions for success: the client must have the same bold aspiration we do and is prepared to commit its resources and take real risk. We’re also prepared to commit our resources and take real, economic risk. That’s where the journey starts.
Fundamentally, we’re on the same side of the table with a common objective. And our incentives, and our people, and our capabilities are all aligned to achieve that common objective.