Don’t rest on your laurels!
Times are difficult. Do you feel it’s becoming harder and harder to rmaintain your value creation? You’re not alone. When economic growth is strong, average performance may suffice. But in today’s turbulence, you have to perform and know how to keep your position – a double challenge that few meet…
The BCG Henderson Institute has studied the results of 22,000 companies over the past 40 years and its conclusion is harsh: it is increasingly difficult to sustain high performance over time. Over 5 consecutive years, only 17%of the companies studied were able to maintain their dominant positions. No miracles — they constantly reinvented their business models, found new sources of growth, and adapted to market developments.
The second piece of bad news is that the old all-purpose solutions, such as cost reduction, no longer work.
The study authors identified three new best practices to put in place:
– Change your mental patterns and force yourself to reinvent your business model even when everything is going well;
– Forget traditional indicators that only indicate past performance in favor of those that help assess future performance and the sustainability of your sales. For example, does your latest innovation already represent a significant part of your sales?
– Practice juggling different time scales: manage operations in the short term and develop breakthrough innovations in the longer term.
Did you take your vitamins?
To go further: “Fighting the Gravity of Average Performance” by Martin Reeves, Kevin Whitaker, and Tom Deegan (MITSloan Management Review, 9 January 2020)