Research Shows How the Top Growth Companies Achieve a Holistic Business Transformation

Highlights

  • A holistic business transformation is a step up from tactical activities to strategic business outcomes.
  • It's needed when company leaders seek to shift from incremental advancements to order of magnitude improvements.
  • Research findings show that the highest revenue growth companies achieved holistic business transformation by focusing on a mix of 9 company growth strategies. Each of these strategies is shared below.
Johnny Grow Revenue Growth Consulting

Research Shows How a Holistic Business Transformation Succeeds

There's no shortage of talk about business transformation. But what's that even mean?

Well, some research performed for The Business Growth Report answered that question.

It found that the Best-in-Class respondents (i.e., the top 15 percent) achieved business transformation by focusing on a combination of 9 company growth strategies.

The research used a 51-question survey to capture business growth effectiveness and performance results from 141 companies.

Respondents were ranked pursuant to the four measures of revenue growth, profit growth, revenue predictability and revenue vitality. That last measure is equal to the percentage of revenue achieved from products created during the prior three years. They were then grouped into one of three archetypes as shown below.

  • Best-in-Class companies scored in the top 15%
  • Median companies scored in the middle 50%
  • Laggard companies scored in the lower 35%

Segmenting the respondents into cohorts allowed us to correlate program results by archetype. And that allows us to understand what the top growth companies do differently than their lower performing peers.

The 9 Growth Strategies that Drive Business Transformation

Nine business strategies stood far above all others in terms of driving transformative results.

Company Growth Best Practices

Here are some of the summary findings.

1

Growth Strategy

A growth strategy is generally not your annual plan. Instead, it's singularly focused on the actions that drive revenue improvement. It defines the best revenue strategy and roadmap to achieve targeted financial results in the shortest time and least cost. It designs and communicates the revenue goal, identifies the actions to achieve the goal, mobilizes resources to execute the actions and continuously measures progress.

Specific objectives, prescriptive methods, efficient resource allocation and real-time analytics collectively create more favorable outcomes than would occur otherwise. But just how much more favorable?

We asked participants to describe their growth strategy. We also correlated annual revenue growth for each type. The results are shown below.

Growth Strategy Research Results

Respondents with actively managed growth strategies achieved 2.8 times higher revenue growth than respondents without.

2

Revenue Operations (RevOps)

A survey question was used to determine the primary source of company revenue accountability. The total responses are shown in the below left-side pie chart. The right-side doughnut chart delineates the centrally managed respondents by performance archetype.

Company Revenue Accountability

It was no surprise that the sales organization was responsible for company revenue among most respondents. However, we did incur a surprise when delineating the respondent data by performance archetype.

While only 16% of all respondents had a centralized group with revenue accountability, 89% of that small cohort was made up of the Best-in-Class archetype.

This inverse relationship reveals that almost 9 out of 10 of the highest growth companies manage revenue responsibility differently than all other companies. And 76% of this cohort used Revenue Operations (RevOps) as their centralized revenue management program.

This statistically relevant data suggests that centralized revenue management highly correlated to transformational growth.

3

Revenue Technologies (RevTech)

The research survey posed questions to discover the most effective revenue growth technologies. We asked participants to identify their top growth applications and rank their effectiveness on a scale of 1 to 10.

The survey questions were designed to surface the most effective applications, not the most popular. The results are shown below for each growth archetype.

Top 5 Revenue Technologies

The biggest disparity among archetypes was the effectiveness of artificial intelligence (AI). The top performers ranked AI effectiveness 37% higher than the combined average of the Median and Laggard cohorts. That's a significant separation so we drilled down further.

When correlated with related survey questions it became apparent that lower growth companies were more often in the early stages of AI deployment. They were quite often in proof of concepts. This differed from the highest performers who were well past the days of trials and prototypes and scaling their AI adoption.

4

Innovation

The survey asked questions to understand the link between innovation investment and innovation generated revenue.

The data revealed three separate but related findings.

First, the median innovation investment among all respondents was 3 to 6%. However, the median investment for the highest growth companies was 7 to 10%.

Second, innovation budgets varied significantly by type of innovation. The data revealed that respondents with the highest new revenue streams invested 16-20% more into transformative innovation. That's different than incremental innovation programs which are generally limited to marginal improvements of existing products. For the high growth cohort, on average, about 40% of their innovation budget was directed to transformative innovation.

Innovation Price Premiums

Third, as shown in the above chart, the Best-in-Class archetype achieved price premiums 2.9 times more frequently than all other respondents. On the flip side, this cohort incurred price decreases 2 times less than all other respondents.

5

Corporate Culture

We posed questions to understand the strategic importance of corporate culture.

Company Culture part of Growth Strategy

As shown in the above chart, respondents that cited corporate culture as a growth strategy achieved an average of 41% higher revenue growth than those who did not.

The data also revealed that Revenue Per Employee was 14% higher and employee churn was 10% lower for respondents that advised culture was an integral component of their strategy.

Companies citing corporate culture as part of their growth strategy achieved 41% higher revenue growth, 14% higher revenue per employee and 10% lower staff turnover.

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6

Customer Affinity

Applying a customer strategy to build customer affinity is essential. That's because strong customer relationships are a leading indicator of increased customer purchases, referrals, customer lifetime value and retention; all factors that deliver significant and sustained company growth.

For those survey participants with active customer strategies, we asked questions to measure their payback.

Customer Strategy ROI

The volume of respondents that did not measure their customer strategy ROI was surprising.

However, when filtering the results by performance archetype it was less surprising that 76% of the Best-in-Class cohort achieved a "Significant ROI", that is 20% or higher ROI, from their customer strategy investment.

7

Revenue Analytics

You can't manage what you can't measure. Perhaps that's why the top performers cited revenue analytics as a top driver for company growth.

Survey respondents identified the three most effective performance analytics tools.

Revenue Analytics Effectiveness
Revenue Analytics Effectiveness

The data show that predictive analytics are the most valuable tool among the highest growth companies. However, it also shows the effectiveness of each type of analytic is significant.

8

Mergers & Acquisitions

The data found that mergers and acquisitions (M&A) accelerated business growth, leapfrogged competitors, created new revenue streams and quickly boosted top line revenues.

M&A Growth Strategy

94% of the Best-in-Class companies cited M&A as a growth strategy. This cohort applied M&A 42% more than the combined Median and Laggard cohorts.

When we correlated the data by company size, we found that larger companies (over $1B) were 22% more likely to cite M&A as part of their company strategy compared to midsize companies ($100M to $1B). They were 59% more likely to apply M&A when compared to smaller companies (less than $100M).

9

Strategic Alliances

We measured participants that use strategic alliances as an active part of their company strategy. The data is delineated by performance archetype in the below bar chart.

Strategic Alliances Growth Strategy

92% of the Best-in-Class companies actively use alliances as part of their company strategy. That's an overwhelming majority and 41% higher than the combined average of the Laggards and Medians.

The data also found that most strategic alliances were not between companies in the same industry. 53% of alliance partnerships were formed among companies in different industries.

From a company growth perspective, all cohorts reported higher revenue growth rates from their strategic alliances than their organic growth.

One More Thing. Participation is not Dedication

Most respondents indicated they adopted all or most of the 9 growth strategies.

However, there is a big difference between adoption which is often a casual participation and dedication which creates expertise.

Dedication requires programs with executive sponsorship, focused resources, enabling technology, performance analytics and continuous process improvements. Dedication goes from being a generalist to becoming a specialist.

And when the criteria for dedicated programs are considered, only the Best-in-Class engaged in 7 or more, on average, of the growth strategies.

These strategies can be applied individually to deliver incremental improvements. However, an integrated mix is needed to achieve a holistic business transformation.

To advance from incremental to exponential business outcomes, consider your current performance in these nine areas, and identify the biggest uplift opportunities.