It is no secret that businesses thrive when engineered for growth. For CEOs, the challenge is how to lead, sustain, recalibrate and drive growth not only when the times are good, but also when the going is tough or when core business expansion has stalled. By adopting a holistic growth mindset, CEOs can kick-start subtle but powerful shifts in work culture and risk appetite that permeate the entire organization to enable sustainable and scalable growth.
The past few years have brought several critical challenges, including the unprecedented covid pandemic and subsequent focus on economic recovery. More recently, the UK has faced a cost-of-living crisis, rising interest rates and an uncertain economic outlook. While it has so far avoided a recession, macroeconomic uncertainties persist, leaving business leaders cautious.
The lessons that have emerged have been invaluable. These challenges have highlighted weaknesses in old approaches and business models. It would pay to explore how to accelerate long-overdue changes in more difficult times like these. Mental models, representing how people view and interpret the world, can limit progress unless actively challenged. That is the secret sauce to driving growth regardless of the macroeconomic landscape.
CEOs must reshape their old mental models to build agility and resilience for navigating an evolving economic climate, societal changes and an unpredictable future. It is about identifying a seed of opportunity for transformation and growth amid any crisis and creating it themselves if it is not obvious.
In practice, this can mean embracing innovation to reimagine an organization for a digital era, capturing cost and operational efficiencies and enriching the end-user journey based on customer demands. It involves flipping the ‘back-to-front’ model to become customer-centric, rather than service or product-focused, and leveraging data analytics, AI and machine learning to predict future customer needs.
This strengthens customer retention, trust and companies’ relevance in a competitive landscape (think, for instance, how Big Tech has entered the financial services market, compelling traditional banks to adopt more innovative strategies and undertake digital and service transformations to keep up). By adopting an attitude of continuous innovation, CEOs can position their organizations for strategic industry co-creation, allowing flexibility to spot gaps and capitalize on profitable cross-selling opportunities.
Build adjacencies for growth: A key principle of a growth mindset is to seek ways to expand into breakthrough areas and adjacencies to stay ahead of the curve. According to McKinsey, companies and their CEOs who successfully adopt growth mindsets are 2.4 times more likely to outperform their peers. Further, those that invest in ‘growth pathways’ into adjacencies by building on the core and innovating into ‘breakout’ businesses are 97% more likely to gain a competitive edge.
For example, Swedish furniture giant Ikea expanded into new areas by empowering customers with integrated solutions, rather than reinventing itself to enter another business domain like the television market. It focuses on equipping customers with all the necessary items for their living rooms in a way that works best for them, thereby adding value to their everyday lives.
Similarly, Netflix is betting on video gaming and is ahead of rival streaming services like HBO Max and Disney Plus when it comes to subscriber retention. However, like Ikea, its goal is to create an adjacency while leveraging its core product—video streaming.
This ties in with founder Reed Hastings’ view that Netflix competes with anything customers do to relax, including “drinking a bottle of wine.” As video gaming grows rapidly, Netflix aims to retain its vast subscriber base by offering mobile video games at no extra cost.
The McKinsey report further reveals that businesses expanding into adjacent industries are “20% more likely to achieve greater growth.” Implementing change and spotting growth opportunities requires CEOs to innovate, secure company-wide buy-in, devise a strategy and ensure successful execution.
Lead by example: Some key questions CEOs can ask themselves include: How can the core competency solve global business problems? Which supply chain parts need improvement? What are customers looking for, and what can be done differently to help solve their most pressing problems? In essence, businesses should aim to make themselves indispensable to customers, a win-win scenario because this can build new revenue streams.
Amazon exemplifies this approach. CEO Jeff Bezos applied tools—from inventory management to algorithm-based recommendation engines—that made it the world’s digital bookstore as it moved adjacently towards electronics and toys and everything sold online. Amazon then disrupted more markets, from healthcare to payments, including launching a buy-now-pay-later product with Barclays and a home insurance comparison service in the UK.
As businesses look ahead and competition heats up, CEOs must lay the ground for resilient growth with smart, sustainable and future-proof strategies.