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Have you tested your strategy lately?

Recently I read again the article from Mc Kinsey in 2011 and feel it’s still valid as of today.

Three authors named Chris Bradley, Martin Hirt, and Sven Smit tested with more than 700 senior strategists around the world that to bring us the test of a good strategy.

The list of the 10 tests is as follows:

Test 1: Will your strategy beat the market?
Test 2: Does your strategy tap a true source of advantage?
Test 3: Is your strategy granular about where to compete?
Test 4: Does your strategy put you ahead of trends?
Test 5: Does your strategy rest on privileged insights?
Test 6: Does your strategy embrace uncertainty?
Test 7: Does your strategy balance commitment and flexibility?
Test 8: Is your strategy contaminated by bias?
Test 9: Is there conviction to act on your strategy?
Test 10: Have you translated your strategy into an action plan?

It is not surprising that recent McKinsey Quarterly survey of 2,135 executives indicates that few strategies pass more than three of the tests (Exhibit 1).

exhbit

 

Hereby is the details of the 10 tests:

Test 1: Will your strategy beat the market?

All companies operate in markets surrounded by customers, suppliers, competitors, substitutes, and potential entrants, all seeking to advance their own positions. That process, unimpeded, inexorably drives economic surplus—the gap between the return a company earns and its cost of capital—toward zero.

For a company to beat the market by capturing and retaining an economic surplus, there must be an imperfection that stops or at least slows the working of the market. An imperfection controlled by a company is a competitive advantage. These are by definition scarce and fleeting because markets drive reversion to mean performance (Exhibit 2). The best companies are emulated by those in the middle of the pack, and the worst exit or undergo significant reform. As each player responds to and learns from the actions of others, best practice becomes commonplace rather than a market-beating strategy. Good strategies emphasize difference—versus your direct competitors, versus potential substitutes, and versus potential entrants.

Q1_10TimelessTests_ex2

Market participants play out the drama of competition on a stage beset by randomness. Because the evolution of markets is path dependent—that is, its current state at any one time is the sum product of all previous events, including a great many random ones—the winners of today are often the accidents of history. Consider the development of the US tire industry. At its peak in the mid-1920s, a frenzy of entry had created almost 300 competitors. Yet by the 1940s, four producers controlled more than 70 percent of the market. Those winners happened to make retrospectively lucky choices about location and technology, but at the time it was difficult to tell which companies were truly fit for the evolving environment. The histories of many other industries, from aerospace to information technology, show remarkably similar patterns.

To beat the market, therefore, advantages have to be robust and responsive in the face of onrushing market forces. Few companies, in our experience, ask themselves if they are beating the market—the pressures of “just playing along” seem intense enough. But playing along can feel safer than it is. Weaker contenders win surprisingly often in war when they deploy a divergent strategy, and the same is true in business.6

Further reading:
Anita M. McGahan How Industries Evolve: Principles for Achieving and Sustaining Superior Performance, Boston, MA: Harvard Business School Publishing, 2004.

Michael Porter, “What is strategy?” Harvard Business Review, November 1996, Volume 74, Number 6, pp. 61–78.

Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in the Markets and in Life, New York: Texere, 2001.

 

Test 2: Does your strategy tap a true source of advantage?

Know your competitive advantage, and you’ve answered the question of why you make money (and vice versa). Competitive advantage stems from two sources of scarcity: positional advantages and special capabilities.

Positional advantages are rooted in structurally attractive markets. By definition, such advantages favor incumbents: they create an asymmetry between those inside and those outside high walls. For example, in Australia, two beer makers control 95 percent of the market and enjoy triple the margins of US brewers. This situation has sustained itself for two decades, but it wasn’t always so. Beginning in the 1980s, the Australian industry experienced consolidation. That change in structure was associated with a change in industry conduct (price growth began outstripping general inflation) and a change in industry performance (higher profitability). Understanding the relationship among structure, conduct, and performance is a critical part of the quest for positional advantage.

Special capabilities, the second source of competitive advantage, are scarce resources whose possession confers unique benefits. The most obvious resources, such as drug patents or leases on mineral deposits, we call “privileged, tradable assets”: they can be bought and sold. A second category of special capabilities, “distinctive competencies,” consists of things a company does particularly well, such as innovating or managing stakeholders. These capabilities can be just as powerful in creating advantage but cannot be easily traded.

Too often, companies are cavalier about claiming special capabilities. Such a capability must be critical to a company’s profits and exist in abundance within it while being scarce outside. As such, special capabilities tend to be specific in nature and few in number. Companies often err here by mistaking size for scale advantage or overestimating their ability to leverage capabilities across markets. They infer special capabilities from observed performance, often without considering other explanations (such as luck or positional advantage). Companies should test any claimed capability advantage vigorously before pinning their hopes on it.

When companies bundle together activities that collectively create advantage, it becomes more difficult for competitors to identify and replicate its exact source. Consider Aldi, the highly successful discount grocery retailer. To deliver its value proposition of lower prices, Aldi has completely redesigned the typical business system of a supermarket: only 1,500 or so products rather than 30,000, the stocking of one own-brand or private label rather than hundreds of national brands, and superlean replenishment on pallets and trolleys, thus avoiding the expensive task of hand stacking shelves. Given the enormous changes necessary for any supermarket that wishes to copy the total system, it is extremely difficult to mimic Aldi’s value proposition.

Finally, don’t forget to take a dynamic view. What can erode positional advantage? Which special capabilities are becoming vulnerable? There is every reason to believe that competitors will exploit points of vulnerability. Assume, like Lewis Carroll’s Red Queen, that you have to run just to stay in the same place.

Further reading:

Michael J. Lanning and Edward G. Michaels, “Thinking strategically,” mckinseyquarterly.com, June 2000.

Michael Porter, “The five competitive forces that shape strategy,” Harvard Business Review, January 2008, Volume 86, Number 1, pp. 78–93.

Phil Rosenzweig, The Halo Effect and the Eight Other Business Delusions That Deceive Managers, New York: Free Press, 2007.

 

Test 3: Is your strategy granular about where to compete?

The need to beat the market begs the question of which market. Research shows that the unit of analysis used in determining strategy (essentially, the degree to which a market is segmented) significantly influences resource allocation and thus the likelihood of success: dividing the same businesses in different ways leads to strikingly different capital allocations.

What is the right level of granularity? Push within reason for the finest possible objective segmentation of the market: think 30 to 50 segments rather than the more typical 5 or so. Too often, by contrast, the business unit as defined by the organizational chart becomes the default for defining markets, reducing from the start the potential scope of strategic thinking.

Defining and understanding these segments correctly is one of the most practical things a company can do to improve its strategy. Management at one large bank attributed fast growth and share gains to measurably superior customer perceptions and satisfaction. Examining the bank’s markets at a more granular level suggested that 90 percent of its outperformance could be attributed to a relatively high exposure to one fast-growing city and to a presence in a fast-growing product segment. This insight helped the bank avoid building its strategy on false assumptions about what was and wasn’t working for the operation as a whole.

In fact, 80 percent of the variance in revenue growth is explained by choices about where to compete, according to research summarized in The Granularity of Growth, leaving only 20 percent explained by choices about how to compete. Unfortunately, this is the exact opposite of the allocation of time and effort in a typical strategy-development process. Companies should be shifting their attention greatly toward the “where” and should strive to outposition competitors by regularly reallocating resources as opportunities shift within and between segments.

Further reading:
Mehrdad Baghai, Sven Smit, and Patrick Viguerie, The Granularity of Growth: How to Identify the Sources of Growth and Drive Enduring Company Performance, Hoboken, NJ: Wiley & Sons, 2008.

Mehrdad Baghai, Sven Smit, and Patrick Viguerie, “Is your growth strategy flying blind?Harvard Business Review, May 2009, Volume 87, Number 5, pp. 86–96.

 

Test 4: Does your strategy put you ahead of trends?

The emergence of new trends is the norm. But many strategies place too much weight on the continuation of the status quo because they extrapolate from the past three to five years, a time frame too brief to capture the true violence of market forces.

A major innovation or an external shock in regulation, demand, or technology, for example, can drive a rapid, full-scale industry transition. But most trends emerge fairly slowly—so slowly that companies generally fail to respond until a trend hits profits. At this point, it is too late to mount a strategically effective response, let alone shape the change to your advantage. Managers typically delay action, held back by sunk costs, an unwillingness to cannibalize a legacy business, or an attachment to yesterday’s formula for success. The cost of delay is steep: consider the plight of major travel agency chains slow to understand the power of online intermediaries. Conversely, for companies that get ahead of the curve, major market transitions are an opportunity to rethink their commitments in areas ranging from technology to distribution and to tailor their strategies to the new environment.

To do so, strategists must take trend analysis seriously. Always look to the edges. How are early adopters and that small cadre of consumers who seem to be ahead of the curve acting? What are small, innovative entrants doing? What technologies under development could change the game? To see which trends really matter, assess their potential impact on the financial position of your company and articulate the decisions you would make differently if that outcome were certain. For example, don’t just stop at an aging population as a trend—work it through to its conclusion. Which consumer behaviors would change? Which particular product lines would be affected? What would be the precise effect on the P&L? And how does that picture line up with today’s investment priorities?

Further reading:

Peter Bisson, Elizabeth Stephenson, and S. Patrick Viguerie, “Global forces: An introduction,” mckinseyquarterly.com, June 2010.

Richard Rumelt, “Strategy in a ‘structural break,’” mckinseyquarterly.com, December 2008.

 

Test 5: Does your strategy rest on privileged insights?

Data today can be cheap, accessible, and easily assembled into detailed analyses that leave executives with the comfortable feeling of possessing an informed strategy. But much of this is noise and most of it is widely available to rivals. Furthermore, routinely analyzing readily available data diverts attention from where insight-creating advantage lies: in the weak signals buried in the noise.

In the 1990s, when the ability to burn music onto CDs emerged, no one knew how digitization would play out; MP3s, peer-to-peer file sharing, and streaming Web-based media were not on the horizon. But one corporation with a large record label recognized more rapidly than others that the practical advantage of copyright protection could quickly become diluted if consumers began copying material. Early recognition of that possibility allowed the CEO to sell the business at a multiple based on everyone else’s assumption that the status quo was unthreatened.

Developing proprietary insights isn’t easy. In fact, this is the element of good strategy where most companies stumble (see sidebar, “The insight deficit”). A search for problems can help you get started. Create a short list of questions whose answers would have major implications for the company’s strategy—for example, “What will we regret doing if the development of India hiccups or stalls, and what will we not regret?” In doing so, don’t forget to examine the assumptions, explicit and implicit, behind an established business model. Do they still fit the current environment?

Another key is to collect new data through field observations or research rather than to recycle the same industry reports everyone else uses. Similarly, seeking novel ways to analyze the data can generate powerful new insights. For example, one supermarket chain we know recently rethought its store network strategy on the basis of surprising results from a new clustering algorithm.

Finally, many strategic breakthroughs have their root in a simple but profound customer insight (usually solving an old problem for the customer in a new way). In our experience, companies that go out of their way to experience the world from the customer’s perspective routinely develop better strategies.

Further reading:
Patricia Gorman Clifford, Kevin P. Coyne, and Renée Dye, “Breakthrough thinking from inside the box,” Harvard Business Review, December 2007, Volume 85, Number 12, pp. 70–78.

 

Test 6: Does your strategy embrace uncertainty?

A central challenge of strategy is that we have to make choices now, but the payoffs occur in a future environment we cannot fully know or control. A critical step in embracing uncertainty is to try to characterize exactly what variety of it you face—a surprisingly rare activity at many companies. Our work over the years has emphasized four levels of uncertainty. Level one offers a reasonably clear view of the future: a range of outcomes tight enough to support a firm decision. At level two, there are a number of identifiable outcomes for which a company should prepare. At level three, the possible outcomes are represented not by a set of points but by a range that can be understood as a probability distribution. Level four features total ambiguity, where even the distribution of outcomes is unknown.

In our experience, companies oscillate between assuming, simplistically, that they are operating at level one (and making bold but unjustified point forecasts) and succumbing to an unnecessarily pessimistic level-four paralysis. In each case, careful analysis of the situation usually redistributes the variables into the middle ground of levels two and three.

Rigorously understanding the uncertainty you face starts with listing the variables that would influence a strategic decision and prioritizing them according to their impact. Focus early analysis on removing as much uncertainty as you can—by, for example, ruling out impossible outcomes and using the underlying economics at work to highlight outcomes that are either mutually reinforcing or unlikely because they would undermine one another in the market. Then apply tools such as scenario analysis to the remaining, irreducible uncertainty, which should be at the heart of your strategy.

Further reading:
Hugh G. Courtney, 20/20 Foresight: Crafting Strategy in an Uncertain World, Boston, MA: Harvard Business School Publishing, 2001.

Hugh G. Courtney, Jane Kirkland, and S. Patrick Viguerie, “Strategy under uncertainty,” mckinseyquarterly.com, June 2000.

Charles Roxburgh, “The use and abuse of scenarios,” mckinseyquarterly.com, November 2009.

 

Test 7: Does your strategy balance commitment and flexibility?

Commitment and flexibility exist in inverse proportion to each other: the greater the commitment you make, the less flexibility remains. This tension is one of the core challenges of strategy. Indeed, strategy can be expressed as making the right trade-offs over time between commitment and flexibility.

Making such trade-offs effectively requires an understanding of which decisions involve commitment. Inside any large company, hundreds of people make thousands of decisions each year. Only a few are strategic: those that involve commitment through hard-to-reverse investments in long-lasting, company-specific assets. Commitment is the only path to sustainable competitive advantage.

In a world of uncertainty, strategy is about not just where and how to compete but also when. Committing too early can be a leap in the dark. Being too late is also dangerous, either because opportunities are perishable or rivals can seize advantage while your company stands on the sidelines. Flexibility is the essential ingredient that allows companies to make commitments when the risk/return trade-off seems most advantageous.

A market-beating strategy will focus on just a few crucial, high-commitment choices to be made now, while leaving flexibility for other such choices to be made over time. In practice, this approach means building your strategy as a portfolio comprising three things: big bets, or committed positions aimed at gaining significant competitive advantage; no-regrets moves, which will pay off whatever happens; and real options, or actions that involve relatively low costs now but can be elevated to a higher level of commitment as changing conditions warrant. You can build underpriced options into a strategy by, for example, modularizing major capital projects or maintaining the flexibility to switch between different inputs.

Further reading:
Lowell L. Bryan, “Just-in-time strategy for a turbulent world,” mckinseyquarterly.com, June 2002.

 

Test 8: Is your strategy contaminated by bias?

It’s possible to believe honestly that you have a market-beating strategy when, in fact, you don’t. Sometimes, that’s because forces beyond your control change. But in other cases, the cause is unintentional fuzzy thinking.

Behavioral economists have identified many characteristics of the brain that are often strengths in our broader, personal environment but that can work against us in the world of business decision making. The worst offenders include overoptimism (our tendency to hope for the best and believe too much in our own forecasts and abilities), anchoring (tying our valuation of something to an arbitrary reference point), loss aversion (putting too much emphasis on avoiding downsides and so eschewing risks worth taking), the confirmation bias (overweighting information that validates our opinions), herding (taking comfort in following the crowd), and the champion bias (assigning to an idea merit that’s based on the person proposing it).

Strategy is especially prone to faulty logic because it relies on extrapolating ways to win in the future from a complex set of factors observed today. This is fertile ground for two big inference problems: attribution error (succumbing to the “halo effect”) and survivorship bias (ignoring the “graveyard of silent failures”). Attribution error is the false attribution of success to observed factors; it is strategy by hindsight and assumes that replicating the actions of another company will lead to similar results. Survivorship bias refers to an analysis based on a surviving population, without consideration of those who did not live to tell their tale: this approach skews our view of what caused success and presents no insights into what might cause failure—were the survivors just luckier? Case studies have their place, but hindsight is in reality not 20/20. There are too many unseen factors.

Developing multiple hypotheses and potential solutions to choose among is one way to “de-bias” decision making. Too often, the typical drill is to develop a promising hypothesis and put a lot of effort into building a fact base to validate it. In contrast, it is critical to bring fresh eyes to the issues and to maintain a culture of challenge, in which the obligation to dissent is fostered.

The decision-making process can also be de-biased by, for example, specifying objective decision criteria in advance and examining the possibility of being wrong. Techniques such as the “premortem assessment” (imagining yourself in a future where your decision turns out to have been mistaken and identifying why that might have been so) can also be useful.

Further reading:
Dan Ariely, Predictably Irrational: The Hidden Forces That Shape Our Decisions, New York: HarperCollins, 2008.

Dan Lovallo and Olivier Sibony, “The case for behavioral strategy,” mckinseyquarterly.com, March 2010.

Strategic decisions: When can you trust your gut?” mckinseyquarterly.com, March 2010.

Charles Roxburgh, “Hidden flaws in strategy,” mckinseyquarterly.com, May 2003.

 

Test 9: Is there conviction to act on your strategy?

This test and the one that follows aren’t strictly about the strategy itself but about the investment you’ve made in implementing it—a distinction that in our experience quickly becomes meaningless because the two, inevitably, become intertwined. Many good strategies fall short in implementation because of an absence of conviction in the organization, particularly among the top team, where just one or two nonbelievers can strangle strategic change at birth.

Where a change of strategy is needed, that is usually because changes in the external environment have rendered obsolete the assumptions underlying a company’s earlier strategy. To move ahead with implementation, you need a process that openly questions the old assumptions and allows managers to develop a new set of beliefs in tune with the new situation. This goal is not likely to be achieved just via lengthy reports and presentations. Nor will the social processes required to absorb new beliefs—group formation, building shared meaning, exposing and reconciling differences, aligning and accepting accountability—occur in formal meetings.

CEOs and boards should not be fooled by the warm glow they feel after a nice presentation by management. They must make sure that the whole team actually shares the new beliefs that support the strategy. This requirement means taking decision makers on a journey of discovery by creating experiences that will help them viscerally grasp mismatches that may exist between what the new strategy requires and the actions and behavior that have brought them success for many years. For example, visit plants and customers or tour a country your company plans to enter, so that the leadership team can personally meet crucial stakeholders. Mock-ups, video clips, and virtual experiences also can help.

The result of such an effort should be a support base of influencers who feel connected to the strategy and may even become evangelists for it. Because strategy often emanates from the top, and CEOs are accustomed to being heeded, this commonsense step often gets overlooked, to the great detriment of the strategy.

Further reading:
Derek Dean, “A CEO’s guide to reenergizing the senior team,” mckinseyquarterly.com, September 2009.

Erika Herb, Keith Leslie, and Colin Price, “Teamwork at the top,” mckinseyquarterly.com, May 2001.

 

Test 10: Have you translated your strategy into an action plan?

In implementing any new strategy, it’s imperative to define clearly what you are moving from and where you are moving to with respect to your company’s business model, organization, and capabilities. Develop a detailed view of the shifts required to make the move, and ensure that processes and mechanisms, for which individual executives must be accountable, are in place to effect the changes. Quite simply, this is an action plan. Everyone needs to know what to do. Be sure that each major “from–to shift” is matched with the energy to make it happen. And since the totality of the change often represents a major organizational transformation, make sure you and your senior team are drawing on the large body of research and experience offering solid advice on change management—a topic beyond the scope of this article!

Finally, don’t forget to make sure your ongoing resource allocation processes are aligned with your strategy. If you want to know what it actually is, look where the best people and the most generous budgets are—and be prepared to change these things significantly. Effort spent aligning the budget with the strategy will pay off many times over.

Further reading:
Carolyn Aiken and Scott Keller, “The irrational side of change management,” mckinseyquarterly.com, April 2009.

Mahmut Akten, Massimo Giordano, and Mari A. Scheiffele, “Just-in-time budgeting for a volatile economy,” mckinseyquarterly.com, May 2009.

Josep Isern and Caroline Pung, “Driving radical change,” mckinseyquarterly.com, November 2007.

 


As we’ve discussed the tests with hundreds of senior executives at many of the world’s largest companies, we’ve come away convinced that a lot of these topics are part of the strategic dialogue in organizations. But we’ve also heard time and again that discussion of such issues is often, as one executive in Japan recently told us, “random, simultaneous, and extremely confusing.” Our hope is that the tests will prove a simple and effective antidote: a means of quickly identifying gaps in executives’ strategic thinking, opening their minds toward new ways of using strategy to create value, and improving the quality of the strategy-development process itself.

About the author(s)

Chris Bradley is a principal in McKinsey’s Sydney office, Martin Hirt is a director in the Taipei office, and Sven Smit is a director in the Amsterdam office.

The authors wish to acknowledge the many contributions of McKinsey alumnus Nick Percy, now the head of strategy for BBC Worldwide, to the thinking behind this article.

Chief Growth Officer: Who they are, Why Now and Do you need one?

Why now?

With the appointment of Francisco Crespo as the new “Chief Growth Officer” (CGO) of Coca-Cola, Coca-Cola  together with other FMCGs like Colgate-Palmolive, Coty and Mondelēz have all hired CGOs to “accelerate growth efforts” or to “bring focus and growth to our platforms”.

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(by RR Associates)

One of the reasons I think we just can know by simply just looking at its name: for growing the company. But why? Because growing now is not the easy task as before. For such FMCG companies, as the other name that we can call them as “epic marketers”, they rely on their marketing techniques to grow and earn profits. But why this role does not belong to the Chief Marketing Officer? Maybe the CEO does not trust the CMOs anymore for such role or the CMOs could not deliver what the CEOs expect?

Screen Shot 2017-08-14 at 3.16.48 PM.png

(by RR Associates)

According to the Accenture Strategy Research, CMOs spend just 37% of their time on innovation and just 30% see themselves as cutting-edge marketing innovators. CMOs may have different understanding of what they are expected or they could not focus on driving growth because of their traditional function? Maybe both. And their CEOs could not wait any longer to drive growth for their companies.

As Michael Koziol, international president at global brand experience agency Huge, mentioned “As long as marketers continue to position themselves as experts in advertising, brand positioning, millennials and the latest digital fads – instead of being growth drivers – we’ll see more CMO positions disappear.”

Welcome to the new exciting role.

Screen Shot 2017-08-14 at 3.14.41 PM.png

(by RR Associates)

CGO’s Role

Even the fact that CGO title is named by only a few companies, the role of growing companies have long history. They have various names such as Chief (New) Business Development Officer, Chief Strategy Officer…

But who can become the CGO? According to RR & Associates,  CGOs must have the marketing and brand building expertise to make the consumer the focal point of the business and the P&L experience that brings credibility and commercial grounding.

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By placing the chief growth officer as a direct report to the CEO, the CMO, may remain on the executive committee, they no longer are reporting directly to the CEO.

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Do you need CGO?

As mentioned by RR Associates, you consider a CGO by looking at such questions:

Does your company culture reflect today’s market reality?

                + Are best practices shared across your company?

                + Is there duplication of activities across your company?

+ Are you bureaucratic rather than agile?

+ Is your innovation additive rather than disruptive?

+ Do your insights and R&D teams inform your new product development and routes to market?

Do your products and services serve evolving consumer needs?

+ Do the bulk of your revenues come from legacy brands in shrinking or sluggish categories?

+ Are you losing market share to products from new categories?

+ How diverse are your business categories in terms of consumer base and channel?

Are your financial and human capital investments future-proof?

+ Do your investments reflect your growth agenda?

+ Are business leaders focusing on short-term targets over long-term profitability?

+ Do you have a strong bench of talent when it comes to CEO succession?

The CGO’s Job Description

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Depending on the companies, there are various way to describe what CGO’s accountabilities and responsibilities.  We can just look at some key lines in their JD to know what they are expected to perform:

Reporting Relationship 

The Chief Growth Officer position reports to the President and Chief Executive Officer and serves as a member of the Senior Executive Team.

Principal Accountabilities 

• Lead and direct the day-to-day activities leading to profitable growth. This includes business development, marketing, product development, and executive management business planning and marketing strategies.

• Provide leadership and direction in setting performance criteria and ensure proper training and development plans for sales and account management resources to ensure creation and maintenance of strategic relationships with clients. Serve as an “environmental compass” to senior management.

• Work with senior leadership on a cross-functional basis to build team relationships aligned with internal and external expectations of business development and service delivery.

• Ensure excellence in standards development, maintenance, and evolution that retains current accounts and positions the company strategically through market analysis and industry assessment for market growth domestically and abroad.

o Analyze historical standards of product/information and report on account vitality rates – growth/attrition.

o Analyze and develop business plans, model financial impact, ROI development, and create financial forecasts/projections.

• Build global brand equity and consistency through multiple promotion and communication industry channels:

o Responsible for presentation venues and educational events – both in person and via the Internet.

o Promote company’s standards and its business value through its publications, Web appearance, and social media efforts.

• Align under the Company brand and lead company’s market-focused managing directors to ensure targeted prioritization of effort and return on investment for commitment dollars.

• Oversee the creation and integration of all key marketing and branding activities to enhance company’s market position.

o Oversee all activities and strategies for marketing campaigns, advertising, communications, public relations, and other promotional efforts, providing overall leadership to market positioning and strategic communication.

o Regularly evaluate market reactions to programs/services to ensure marketing strategies, plans, and actions are consistent with evolving market needs and the competitive environment.

o Establish marketing goals to ensure share of market and profitability of products and services. Develop and execute marketing and sales plans and programs in a fiscally sound manner to ensure goals for growth and expansion of Company products and services are met or exceeded.

• Build a “best in class” collective company marketing sales and business development team. Represent the company through key client visits, presentations, and industry events as appropriate to advance Company’s goals.

o Develop strategy and plans for new business opportunities.

o Identify variances to plan and opportunities to improve performance, efficiency, and productivity to achieve the goals and objectives set by senior leadership.

o Analyze industry trends and information to identify standards, product categories and markets to enter as future sources of growth.

• Identify/evaluate financial feasibility of prospective business opportunities. Develop plans for new ventures that hold potential for a high degree of success from a business development perspective based on customer accounts’ needs and trends in the industry.

• Lead process of defining product strategy and developing product roadmaps and requirement documents. Analyze competitive/market research and customer feedback data.

• Oversee product development and design, execution, and operational sequencing of products from concept to customer. Profitability, customer service, speed-to-market, quality, and focus on compliance requirements are critical to success.

• As a senior executive with Company, demonstrate personal conduct in keeping with Company’s reputation of “excellence,” ensuring Company’s integrity, trust, and reputation in the marketplace with key stakeholders/influencers, including customers, payers, regulators, consumer groups, and internal staff and field surveyors while maintaining alignment with Company’s core values and advancing the goodwill and credibility of Company staff, surveyors, and its accreditation processes.

• Recruit, select, and retain highly qualified professionals.

• Attend board meetings and provide information and actions as directed and consistent with the Company policy governance model.

• Create a working environment where productivity can be sustained and improved, and where innovation and personal growth are encouraged and realized. Provide the leadership necessary to maintain a motivated, productive, and competent team through open communication and delegation of responsibilities and authority. Ensure people are in place to drive business results.

Experience and Qualifications 

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The successful candidate will possess a master’s degree in a health or human services discipline, or a master’s degree in business or public administration, marketing, or related field with an undergraduate degree in health or human services discipline. In addition, this individual will have a minimum of 10 years of progressively higher-level managerial experience with a focus on business development in human services or the equivalent combination of education and experience.

The ideal candidate will possess the following qualifications and experience: 

• Demonstrated success unifying and aligning multiple, unique, yet related products or service lines under a corporate brand, and advancing the value and marketability of such as a branded suite of solutions or services through a variety of channels.

• Experience leading the growth and launch of multiple product lines or business development strategies in an entrepreneurial environment achieving market success and alignment under a common corporate identity.

• Understands the complexity of managing in a neutral impartial accreditation environment. When considering corresponding growth opportunities, must consider the impact on and value to Company’s “balanced stakeholder” communities, persons served, direct business customer, payers and insurers, regulators, and the general public).

• Demonstrated experience and ability in developing and executing highly sophisticated, appropriate, and effective sales and marketing presentations tailored to a variety of audiences.

• Ability to move and inspire people to action through articulate vision and direction, influence, and persuasion. Proven ability to effectively lead cross-functional teams and build processes to deliver results.

• Proven professional skills in written and verbal communication; interpersonal/ relationship-building; planning and project management; creative business development; branding; analytical and problem-solving; influence; persistency; and negotiation.

Personal, Professional, and Leadership Attributes 

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The successful candidate will understand and have a commitment to the philosophy, mission, values, and vision of Company. This key executive will be able to demonstrate these values with his/her leadership practices and will possess personal and professional integrity and display a professional decorum in their representation of the company.

Specifically, the following skills and attributes will be required to be successful in this position: 

• Excellent decision-making skills and strong analytical, strategic planning, and financial acumen required.

• High energy level, superior communication skills, and the charismatic personality needed to gain the respect and confidence of subordinates and key customer contacts.

• An extremely organized, disciplined, hands-on, and process-oriented leader who is not afraid of digging into details when necessary.

• Proactive and action-oriented, assertive, committed, and high-energy with a high level of adaptability.

• Shows respect and sensitivity for cultural differences; promotes a harassment-free environment.

• Strong work ethic, achievement-oriented, and motivated beyond personal interests.

• Strong people management and leadership skills. Highly effective and active communicator who works well with people at all levels.

• Strong business acumen, intelligence, and capacity. Thinks strategically and implements tactically.

• Highly ethical; open leadership style. Actively seeks out and supports collaborative thinking and problem-solving with others in the organization. Does not view collaborative dialogue around decisions as a personal attack on abilities. Coachable.

• Strategic vision and thinking. Ability to position the organization for the future, looking beyond the present situation to conceptualize key trends and identify changing market demands.

• Knowledgeable of how decisions impact all aspects of the business. Approaches his/her work as an interconnected system.

• Creative, innovative, and “out-of-the-box” thinking skills.

• Problem-solves and approaches work from a “return on investment” perspective. Manages difficult or emotional customer situations; responds promptly to customer needs; elicits customer feedback to improve services; responds to requests for service and assistance; meets commitments.

 

High-performing teams: A timeless leadership topic

By Scott Keller and Mary Meaney (Mc Kinsey)

CEOs and senior executives can employ proven techniques to create top-team performance.

The value of a high-performing team has long been recognized. It’s why savvy investors in start-ups often value the quality of the team and the interaction of the founding members more than the idea itself. It’s why 90 percent of investors think the quality of the management team is the single most important nonfinancial factor when evaluating an IPO. And it’s why there is a 1.9 times increased likelihood of having above-median financial performance when the top team is working together toward a common vision.1“No matter how brilliant your mind or strategy, if you’re playing a solo game, you’ll always lose out to a team,” is the way Reid Hoffman, LinkedIn cofounder, sums it up. Basketball legend Michael Jordan slam dunks the same point: “Talent wins games, but teamwork and intelligence win championships.”

The topic’s importance is not about to diminish as digital technology reshapes the notion of the workplace and how work gets done. On the contrary, the leadership role becomes increasingly demanding as more work is conducted remotely, traditional company boundaries become more porous, freelancers more commonplace, and partnerships more necessary. And while technology will solve a number of the resulting operational issues, technological capabilities soon become commoditized.

Building a team remains as tough as ever. Energetic, ambitious, and capable people are always a plus, but they often represent different functions, products, lines of business, or geographies and can vie for influence, resources, and promotion. Not surprisingly then, top-team performance is a timeless business preoccupation. (See sidebar “Cutting through the clutter of management advice,” which lists top-team performance as one of the top ten business topics of the past 40 years, as discussed in our book, Leading Organizations: Ten Timeless Truths.)

Amid the myriad sources of advice on how to build a top team, here are some ideas around team composition and team dynamics that, in our experience, have long proved their worth.

Team composition

Team composition is the starting point. The team needs to be kept small—but not too small—and it’s important that the structure of the organization doesn’t dictate the team’s membership. A small top team—fewer than six, say—is likely to result in poorer decisions because of a lack of diversity, and slower decision making because of a lack of bandwidth. A small team also hampers succession planning, as there are fewer people to choose from and arguably more internal competition. Research also suggests that the team’s effectiveness starts to diminish if there are more than ten people on it. Sub-teams start to form, encouraging divisive behavior. Although a congenial, “here for the team” face is presented in team meetings, outside of them there will likely be much maneuvering. Bigger teams also undermine ownership of group decisions, as there isn’t time for everyone to be heard.

Beyond team size, CEOs should consider what complementary skills and attitudes each team member brings to the table. Do they recognize the improvement opportunities? Do they feel accountable for the entire company’s success, not just their own business area? Do they have the energy to persevere if the going gets tough? Are they good role models? When CEOs ask these questions, they often realize how they’ve allowed themselves to be held hostage by individual stars who aren’t team players, how they’ve become overly inclusive to avoid conflict, or how they’ve been saddled with team members who once were good enough but now don’t make the grade. Slighting some senior executives who aren’t selected may be unavoidable if the goal is better, faster decisions, executed with commitment.

Of course, large organizations often can’t limit the top team to just ten or fewer members. There is too much complexity to manage and too much work to be done. The CEO of a global insurance company found himself with 18 direct reports spread around the globe who, on their videoconference meetings, could rarely discuss any single subject for more than 30 minutes because of the size of the agenda. He therefore formed three top teams, one that focused on strategy and the long-term health of the company, another that handled shorter-term performance and operational issues, and a third that tended to a number of governance, policy, and people-related issues. Some executives, including the CEO, sat on each. Others were only on one. And some team members chosen weren’t even direct reports but from the next level of management down, as the CEO recognized the importance of having the right expertise in the room, introducing new people with new ideas, and coaching the next generation of leaders.

Team dynamics

It’s one thing to get the right team composition. But only when people start working together does the character of the team itself begin to be revealed, shaped by team dynamics that enable it to achieve either great things or, more commonly, mediocrity.

Consider the 1992 roster of the US men’s Olympic basketball team, which had some of the greatest players in the history of the sport, among them Charles Barkley, Larry Bird, Patrick Ewing, Magic Johnson, Michael Jordan, Karl Malone, and Scottie Pippen. Merely bringing together these players didn’t guarantee success. During their first month of practice, indeed, the “Dream Team” lost to a group of college players by eight points in a scrimmage. “We didn’t know how to play with each other,” Scottie Pippen said after the defeat. They adjusted, and the rest is history. The team not only won the 1992 Olympic gold but also dominated the competition, scoring over 100 points in every game.

What is it that makes the difference between a team of all stars and an all-star team? Over the past decade, we’ve asked more than 5,000 executives to think about their “peak experience” as a team member and to write down the word or words that describe that environment. The results are remarkably consistent and reveal three key dimensions of great teamwork. The first is alignment on direction, where there is a shared belief about what the company is striving toward and the role of the team in getting there. The second is high-quality interaction, characterized by trust, open communication, and a willingness to embrace conflict. The third is a strong sense of renewal, meaning an environment in which team members are energized because they feel they can take risks, innovate, learn from outside ideas, and achieve something that matters—often against the odds.

So the next question is, how can you re-create these same conditions in every top team?

Getting started

The starting point is to gauge where the team stands on these three dimensions, typically through a combination of surveys and interviews with the team, those who report to it, and other relevant stakeholders. Such objectivity is critical because team members often fail to recognize the role they themselves might be playing in a dysfunctional team.

While some teams have more work to do than others, most will benefit from a program that purposefully mixes offsite workshops with on-the-job practice. Offsite workshops typically take place over two or more days. They build the team first by doing real work together and making important business decisions, then taking the time to reflect on team dynamics.

The choice of which problems to tackle is important. One of the most common complaints voiced by members of low-performing teams is that too much time is spent in meetings. In our experience, however, the real issue is not the time but the content of meetings. Top-team meetings should address only those topics that need the team’s collective, cross-boundary expertise, such as corporate strategy, enterprise-resource allocation, or how to capture synergies across business units. They need to steer clear of anything that can be handled by individual businesses or functions, not only to use the top team’s time well but to foster a sense of purpose too.

The reflective sessions concentrate not on the business problem per se, but on how the team worked together to address it. For example, did team members feel aligned on what they were trying to achieve? Did they feel excited about the conclusions reached? If not, why? Did they feel as if they brought out the best in one another? Trust deepens regardless of the answers. It is the openness that matters. Team members often become aware of the unintended consequences of their behavior. And appreciation builds of each team member’s value to the team, and of how diversity of opinion need not end in conflict. Rather, it can lead to better decisions.

Many teams benefit from having an impartial observer in their initial sessions to help identify and improve team dynamics. An observer can, for example, point out when discussion in the working session strays into low-value territory. We’ve seen top teams spend more time deciding what should be served for breakfast at an upcoming conference than the real substance of the agenda (see sidebar “The ‘bike-shed effect,’ a common pitfall for team effectiveness”). One CEO, speaking for five times longer than other team members, was shocked to be told he was blocking discussion. And one team of nine that professed to being aligned with the company’s top 3 priorities listed no fewer than 15 between them when challenged to write them down.

Back in the office

Periodic offsite sessions will not permanently reset a team’s dynamics. Rather, they help build the mind-sets and habits that team members need to first observe then to regulate their behavior when back in the office. Committing to a handful of practices can help. For example, one Latin American mining company we know agreed to the following:

  • A “yellow card,” which everyone carried and which could be produced to safely call out one another on unproductive behavior and provide constructive feedback, for example, if someone was putting the needs of his or her business unit over those of the company, or if dialogue was being shut down. Some team members feared the system would become annoying, but soon recognized its power to check unhelpful behavior.
  • An electronic polling system during discussions to gauge the pulse of the room efficiently (or, as one team member put it, “to let us all speak at once”), and to avoid group thinking. It also proved useful in halting overly detailed conversations and refocusing the group on the decision at hand.
  • A rule that no more than three PowerPoint slides could be shared in the room so as to maximize discussion time. (Brief pre-reads were permitted.)

After a few months of consciously practicing the new behavior in the workplace, a team typically reconvenes offsite to hold another round of work and reflection sessions. The format and content will differ depending on progress made. For example, one North American industrial company that felt it was lacking a sense of renewal convened its second offsite in Silicon Valley, where the team immersed itself in learning about innovation from start-ups and other cutting-edge companies. How frequently these offsites are needed will differ from team to team. But over time, the new behavior will take root, and team members will become aware of team dynamics in their everyday work and address them as required.

In our experience, those who make a concerted effort to build a high-performing team can do so well within a year, even when starting from a low base. The initial assessment of team dynamics at an Australian bank revealed that team members had resorted to avoiding one another as much as possible to avoid confrontation, though unsurprisingly the consequences of the unspoken friction were highly visible. Other employees perceived team members as insecure, sometimes even encouraging a view that their division was under siege. Nine months later, team dynamics were unrecognizable. “We’ve come light years in a matter of months. I can’t imaging going back to the way things were,” was the CEO’s verdict. The biggest difference? “We now speak with one voice.”


Hard as you might try at the outset to compose the best team with the right mix of skills and attitudes, creating an environment in which the team can excel will likely mean changes in composition as the dynamics of the team develop. CEOs and other senior executives may find that some of those they felt were sure bets at the beginning are those who have to go. Other less certain candidates might blossom during the journey.

There is no avoiding the time and energy required to build a high-performing team. Yet our research suggests that executives are five times more productive when working in one than they are in an average one. CEOs and other senior executives should feel reassured, therefore, that the investment will be worth the effort. The business case for building a dream team is strong, and the techniques for building one proven.

About the author(s)

Scott Keller is a senior partner in McKinsey’s Southern California office, and Mary Meaney is a senior partner in the Paris office.

How will same-day and on-demand delivery evolve in urban markets?

By Florian Bauer, Ludwig Hausmann, Jan Krause, and Thomas Netzer (McKinsey)

Delivery start-ups have struck a chord with consumers. But brick-and-mortar retailers and parcel services could still compete by playing to their strengths.

The B2C delivery market has been roiled by change in the past few years. In a 2014 McKinsey report on logistics trends, same-day delivery was considered “the next evolutionary step in parcel logistics.” Back then, a consumer survey indicated that latent demand for higher-convenience offers would give fast parcel delivery (service within 1 to 12 hours) 15 percent of the market for B2C domestic parcel deliveries by 2020. The supply side at the time, however, was just emerging. While early providers of same-day delivery gained market traction, they weren’t alone for long.

A new set of competitors—on-demand urban delivery providers—has since entered the B2C delivery market. These start-ups, including Deliveroo and Foodora in Europe, as well as DoorDash and Postmates in the United States, offer a different form of service: they integrate demand aggregation via their own mobile platforms with dedicated in-house operations to enable (almost) instant delivery. These innovations in the go-to-market approach and logistics model have attracted almost $5 billion in venture capital (VC) since 2014 in Western markets alone (exhibit), with leading players on average raising more than 90 percent of their total funding in that period. That’s shaking up the urban shopping and delivery landscape.

US and EU venture capital financing history for urban delivery start-ups, looking at urban grocery and urban prepared food delivery for 2010-13 and 2014-17

Intrigued by this rapid evolution and the recent developments, we undertook new research, which included conducting interviews with more than 40 industry experts, from start-up founders to investors and their partners along the entire value chain, as well as making test purchases. We discuss our findings on the market in this article and a new report, The urban delivery bet: USD 5 billion in venture capital at risk?

Many delivery start-ups are one-trick ponies

Although urban delivery start-ups are striking a chord with consumers, their rise is ultimately due to investors’ bets on a virtuous cycle. Namely, the success of the urban delivery market depends on scale at a level that is only possible with heavy up-front investment.

More than two-thirds of today’s urban delivery start-up action is in one category: prepared-food delivery. However, winners in this space are already emerging, and their dominance is clear. For the many runners up, a new hunting ground is needed, but it will be hard to come by. Markets such as groceries or nonfood retail do not offer the same rare combination of high gross margins and high urgency as hot food does. At average variable costs per delivery as high as $7 to $10, profitability will remain out of reach for these start-ups in the broader market—unless they reinvent themselves and address the limitations of their instant delivery model. This entails moving from pure point-to-point delivery to more cost-efficient network-based consolidation (and with it, from instant to same-day delivery) and adopting “old school” models of product warehousing and employment. For most new entrants, however, a shift of this magnitude would exceed their capabilities and budgets, and trying to make it happen would set them up for failure.

But start-ups unleashed a big opportunity—and some traditional players are well placed to compete

Even as most start-ups struggle to adapt, their impact on urban consumers’ expectations will be lasting: shoppers have grown fond of having the city at their fingertips. Given this renewed attention to and scope for service enhancements, the same-day formula in retail could come full circle. As same-day delivery stands to outgrow instant delivery by ten to one, it could unlock an opportunity worth more than $200 billion for retailers in Europe and North America over the next decade.

In this context, two types of traditional players could make a mark. On the retail side, brick-and-mortar stores stand to recapture ground from fast-growing pure e-tailers. They alone have the dense network of physical stores to support same-day order fulfillment and delivery from “the city as a warehouse.” In logistics, incumbent parcel services—not start-ups—stand to gain at least 80 percent of the future same-day market. Only they have the critical capabilities that retailers will seek: proven expertise in consolidated network operations, synergies with significant base volume, and the commercial capabilities and standing big-customer relationships to support such deals.

About the author(s)

Florian Bauer is an associate partner in McKinsey’s Vienna office, Ludwig Hausmann is an associate partner in the Munich office, and Jan Krause is a partner in the Cologne office, where Thomas Netzer is a senior partner.

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