ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

Welcome to the latest edition of Leading Off. We hope you find our insights useful. Let us know what you think at [email protected] and [email protected].

—Alex and Axel

All leaders want to realize sustained growth at their organizations, but few accomplish that feat. Among S&P 500 companies, for instance, only one in ten reports growth above GDP for more than 30 years, McKinsey research shows. How can leaders push their organizations to consistently grow and outperform their peers over the long run? They can start by developing a growth mindset. Making a conscious choice to pursue growth helps to shape their decision-making and actions across all areas of the business—and they maintain this attitude even in the face of unexpected or disruptive challenges. This week, we look at how leaders can turn their mindsets into behaviors that enable growth.

AN IDEA

Put mindsets into action

Although many leaders say they are committed to long-term growth, their actions don’t always match their ambitions. A McKinsey survey of more than 500 leaders shows that respondents spend only 22 percent of their time on long-term growth initiatives. What’s the antidote, then? McKinsey’s Andy West, Greg Kelly, Jill Zucker, Michael Birshan, and coauthors note that leaders of companies that outperform their peers align their behaviors with five critical mindsets: prioritizing growth, acting boldly, maintaining a customer-centric approach, attracting and nurturing talent, and executing with rigor. When leaders adopt these mindsets, say the authors, they are better able to spend more time on long-term growth initiatives, rather than getting sidetracked by short-term issues. The mindsets also enable leaders to allocate resources to growth opportunities and consistently communicate that growth is their North Star. “The journey to growth is a marathon, not a sprint: It often requires more than 18 months to see results,” the authors say. “To get there, leaders need more than just ambition and business savvy; they need a holistic approach with courage and resilience at the core.”

A BIG NUMBER

6

That’s the number of strategies that companies can follow to achieve continuous industry-leading growth. McKinsey’s Andy West, Ari Libarikian, Erik Roth, Greg Kelly, and coauthors note that fewer than one in four companies outpace their industry peers on revenue and profit growth. To overcome those odds, the authors’ strategies for “courageous growth” include building an innovation culture and mindset; growing the core business with data, analytics, and AI; and expanding into “right to win” businesses.

A QUOTE

“Many incumbents are neglecting their most powerful competitive advantage: their vast existing customer bases.”

That’s McKinsey’s Harald Fanderl, Oliver Ehrlich, Robert Schiff, and Victoria Bough on how companies can grow by improving the customer experience. Rather than aggressively acquiring new customers to fend off competitors, larger companies in many industries can achieve “experience-led growth” by better serving their current customers. The authors note that “80 percent of the value creation achieved by the world’s most successful growth companies comes from their core business—principally, unlocking new revenues from existing customers.”

A SPOTLIGHT INTERVIEW

As cofounder of Cognizant, a global IT outsourcing company, Frank D’Souza quickly learned to manage growth—of both the organization’s performance and its people. In an interview with McKinsey’s Hans-Werner Kaas, D’Souza says that developing a strong client-focused culture was critical to maintaining long-term performance. As Cognizant expanded rapidly—including hiring 75,000 people in D’Souza’s last year as CEO—D’Souza worried about maintaining its culture. His leadership team focused on honoring high-performing employees, establishing meaningful rituals, and “taking time to document and retell the stories of the big and little things that moved the company forward over the years,” he says. “These specific examples were a powerful way for us to make the culture come to life and spread it throughout the organization.”

— Edited by Eric Quiñones, senior editor, New York

Share these insights

Did you enjoy this newsletter? Forward it to colleagues and friends so they can subscribe too. Was this issue forwarded to you? Sign up for it and sample our 40+ other free email subscriptions here.