A recent Booz & Company survey of more than 2,350 global executives reveals significant concerns about, and lack of confidence in, their own companies’ growth and strategy efforts. Among the findings:
- 53 percent of executives do not believe their company’s strategy will lead to success.
- 64 percent say they have too many conflicting priorities.
- 54 percent say their company’s way of creating value is not well understood by employees or customers.
- 83 percent say their company’s growth strategy leads to waste, at least some of the time.
- 67 percent say that their company’s capabilities do not fully support their strategy.
- 55 percent say that allocating resources in a way that really supports the strategy is a significant challenge, particularly as companies chase a wide set of growth initiatives.
“These are troubling symptoms. It’s clear to us that this low ‘company confidence’ is a result of companies’ tendencies to chase too many unrelated growth initiatives,” said Booz & Company Partner Paul Leinwand, co-author of The Essential Advantage: How to Win with a Capabilities-Driven Strategy. “Instead of asking the question ‘What are we great at and how can that help us grow?’, companies often look for markets that seem ‘adjacent’ or in a similar sector but where they may not have the capabilities to succeed.”
Though it may seem easier to chase new avenues of growth, these are often highly risky and take attention away from the core business that usually has significant "headroom for growth," says co-author and Booz & Company Managing Director Cesare Mainardi.
The survey data concludes that too many unrelated growth initiatives lead to failure and frustration. Executives who say their company has the fewest firm-wide strategic priorities (one to three) are the most likely to report above-industry average revenue growth (as compared to those having more priorities or no list of priorities at all).
“Based on the survey results, we believe that the key question leaders and top executives should ask is, ‘How can we get focused on the right initiatives—the ones that are best for our company?’” Leinwand said. “To get to the answer, executives need to explore a set of more fundamental questions: ‘What is the company great at doing? What are the few crucial capabilities the company can bring to bear more effectively than anyone else?’”
The survey findings support the benefits of this “capabilities-driven” approach to developing strategy: Those executives who say their company’s differentiating capabilities fully support the company’s strategy are almost twice as likely to report above-average revenue growth for their company as all the others in the survey.
“The real challenge for leaders and top executives is selecting the opportunities that are best for the company and turning down many that are alluring but do not offer a real chance to win,” Mainardi said.