In the quest to create new wealth, world top businesses have applied unconventional strategies and innovative approaches. This would not have been possible without questioning the existing business strategy frameworks and radically changing the basis of their competition in their industries.
But what motivates a leadership team to get on a strategic transformation in the first place?
For some businesses, it is a threat from a disruptive competitor or environment such as Covid-19 and sometimes, businesses get on the bandwagon of global megatrends – one of those roadblocks when you are forced into a certain direction to survive.
However, strategic thinking and systematic planning for the future are perhaps one of the most imperative driving forces for wealthy companies why they introduce a core business to disruptive transformations while paving a path for new growth. It is surely an uncomfortable place for a business and its people to be in but it is also the most fertile.
In order to better understand the transformations and the derivatives behind them, the Innosight research team came up with a methodology to evaluate strategic change efforts. In their research, they aimed towards the best practices across industries instead of being blindfolded by the metrics such as market value, revenue, or subjective and generic assessments such as ‘most innovative’. They name 3 methodologies to determine the legitimacy of innovation and transformation a business has achieved.
The first of them is New growth. Investigating quantifiable growth and questioning, has the business achieved measurable success at creating new products, services, markets and new business models? Using their primary metric which is the percentages of revenue outside the core, they look at the percent of revenue that falls out of their existing core growth areas.
Second of that is Repositioning the core. As the title suggests, it is to investigate whether the transformation reflecting from what the numbers has come from the applied change or is it still stinking old? An important question, how effectively the company transformed its old and core into a disrupted and new.
Lastly, Financials. If the numbers are not proposing the new growth, we may have a problem there in the long run if not the short. Has the return rate been reflected in the new areas? What is their market performance? Have losses been recovered? Is it on a slow growth to revive the business? How are their new products or services performing on their balance sheet?
What questions are you asking?
