Introduction
Many business leaders I talk to have the ambition to propel revenue and profitability to the next level. Yet, it’s widely acknowledged that most transformation initiatives fall short of their targets, leading to frustrations, wasted efforts, and the shutdown of once-promising strategic programs. The key reasons for this are lack of willingness to embrace risk and a lack of long-term commitment to success.
At the proverbial burial ground of failed transformations, you will find tombstones reading the tired corporate clichés of “failing fast”, “thinking like a startup” or “launching MVPs”.
The truth is as simple as it is unpopular: achieving meaningful impact requires significant investments, calculated risk-taking, and long-term commitment.
So, how do you approach going big?
Most transformations I have advised on have one thing in common: swinging for the fences is the only strategically viable option. When aiming to achieve big things, low risk equals low or no reward.
While this is true, I’m not suggesting that you should ignore risk. However, I am arguing that you should manage risk throughout the entire process.
To succeed at scale, businesses must shift their focus from minimising cost to investing wisely. It is about shifting the focus from short-term tactics to strategic investments that drive growth, innovation, and long-term success. I have had the opportunity to work on such transformations with a range of clients across industries, implementing bold strategic initiatives.
At Responsive, we find it helpful to define the business case for the transformation at different stages of the process. Using this serves as a useful stage-gate approach that defines ambitious targets and monitors progress meticulously.
This means being deliberate about what’s critical to succeed at the given stage of the transformation and designing the effort and metrics accordingly to support the decision to proceed to the next stage, to pivot, or to terminate the initiative.
Client Success: investing in a global retail loyalty program
Working with a global retailer aiming to substantially grow revenue and equity value by building a customer loyalty scheme from scratch, we applied this principle. We began by articulating different stages of maturity and mapping the critical success criteria for each stage to understand the investments required along the way.
Ultimately, this would require substantial investments and deployment of resources. Sponsored by the CCO and CIO, the company set its sights on a multi-year transformation – and identified the steps needed to achieve it. In the initial phase, two things were critical: understanding the company’s ability to recruit customers to the loyalty scheme and assessing the commercial strength of different value propositions (i.e., how various mechanisms would affect customer behaviour and our profit margin).
Testing this required very limited CapEx and could be done with a high degree of manual intervention, rather than investing in new technology and extensive system integration projects. We knew that success in the testing would subsequently lead to substantial investments, but our approach allowed our client to invest based on a significantly less sensitive business case, thereby increasing their confidence in making those investments.
Understanding which customers will deliver your value
Most businesses fall into one of two traps when designing strategic commercial initiatives: either they get bogged down in endless operational micro targeting or they assume equal value from all customers. Both approaches are equally unsuccessful, albeit for different reasons.
The first leads to endless segmentation, personas, and customer journey mapping. Do not get me wrong; tailoring your sales and marketing communication at the tactical and operational level is essential. However, when defining a commercial strategy that will yield significant results, you need to simplify.
The second trap prevents you from designing for the customers who will deliver your value. This design encompasses everything from your value proposition and go-to-market strategy to your distribution and underlying financial model. Trying to cater to everyone weakens your proposition and makes delivering value far more costly.
Client Success: scaling customer advisory in financial services
Following a few years of successfully gaining market share through customer acquisition, a leading financial services company sought to increase the average customer value. Together, we identified strong financial advisory as the key lever for consolidating a larger share of the customers’ relevant products and assets with our client. However, the needs of different customer segments varied widely, as did their revenue potential. Trying to cater to all customers would have been too costly and would have strained the organisation’s ability to deliver the value required to attract more of the customers’ business.
Instead, we focused on deploying the available, scarce advisory resources toward a limited set of customers who would value them and reciprocate by increasing their business with our client. For the broader customer base, the company developed a simpler, much more scalable digital advisory concept to ensure responsible management of each customer’s savings and finances.
The transformation process took more than three years, required significant investments, and successfully mobilised every part of the business. It ultimately yielded a sustainable 10% increase in overall company profits and further increased the average customer value.
Embracing a ‘Think Big’ mindset
While success is undoubtedly determined more by implementation than strategy, building on the wrong foundation will almost certainly lead you down a path to failure. This is supported by both statistical evidence and personal experience.
I firmly advise our clients to embrace a ‘Think Big’ mindset by setting ambitious goals and pursuing them with the necessary means. This approach offers the highest probability of achieving outcomes that will change the trajectory of a company.
The early steps include:
- Articulate a bold ambition and business case
- Acknowledge that it requires time, investment, and risk
- Design your risk-mitigation approach
- Identify your value potential and the customers who will deliver that value
- Cater relentlessly to those customers while avoiding the alienating your remaining customers
Doing this well will dramatically increase your chances of success.
