Are you wondering how your business is going to survive not just the remainder of the pandemic, but the looming recession too?
Perhaps you’ve realised you need to rewrite your business strategy but you aren’t sure what you need to focus on?
Then you’ve come to the right place.
Rita McGrath is a best-selling author, a sought-after speaker, and a longtime professor at Columbia Business School. She’s one of the world’s top experts on innovation and growth and is one of the most regularly published authors in the Harvard Business Review and a frequent speaker on business strategy.
She’s the perfect guest to discuss how leaders can navigate these imminently choppy waters.
In this episode of The Melting Pot, Rita, whose expertise lies at the intersection of strategy and innovation, discusses her incredibly useful model for rapid portfolio review and what she calls ‘discovery-driven growth’. I.e. how do you find things that you can drive revenue from, not just now, but in the future too.
We hope you enjoy this conversation as much as we did.
On today’s podcast:
- What got Rita into the uncertainty space
- The entrepreneurial mindset
- What can people do in a crisis
- Rapid portfolio review
- Examples of companies pivoting during COVID-19
- The Best Service is No Service – Bill Price & David Jaffe
- Seeing Around Corners – Rita McGrath
- Rita’s YouTube Channel
What Businesses Can Do in a Crisis with Rita McGrath
Over the last few weeks, as the light at the end of the tunnel has become increasingly brighter, more and more CEOs have been asking themselves if they have the right strategy in place for ensuring their business survives the imminent recession. What should they be stopping and how do they put in place a process of innovation?
Rita McGrath, best-selling author, sought-after speaker, and a longtime professor at Columbia Business School, is one of the world’s top experts on innovation and growth and also one of the most regularly published authors in the Harvard Business Review.
That HBR article
A few years ago Rita wrote an article for HBR using the stats taken from the last couple of recessions which showed what percentage of businesses came out of each recession and grew significantly stronger after it.
It turns out, it’s about 9%.
She discovered that if businesses do nothing they have a one in 10 chance of coming out the other side. And of those 9%, the ones that thrived, not just survived, became more efficient and used their efficiency savings to drive innovation.
In that article Rita discussed what those successful businesses did, what processes they followed, what steps they took – how they channeled their revenue into innovation. Because this is where Rita’s real expertise lies – at the intersection of strategy and innovation.
So if you think you ought to be taking a long hard look at your business, Rita is someone worth listening to.
Navigating the new normal
So why are so many people floundering now, wondering how to navigate this new normal? Because, says Rita, very few top-level executives have ever been in this situation before.
“A lot of senior leadership may have gotten to a very high decision making role without ever having been exposed to a high uncertainty environment, it’s entirely possible.”
One thing she’s been helping lots of businesses do lately is to think differently about where they are – because when your business is that uncertain, you make different strategic decisions.
Businesses that have not just survived the last couple of recessions, but who have thrived, have actively taken steps to do so.
They’ve followed a framework to review what needs to be done, reduce where they can and they’ve taken some of those saved resources and put them into something that may be able to accelerate their revenue.
Rapid portfolio review
Rita recommends businesses carry out what she calls a ‘rapid portfolio review’, whereby you do a very quick and dirty inventory of all the activities that you’re doing above a certain threshold. Then if you’re spending more than X on it then it goes on the review list. You then very quickly score it in terms of levels of uncertainty.
Once you’ve got your list you then review your strategy. If it is dependent on things that are no longer true, you need to come up with a refreshed set strategy statement.
This doesn’t have to be a hugely complicated exercise, it’s more to show you a direction of where you think you want to be placing your bets. So you then take that strategy and convert it into something that’s easily actionable by your people. Rita recommends creating what she calls ‘strategic screening statements’.
“So obviously, you’re gonna start at the bottom of the list and just ask the question, ‘does it still fit our strategy? Is it still going to be a growth engine for the future?’ And if the answer is no, those become things you can consider disengaging from – some process of disengagement, that should free up some resources.”
The last step of the process is for you to then take each of those new opportunities and you don’t plan them as though you know what you’re doing, you plan them to discover. Rita calls this ‘discovery-driven planning’. It’s how you take your new ideas forward.
Figuring out what your customers want
Rita says there’s power in the phrase – ‘what’s the customer job to be done?’
“Look, don’t think about selling your product or service. Think about your customers hiring those things to get jobs done in their lives. And you really want to get into the customer’s head in terms of jobs done in their lives.”
She advises, “you are not the expert on your customer. You are the expert on what you do. And your expertise is often in the way of what your customer actually understands.”