Breaking the mold: Five behaviors of leading growth transformers

Today’s business leaders recognize transformation as the courageous choice required to deliver an ambitious business agenda. As we reported earlier this year, companies pursue transformation to reset the business, venture into areas of greater ambition, deliver bold growth, enable operating-model change, build new and competitive capabilities, and evolve their culture in ways that can set them apart from competitors.

One of the most critical new directions for transformation is growth. McKinsey’s latest analysis suggests that about 50 percent of transformation value today comes from growth initiatives, up from less than 40 percent two years ago. The authors looked closely at dozens of companies that successfully transformed for growth to understand what makes them unique.  The data is clear. Growth transformers that outperform their subsector median do five things differently:

1. They start with competitive insights. These include an external view of where and how to win. These growth leaders build a strategic vision of who they want to become by applying competitive insights, consumer sentiment, market trends, and an investor’s perspective. They don’t begin with an internal view of their own performance.
2. They use external partnerships to fuel growth. Leading growth transformers recognize that their ability to realize their growth ambition requires skills, capabilities, and offerings that are effectively held by a partner.
3. They make ambition a part of leadership expectations. They challenge and reward employee behavior that brings bold thinking and new solutions to bear.
4. They use technology and digital strategy as part of the foundation, enabling business case development and execution. Leading growth transformers see digital strategy as a foundational enabler of business performance. They build automation for a frictionless customer experience and integrate generative AI from the outset.
5. They make decisions based on a strong fact base. This fuels more effective and efficient decision making and becomes embedded as a way of working.

Leading growth transformers saw above-median revenue growth and above-median profitability when compared with peers in the same subsector. In addition to the five differentiating behaviors, the authors’ research also identified a set of behaviors that were common across all growth transformers:

1. They keep the customer at the center. All growth transformers prioritize customer feedback and link this to strategic choices. This is a rich fact base, as opposed to sales leader sentiment.
2. They use formal feedback mechanisms to drive individual performance. Companies transforming for growth recognize the need for performance management systems as part of their overall operating model.
3. They set clear expectations for employees. These expectations include desired shifts in norms and behaviors. A clear understanding of behavioral expectations is critical for employees to embed these shifts into their daily work.
4. They are transparent. Growth transformers are transparent regarding the operational metrics driving execution and performance.
5. They push decisions to the lowest levels to encourage ownership. All growth transformers give employees the power to take initiative and make decisions.

To embed these behaviors into the daily work of a growth transformation requires a bold aspiration, the right infrastructure to enable technology, rigorous execution, and performance management with evolved ways of working to support necessary cultural shifts.

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