It’s a fairly natural response when funds are tight to want to keep a firm hold on the purse strings. But success isn’t measured in how much money you save; ultimately it’s a question of growth. And, according to new research, it appears that the more conservative and cautious enterprises are the most likely to miss the boat when it comes to maximising growth, with change-resistant firms almost half as likely to achieve a higher level of growth as their bullish counterparts.
The second annual Barometer on Change from transformation consultancy Moorhouse shows that, perhaps unsurprisingly, cost-cutting is the order of the day. Over half of the 200 FTSE 250 board-level directors contacted in the survey had plans in place to reduce overheads; in comparison scarcely more than a fifth had initiatives designed to improve performance.
In part it seems the problem isn’t down to a lack of vision but a lack of action. Amongst the respondents, 72% felt new products and services were an important strategic challenge but only 19% had initiatives in place that directly addressed the problem. Culture change was cited as being a key challenge by 31% of organisations – just 13% had any programmes designed to tackle this problem.
Whilst in times of adversity it may seem tempting to hide away and wait out the storm, there does seem to be a very strong correlation between higher growth enterprises and a willingness to take on change. Organisations that have experienced higher growth in recent years – a cumulative annual increase of more than 5% – have been those whose initiatives address issues such as staff engagement. In contrast, organisations that have achieved lower levels of growth have been primarily focused on reducing costs.
Stephen Vinall, managing director of Moorhouse, remarked on the findings: “Some UK businesses have become stuck in a mindset of cost reduction and internal efficiency drives with little focus on initiatives that will generate their competitive edge and position them well for growth. To achieve growth, organisations must look beyond cost-cutting and at investing in the kinds of initiatives that will help support this ambition.”
Being prepared to actively court change, rather than shore up against it, seems to be a marker of a successful high-growth strategy. And whilst investing in strategies that increase spend, rather than reduce it, may seem slightly higher risk, it seems it is ultimately the only way to achieve long-term meaningful growth.