Investing smartly in transformation is about going all in. Not just doing it partly. How do you ensure that every euro spent genuinely multiplies its value? When you think about changing your business, think about the Five Big Moves – an established framework that can change your organisational trajectory. Here is a deep dive on these powerful moves.
Productivity improvements: true transformation demands stepping up your efficiency game to bring speedier improvements in productivity than 70% of your competition. For example, targeting to be at the top in productivity improvements can easily redefine your operational effectiveness and set new benchmarks in your industry.
Differentiation improvement: innovate your products, services, and even business model to uniquely add at least double the amount of the gross margins and be one of the top 30% revenue companies in your respective industry. It’s all about uniquely adding tremendous value that sets you apart.
Active resource reallocation: actively reallocating over 60% of capital resources among your different businesses or markets will serve not only to diversify risk but also to capture new opportunities, which can in turn create potentially 50% more value than your slower-moving peers.
Programmatic M&A: engaging in systematic mergers and acquisitions cumulatively totaling over 30% of your market capitalisation can consistently firm up your business landscape without overwhelming your foundational strategy.
Capital expenditure programs: a substantial increase in capital expenditures—to at least 1.7 times the industry median—can catalyse long-term growth, especially when these investments are directed towards innovative and strategic areas of your business.
We are seeing that these moves and measuring their impacts produce substantial returns collectively as is also confirmed by a recent McKinsy survey. Many companies, more often than not, tend to pay a little bit of regard to considerations of inflation-adjusted returns or ignore the opportunity costs of their dormant strategies, which more likely would have buried the true value of the investments.