Principles

SUSTAINABLE GROWTH

The goal of maximizing year-over-year growth still seems to drive most executives, often despite the damage incurred by nature or stakeholders. The question is: How long will it last?

Growth does offer some indication whether we’re running a healthy business, however, to get a better understanding of the durability and sustainability of growth we need to take into account KPIs such as Customer Retention Rate, number of repeat customers, Customer Satisfaction, Customer/Employee Engagement, and Employee Turnover Rate.

How we perceive sustainable growth can be explained using the image to the right, exposing the interrelationships between:

and relative to:

  • Cooperation ─ Alignment of the organization
  • Creation ─ Added value created by the company
  • Competition ─ Relative position in the marketplace
  • Connection ─ Relationship with the customer

To be successful, a company, as a collective, needs to create value that distinguishes (differentiate) from the competition, however, it will also need to take into account the interests of stakeholders (CSR) and the influence of public scrutiny on the company’s reputation.

For instance, during the Coronacrisis, Booking.com claimed ‘tens of millions of Euros in government support‘, following a one month drop of 85% in holiday bookings, for its 5.500 Dutch employees. However, a few months prior to the virus outbreak the company had spent $8 billion of its cash on share buybacks to please its shareholders. By ignoring their social responsibility, the damage to the corporate image could be detrimental, once consumers start a boycott.

KEY DIMENSIONS OF GROWTH

The image above views a company as a cooperation of people that have set out to discover, create, and deliver differentiating value, that is perceived relevant and significant by a group of customers, allowing the firm to forge strong customer bonds.

As a consequence, we believe two dimensions are most critical to the success of the operation: co-creation and co-opetition.

Co-creation demands having the capacity (capital, capabilities, and culture) to create relevant and significant value in collaboration with connected and highly engaged customers.

Co-opetition is used to describe cooperative competition, which are, given the rise of the platform economy and the decoupling of the digital value chain, vital aspects of the modern enterprise.

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