After navigating pandemic-era supply chain issues, many companies are struggling to deliver on investor demands for the next wave of billion-dollar growth. This article explains how leaders can identify and act on the underlying shifts in the world that are necessitating a completely different approach to growth.
“We’ve promised the Street an additional billion dollars of growth in the next three years. And we have absolutely no idea how we’re going to get there…”
I’ve heard that same message from four different leaders in the last month. Across wildly different industries. Having emerged from the pandemic and the fear of a recession, companies are returning to the question of growth. And a lot of them are struggling with the answer. There’s an underlying shift threatening the traditional approach to the kind of growth the Street is hungry for.
Food companies and packaged goods manufacturers experienced massive growth during the pandemic. We were all in quarantine and then working from home, right? So why not eat some more Frosted Flakes?
And that wasn’t just true for cereal companies. Coming out of the pandemic, many businesses found that their biggest challenges were on the supply side of the house. Packaged goods manufacturers couldn’t produce toothpaste fast enough. Automobile manufacturers faced a massive shortage in the chipsets that run their cars. Media companies were racing to create enough content to populate their new streaming services. Even tech companies faced a supply shortage in the form of engineers and product managers. In that environment, top-line growth was all about simply keeping up with orders.
But those supply issues have been largely sorted out. And so attention has turned to driving enough demand to deliver on billion-dollar growth.
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Investors are growing weary, watching a sharp slowdown in revenues and a rise in sobering forecasts for the year ahead at Fortune 500 companies. Disney’s sales growth slowed sharply to 7.5% last year from a scorching 23%, or $15 billion, in 2022, with a further slowdown expected this year. Diageo upset investors by issuing a profit warning amid declining sales after revenues jumped 20%, or $3.4 billion, in 2022. Nike’s share price has been retreating after it forecast a disappointing revenue increase of 1% this year, a far cry from its 19%, or $7.1 billion, sales surge in 2021.
Now, execs are racing to find a way to drive demand. Some are looking to spur enough product innovation to save the day. Others are building out new loyalty programs to engage customers. For their part, B2B companies are focusing on new sales incentive programs to juice the numbers.
But it’s not simply about drumming up mass demand. Across multiple sectors, future-focused leaders are starting to understand the underlying shifts that are upending their traditional approach to big growth.
Read full article on Forbes.
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