The Search For Growth - Company Directors

The Search For

Growth

February 2015

1 © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative

(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of

KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

What are the most critical challenges you

expect to face as CEO over the next three

years? (Top 5 ranked in descending order)

1. Expanding geographically

2. Adapting to government regulation

3. Strengthening our brand*

4. Focusing on operational excellence*

5. Spurring innovation

Is growth on your mind… efficient growth?

“The vast majority of CEOs are optimistic about the economy and their own business

prospects in the coming three years. They see possibilities for ‘efficient growth’ and the

potential to leverage new technologies to enhance customer relationships and streamline

operations.”

John Veihmeyer

Global Chairman, US Chairman and CEO of KPMG

Sourced from KPMG global survey: ‘Setting the course for growth: CEO

Perspectives’

* same value

Which is more important to your

company’s overall well-being?

72%

28%

Overall focus

on growth

Overall focus

on operational

efficiencies




Developing and implementing a growth strategy

Alexander Osterwalder’s Business Model Canvas*

Cost structure Revenue Streams

Key Resources

Key Activities

Key Partners

Value

Proposition Channels

Customer

Segments

Customer Relationships

At the core of every business is their Value Proposition

*Business Model Generation by Alexander Osterwalder : Paperback John Wiley and Sons Ltd






Cost structure Revenue Streams

Key Resources

Key Activities

Key Partners

Channels

Customer

Segments



Value

Proposition





Common lifecycle and growth phases

.

Source: Informed from the Greiner Growth Model, Larry E Greiner




Periods of upheaval and turmoil are inevitable

Resolution

of Crisis

• Owner can’t & not

equipped to do

everything

• Staff crave structure

• Owner wants control

• Staff crave autonomy

• Motivation suffers

• Lack of performance

metrics

• Owner feels loss of

control

• Silo based

• New leadership model

• Different capabilities

• Formal structure

Need to evolve organisational

structure Provide more

responsibility Owners need to let go

New way without

reverting back to

centralisation

• Processes

overbearing

• Overheads increase

• Procedure driven

• Streamline processes

• Focus on value add

• Promote problem solving

• Too much internal

management

• Too removed from customer

Symptoms




Grill’d Burgers moving into Build phase

• Who is the right leader?

• Who has right skills?

• How can I let go?

• What processes, systems and

structures do I need?

Grill’d




The goal is to progress efficiently as possible

Foundations for Growth

Growing companies are

always either ahead or behind

in their financial systems.

We started ahead, but more

recently find ourselves

needing an overhaul.

Simon Crowe, Grill’d. BRW Best of the mid market – Unsung Heroes

Grill’d




Operating model needs to evolve and adapt

How often do you evaluate your operating model?

Leading practice is to

review and adapt your

operating model at least

annually

Sourced from KPMG global: ‘Setting the course for growth:

CEO Perspectives’




Step back

Manage by exception

Expansion of market

Customer led

Innovation

Continually reviewed

Owner directed

Business plan

Budget established

Direction &

Strategy

Ideas

Creative

Make to sell

Consolidation

Renew strategy

Market & customer focus

Rationalise

Values driven

Team matrix

Problem solving

Customer centric

Owner directed

Formal hierarchy

Formalised roles

Decentralised structure

New leaders

Technical managers

Profit centre structure

Organisation &

People

Head office function

Centralised &

decentralised

Performance & reward

Informal

Owner resourced

Value add

Automated

Leading practice

Simple support processes

introduced from own

knowledge

Internal processes

continue to evolve

Finance metrics

Manual

Process

Formal & documented

processes

Procedure focus

None: fluid

What do the foundations look like for each phase? F

OU

ND

AT

ION

S F

OR

GR

OW

TH

Enterprise structure

Simplified

Work standards

established

Periodic reporting

Action by exception Risk and control

Dedicated resources to

manage entity-wide

controls

None: reactionary

Basic operational &

bookkeeping systems

established

Reliance on existing

systems

Technology

Enterprise wide

Reporting & Business

Intellgience

Limited Forward looking

Analytics




• Path is not always linear

• Symptoms across a number of

phases

• Foundations are oversized for the

business stage

• Business practices need to adapt

to ‘right size’

Case study: law firm in accelerate phase

• Sense of loss of control

• Silo operations

• Overhead costs increase




Where to from here – three critical questions

• Where has the organisation been?

• Where are you currently in the growth lifecycle?

• What does this mean for where you are going?






Cost structure

Key Resources

Key Activities

Key Partners


Revenue Streams

Channels

Customer

Segments


Value

Proposition






Growth Framework - How to think about strategic initiatives

Customers / segments

Diversified Channels

Markets

Pricing

Strategic Alliance

Acquisition of Competitors

Acquisition of Book

Joint Venture

Products / Services

Option Types Examples

Demographics, Business, Consumer, Industry

Distributors, Online, Face to Face

Bundling to increase client value prop, new offers

New segments, new geographies, new brands

Premium / budget brands, volume play, niche / high

margin play

Pricing, trade spend management, promotional

effectiveness

Corporate overheads (people, T&E etc.), supply chain, stores

Systems streamlining

Inventory, payables / receivables,

Option Types Examples




There are many options to consider…

Innovation

Products &

services

development

New sales channels

Brand positioning Other options…

Sales channel efficiency

Digital strategy

Promotional strategy

Search engine optimisation

Client segmentation improvements

Repricing

Exploring partnerships

Repositioning value proposition

Multi-channel marketing

Loyalty reward schemes




Brand positioning: budget, premium or both?

Premium

Somewhere in Between

Budget

“Our future will be a world of

paradoxes and to every megatrend

you can find another smaller trend

which appears to oppose it.”

Patrick Dixon – Futurist

Sales of budget brands AND super-premium brands are both set to grow (www.globalchange.com)

Lower Costs Through:

1. Experience

2. Scale economies

3. Established networks

4. Efficiency, lead costs

FOCUS

5. Capital, technology

6. Intrinsic advantages

Added value through:

+ Product

+ Support

+ Distribution

+ Brand

Porter’s Brand

Positioning Model

Strategy is

about picking

one pathway and

not ending up in

“no mans land”




New markets via new sales channels

Online Distributor

Emerging Trend

Retail Face 2 Face Contact Centre

Emerging Trend

Diversify to reduce risk

Access new geographies

Access new target markets

Bundle channels for better experience

Client example

Sports shoe retailer

http://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=cJslax7AQwsJOM&tbnid=dGHRgiNhBJyDHM:&ved=0CAUQjRw&url=http://mtstuartpt.com/content/running-shoe-types-attempt-de-mystify&ei=DD-tUcuvC8-2lQXjr4CIAg&bvm=bv.47244034,d.aGc&psig=AFQjCNF5Y9V4wwVVgVmI8wFioeg10DHBzA&ust=1370394761723702




Product or service development?

The ERRC Grid

Cirque de Soleil ERRC Grid High Competition

Downward

pressure on price

Lowering

margins

Unique Offer

One Stop Shop

‘End to End’

‘Money can’t Buy’

Reduced Risk

Reference - Blue Ocean Strategy: W. Chan Kim and Renée Mauborgne

ELIMINATE

Which factors that the

industry takes for granted

should be eliminated?

RAISE

Which factors should be

raised well above industry

standard?

REDUCE

What actions should be

reduced well below the

industry standards?

CREATE

Which factors should be

created that the industry

has never offered?




Product or service development?

CLIENT EXAMPLE

Australian Manufacturer CLIENT EXAMPLE

Custom Jewellery Retailer

Cradle to grave

Less downtime

Relationship with end user

Hold price premium

Reduce reliance on distributor

Experiential

Embracing retail

Exclusivity

Partnership




The rise of the innovative Start-Up

DISRUPTIVE

BUDGET

INNOVATIVE

The Dollar Shave Club

12,000 people signed up in the first 48 hours.

The company has five full-time employees

The Dollar Shave Club has raised USD$1m in ‘seed’

funding from venture-capital firms

Meanwhile, Gillette's own studies have shown men

going to great lengths to keep down the cost of

shaving.

Big companies can't rule out the risk that one of these

ventures takes off – and takes significant market

share

https://www.youtube.com/watch?v=ZUG9qYTJMsI




Do you have a growth strategy?

Considerations

■ Define the organisation’s business goals, direction and objectives

■ Communicate the organisation’s value and differentiation in the market

■ New products, new services, bundled offers to differentiate / create value

■ Sales channels – diversifying to access new markets & geographies

■ Segment your clients/customers into groups to identify growth potential

■ Understand the current situation within the organisation and externally in the market

■ Understand the competitors capabilities and market presence

■ Identify digital tools and channels which can enhance the strategy and Integrate with

advertising and other promotional strategies

■ Review historical sales data to identify growth opportunities

■ Conduct customer surveys / focus groups to deepen understanding of their needs

■ Once Growth Strategy defined, create project plan to support implementation

■ Methodology and process to support the growth strategy in operation

Business Goals

Client Value Proposition

Product & Service Offers

Channels to Market

Customer Segments

SWOT Analysis

Competitive Analysis

Promotion & Market Positioning

Historical Customer Analysis

Tactics

Customer Satisfaction

Develop Action Plan

Implement, Measure & Monitor

The information contained herein is of a general nature and is not intended to address the

specific circumstances of any particular individual or entity.

© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of

independent member firms affiliated with KPMG International Cooperative (“KPMG

International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through

complexity" are registered trademarks or trademarks of KPMG International. Liability limited by a

scheme approved under Professional Standards Legislation.

Presenter’s contact details

Toni Jones

Partner

[email protected]

03 9288 6699

Colette Smith

Director

[email protected]

08 8236 3342

Documents

The Search For Growth - Company Directors