Growth is on every executive's mind. But how do firms put thought to action? Aon reviewed more than 40 studies/frameworks focused on what companies can do to "grow", and found that a consistent pattern emerges. All these frameworks present a set of levers that companies can pull: portfolio repositioning, market transformation, geographic expansion, segment domination. However, one important piece of the puzzle is over- looked or positioned as an afterthought. What is this one last lever for growth that is figuratively staring you in the face, and literally sitting right in front of you (or behind, or beside)?
Although we may want our organizations to act like well-oiled machines, they are ultimately made up of people. A recent study estimated that 84% of the market value of the S&P 500 is in the form of intangible assets. These intangible assets are created by people, and in many cases, are the people themselves.
We therefore sought to understand the impact people have on growth through interviews With CHROs of 25 high growth Fortune 1000 firms (see scope). We also analyzed our proprietary data to identify differences between high and average growth firms. What emerged was the following model, which describes the role of people in fueling extraordinary growth.
Firms that demonstrated profitable growth intertwined their business and people strategies in a dynamic manner, rather than having these be sequential: business strategy leading to people strategy.
- 70% of Fortune 1000 companies have disappeared in the last 70 years
- Corporate profits have peaked in 2015 and are trending downward
- Talent shortages continue to put a premium on skills and experience
Scope of the study:
- 25 CHROs in 15+ industries
- 1.1 million employees represented
- Over half a trillion USD total sales revenue
- Companies designated as ‘High Growth’ for having top quartile revenue growth and above median EBITDA growth compared to peers, over a 3-5 year period (revenue and profitability parameters).
Aon's Model for Driving High Growth Through People
The model (below) describes the role of people in shaping and executing on the firm's growth strategy. It demonstrates the crucial role that people have in making growth happen.
The focus therefore is not on the organizational strategy, but all of the elements below it. The vision, mission and purpose for the company is the driving force behind this entire structure, interacting with the external environment.
Elements of the Growth Model
Singular vision, purpose and aspiration at the leadership team level towards driving growth.
“Ambition in absence of a group is meaningless. The leadership team must have an understanding of growth, and how to achieve it.”
Intimate understanding of customers, predicting their needs and what they value; identifying how the firm can uniquely deliver to those needs.
“When you know who you customers are, build a logical suite of products they like, and don’t go too far over your skis… that’s the sweet spot.”
Components of Intentional Alignment
A focus on creating “collective genius” by leveraging diversity of skillsets, and driving innovation at the intersection of organization boundaries.
“We are always looking for Venn diagrams between our products and brands.”
Aligning the organization, culture, processes and people programs to the growth goals of the firm.
“As the new CHRO, I could not change the culture overnight, but I could prove I understood business leaders’ priorities.”
Building a systematic approach to deploy, manage, optimize and track resources and talent.
“When you’re focused on how you can do better constantly, it’s hard to become too full of yourself.”
Making certain each and every employee feels a part of the growth journey and knows their exact role in it.
“Focus on simple messages. The death of organizations is that they overcomplicate.”
Mindset & Action:
Ensuring that leaders have the conviction, resilience and long-term vision to bring to life the right cultural environment for fostering growth.
“We have a ‘No Jerks’ policy. And everyone understands that well.”
Ask yourself: Is my organization doing its very best…
- Drive collective ambition among your leadership teams?
- Focus intensely on who our customers are and how we can fulfill their needs?
- Leverage a diversity of skillsets?
- Adopt a leadership mindset around growth?
- Build focus and discipline?
- Align our people?
- Design our organization, programs and systems?
- Be clear and simple?