1) Bureaucracy anchorsBefore making growth decisions, finance teams and their colleagues elsewhere in the firm rely on a host of complex financial models to make decisions – things like detailed financial models for business cases or lengthy debates about appropriate hurdle rates on investment rates. Rather than debate whether the project meets specific criteria, companies should build a simplified tool for managers to calculate ROI for a greater overall risk profile as well as eliminate hurdle rates altogether. This will encourage managers to generate bigger, bolder ideas for higher-growth projects.
2) Short-termism anchorsCompanies need to remove incentives that inevitably cause business managers to focus on short-term metrics rather than long-term goals. By introducing broad-based equity compensation, business managers are more likely to propose large, multi-year growth initiatives as opposed to only focusing on incremental ideas and operational excellence.
3) Dangerous-to-fail anchorsThe wrong environment can make employees too afraid to go after growth projects or abandon them at the first sign of failure. But companies that penalise growth projects at the first signs of strain or because of uncontrollable factors will ultimately limit overall growth potential. By establishing predefined “exit triggers” for higher-risk growth projects, business managers will feel more comfortable initiating them.
4) Capacity anchorsAs a result of trying to manage overhead costs effectively, teams often run as lean as possible with tight cost controls. This reduces capacity to run higher-risk growth projects. However, if senior leadership allocates budget to teams based on their growth targets and the strategic importance of their growth, teams will have adequate support to drive positive business outcomes. It’s easy to get caught up in worrying about the unknown. But regardless of what the future holds, it’s clear that without knowing and removing what stands in the way of growth, companies will struggle to achieve it. Thomas Roberts is finance advisory leader at CEB, now part of Gartner Image: Shutterstock
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