Drivers of Growth
Talent (again!) and tech lead the way.
Next, we reversed the question, asking members what they saw as the biggest drivers of growth in the short term. Technology advancements led the way, giving support to the fact—laid out in our previous study, Untethered World—that one benefit of the COVID-19 pandemic was the removal of previously existing barriers to digitalization.
Which of the following external factors do you see as most beneficial to your company’s short-term (one- to three-year) growth plans?
No Data Found
Silos and bureaucracies crumbled with the need to put entire businesses online, and many leaders have moved to accelerate that shift. Shipping and mailing company Pitney Bowes is using technology to speed its transition to services—first into a more SaaS environment and then internally to help drive culture change. “In addition to building out product sets and offerings that we think give us a growth factor, we’ve been investing heavily in some of the support structures around that,” said Jason Dies, EVP and president of sending technology solutions at Pitney Bowes. “How we rethink our go-to-market strategy, rethink our incentive structures, rethink how we set up processes and capabilities.”
Human Capital Director, Old Mutual
“Scale does matter and our ability to be able to leverage our scale is where we’re going to play. We’ve spent a whole lot of money over the last five years just investing in tech, digitalizing, modernizing. You don’t see those benefits immediately. We stuck to our guns from a technology investment perspective, and I think it will reap dividends.”
Consistently, members told us they are investing for the longer term in technology, even if it puts pressure on margins and revenues in the short term. Said Celiwe Ross, human capital director at life insurance company Old Mutual: “Scale does matter, and our ability to be able to leverage our scale is where we’re going to play. We’ve spent a whole lot of money over the last five years just investing in tech, digitalizing, modernizing. You don’t see those benefits immediately. We stuck to our guns from a technology investment perspective, and I think it’s going to reap dividends.”
A longer-term investment approach—whether in people or in technology—is a move away from the instant reactivity many leaders needed to demonstrate during the pandemic. But it requires a different type of courage to invest in a few major projects when money is expensive than it does when low interest rates make it easy to make many different bets. Warned Penny Cotner, president and CEO of Infinite Electronics: “I would underscore—for CEOs who have never been through a cycle before—the most important thing is don’t lose your nerve, and make sure that you continue to invest where you know your business thrives. An ostrich mentality in a downturn is dangerous. It’s just a matter of keeping your eye on what you know you do well.”
Avery Dennison has a process meant to make sure that executives stick to their most important bets. “We basically tell the teams they need to come with what we call priority one, priority two, and priority three investments. Priority one investments are strategic investments that they’re saying they’re going to do in the next year or two years,” said Danny Allouche, SVP and chief strategy and corporate development officer. “They can’t decide in the middle of the year that they’re not going to do the investment. You have to have conviction and be willing to take a risk in the short term.”
President and CEO, Infinite Electronics
“I would underscore, for CEOs who’ve never been through a cycle before, the most important thing is don’t lose your nerve, and make sure that you continue to invest where your business thrives. An ostrich mentality in a downturn is dangerous. It’s just a matter of keeping your eye on what you know do well.”
The Digitization of Home Services
Home services provider Neighborly began with a single brand and soon embarked on an acquisitions journey, now making up 30 home improvement brands and $3.3 billion in sales. Eight years ago, the leadership team decided to invest in a digital marketplace that combined all of its brands under one umbrella. The company has spent $30 million over the last four years on digital transformation—a strategy shift that endured through the pandemic and is now bearing fruit. Said Mike Bidwell, Neighborly’s president and CEO: “We are doing this because we can and we should. It will be more powerful for the business.”
Neighborly’s goal is to create a “closed marketplace system,” similar to Amazon’s, that helps existing franchise owners with their own brand identities as well as a common customer data platform. The idea: Just as easily as you can order a product on Amazon, you can now book any home service you need on Neighborly’s digital marketplace. “We’re not introducing Neighborly to subdue or submerge the service brands,” emphasized Roger Chacko, Neighborly’s chief strategy and marketing officer.
Neighborly piloted the system in Huntsville, Alabama, in 2019. In the beginning, the initial multibrand customer rate—the rate at which a customer used multiple Neighborly brands—was just a few percentage points. Today, it’s 18%. Chacko noted that multibrand customers are worth five times the value of single-brand customers.
The company’s unique identity means there’s no playbook to follow. “The needs of each brand as perceived by the consumer are very nuanced. How do you remain true to the uniqueness of each brand’s identity, yet expect synergy? There has been a steep learning curve and continues to be,” Chacko said. But that curve has not changed in tougher economic times. “It’s an evolution. We accomplished the first milestone, and now the focus is making the platform more and more relevant for the needs of the consumer and creating new and surprising elements,” he said.
In a nod to just how confusing the talent question remains, the easing of the talent shortage was the second biggest driver of growth, behind technology advancements and ahead of fewer supply constraints. Many members see the slowdown of the economy helping to shift the talent equation back in favor of the employer. CEOs and marketing leaders were more likely to point to the easing of the talent shortage as a driver, whereas HR leaders were the least likely to do so, suggesting they are less confident in the prospect. U.S. respondents were almost twice as likely as those elsewhere to see this easing as a driver of growth.
Talent as a Growth Engine
At agriculture machinery company AGCO, acquisition is used as a lever to bring in scarce talent. Said Seth Crawford, SVP and general manager of precision ag and digital: “In numerous cases, we’ve gone out and bought the business outright. Because when you can pick up a company with say, 25 engineers at once, that shortens your talent acquisition timeline in a hurry. And we’ve done that in multiple scenarios over the last year.”
Some of these companies happen to be located near universities—which means they can also serve as recruiting centers for students. One American outpost is on the campus of North Dakota State University, and AGCO is also opening small offices connected to innovation centers at Arizona State and the University of Illinois. Said Crawford, “We have similar efforts in Europe and in South America. Instead of asking the students that are graduating to come to our site, we’re basically taking our presence to them and creating a career path for them locally where they can come in during their student time, have some internships, get a feel for what it’s like working with us, and then turn that into a full-time position and a long-term career.”
Sustainability: It Depends
Of note is that sustainability-related responses did not emerge as either a barrier or a booster in the survey responses. Even as many companies previously mentioned ESG regulations as onerous, just 6% said ESG regulations were one of their top blockers—and some executives even shared that pushing ahead full force on sustainability was, instead, at the core of their growth agenda. At Colgate-Palmolive, sustainability was first woven into the overarching corporate strategy in the 2025 plan, which came out in 2020. Earlier this year, Chief Sustainability Officer Ann Tracy was promoted to report to Colgate’s group president of growth and strategy, and is now a member of Colgate’s executive leadership team.
At Austrian energy company OMV, growth will come from a new focus on sustainable chemicals and a shift away from the more volatile oil and gas sectors. Tom Asselman, VP of strategic planning and projects, said, “We see crisis as opportunity.” The company’s strategy is to become a sustainable fuels, feedstocks, and chemicals company. He said, “Our view is that you can basically do both: … money making and doing good for the planet. They’re not contradicting each other.”
Our view is that you can basically do both:
… money making and doing good for the planet.
They’re not contradicting each other.”
– Tom Asselman, VP of Strategic Planning and Projects, OMV