WHY ARE SOME BUSINESSES GROWING, while others flatline? And what’s the role of the CFO in creating growth?
Wolff Olins researched fast-growing organisations, many of them born in this century, to see what they have in common. Businesses that dominate their markets, like Amazon, Apple, Google and Paypal. And businesses you may not have heard of ye,t like Grameen, M-Pesa, Zopa and Tata DOCOMO.
We found five characteristics which together, we believe, set a new agenda for a company’s top team: we sum them up as purposeful, useful, experimental, boundary-less and value-creative.
For CFOs, the most relevant characteristic is value-creative. This means that, instead of pursuing doggedly a single strategy, fast-growth companies develop creatively many parallel strategies to find many new ways of making money.
A great example is Lego, which has used value-creativity to turn a $200m loss into an $885m profit. By 2003, the iconic 70-year-old toy maker was in trouble. The product looked old-fashioned and the business posted a $238m loss. So it began a seven-year strategy to ‘lead the industry in creating value’.
Since then, it has grown an enviable portfolio, diverse but true to its core, including video games, theme parks, retail stores and clothing. There’s even a business consultancy service called Lego Serious Play.
And encouraging value-creativity is the new role of the CFO. The role is about taking a different view of risk. In a business world that has never been so unpredictable, CFOs should be addressing the biggest business risk of all – that today’s revenue streams could dry up. They should be asking the question companies like Kodak failed to take seriously enough: if our current revenue stream failed, what completely new ways could we find to make money?
Amazon’s original revenue stream – online bookselling – shows no signs of drying up. Yet Amazon has wisely built several other businesses alongside it. Amazon understands the imperative of value-creativity. It has developed Amazon Marketplace, which hugely widens its product range. It has acquired businesses like Abebooks, IMDb and Zappos.
And then a whole range of cloud-based computing services, Amazon Web Services. And most recently, it’s creating value for writers as well as readers through Amazon Publishing.
Finding completely new ways to create value is perhaps the most important behaviour for the long-term health of an enterprise. We believe that every business should make it an ambition to launch a totally new revenue stream each year. And CFOs must lead the charge in their organisations: to act less like controllers, and more like liberators.
Robert Jones is a senior strategist of global brand consultancy Wolff Olins
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