Only 20% of CEOs have a clear plan to grow their business

"Critically, many leaders do not realise companies go through different stages of growth"
Mark Hand, Managing Director, Corporate and Commercial Banking, ANZ Australia

ANZ is running a research program which found just 20 per cent of the CEOs involved have a plan around how to build an organisation. This includes the ability to formulate a detailed plan to grow. And it’s a challenge exacerbated by low-‘execution’ skills.

In the ANZ program, many CEOs knew how to create a cash-flow forecast plan and provide basic assumptions to support the cash flow, but 80 per cent lacked the ability to be able to take this plan and implement it.

Overall, the data collected by the ANZ Business Growth Program showed building an organisation that can sustain growth is one of the biggest dilemmas facing CEOs and managing directors. It’s a challenge for the whole economy because businesses such as these are critical for financial vigour.

The program, administered by the University of South Australia’s Centre for Business Growth, collected data from 37 CEOs who attended ANZ assessment clinics last year. These leaders represented small-to-medium enterprises (SMEs) with revenues between $A5 million and $A50 million and employee numbers ranging from five to 200. 

FOUR GROWTH STAGES AND THE ROLE OF THE CEO

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THE CEO JOURNEY

Significantly, a number of major insights emerged from the program.

• Business owners have a deep knowledge of their industry and passion for their customers and products. Many however have not had the time or opportunity to access the expertise needed to grow their business.

• Critically, many leaders do not realise companies go through different stages of growth and each of these stages requires CEOs to evolve. Throughout the program we often found CEOs were playing the wrong role given the company’s respective growth stage.

“CEOs understandably start out as `doers’,” ANZ’s partner in the project, Business Growth Chair Dr Jana Matthews said.

“What they forget is that for their business to grow, they need to become delegators, then coaches and finally ‘change catalysts’. Too often, CEOs remain stuck in phase one – the `doing’ stage.”

The research showed leaders are unaware of how to manage people to high performance.

“Some do not want to grow because they have problems managing their current employees,” Dr Matthews said. “They see more growth as equaling more employees - therefore more problems.“

“We encourage them to do things as simple as working with employees to develop a common set of company values, then making decisions based on those values.”

FEAR OF FAILING

Another impediment to growth for CEOs is a fear of failing. Providing leaders with a growth and decision-making framework, as well as financial analysis capabilities can help them convince cautious business partners and recognise not growing is often far riskier than growing.

Fear of failing can also often be linked to feelings of isolation; simply not having a peer or mentor to talk with about the business and its various challenges.

The research found even just being in the company of like-minded individuals who are trying to grow their companies has helped CEOs and executives overcome their fear of growth.

PROOF OF SUCCESS

The ANZ for Business Growth is proving to be a highly effective mechanism for helping CEOs build their companies and achieve sustainable growth. At the end of the module in August 2015, 75 per cent of the CEOs involved said their business had grown.

Most predicted a 25 per cent increase in revenue over the previous year and projected a 41 per cent increase in staff numbers.

With the Asian opportunity growing, it is essential too CEOs look deeply at how to prepare their companies for growth in offshore markets.

Last year ANZ surveyed 1000 Australian businesses and released the Opportunity Asia 2015 report which found 76 percent of businesses who have expanded into Asia say their profits have increased substantially. Close to 60 per cent of medium sized businesses accomplished this within three years.

Impressively, 50 per cent of the Growth Program participants said since attending, they had started exporting into new markets - including the United States, China, Japan, Singapore, Germany, and Italy.

Developing the abilities to manage growth and change are more critical today than ever before.  Many industries are now facing dramatic changes in technology, social demands, economics and regulation. To thrive both small and large organisations need leaders who are confident, strategic change leaders. 

Mark Hand is Managing Director of Corporate and Commercial Banking for ANZ Australia.

You can read more about the ANZ Business Growth Program here.