Most CEOs like continuous performance, but what really adds value is bold moves and breakthroughs.
The average CEO age is 55 years old, but as CEOs get older, their risk returns get lower. A 25% increase in a CEO’s age leads to a 4% fall in the company’s share price, and as this happens CEOs often look outside of the company to create maximum value.
An example of this is making acquisitions or forming smart partnerships to help the company grow.
When working with CEOs I often get asked about growth, and I believe it comes down to 4 Quadrants that I see as a Growth Wheel.
The Growth Wheel:
The 1st Quadrant is Conventional Growth, with a focus on new products, new markets and new customers. However, I believe this only creates 1-2% of growth in companies.
The 2nd Quadrant is to Use Capabilities in the company. This takes all the assets, skills, and knowledge in the company to create new commercial value. British Telecom did this when they took all their wires & infrastructure to create BT Broadband as a new offering.
The 3rd Quadrant is Smart Transactions, so how to do M&A, JV, & partnerships in a new way to create value.
The last aspect is Disruptive Moves. These are moves that disrupt an industry, change the rules of the game, and do so by coming up with new, pioneering, entrepreneurial moves.
Ideally, I’d like to see a company do all four of these aspects really well, but with a particular focus on Smart Transactions & Disruptive Moves.
How Xinfu Utilises The Growth Wheel:
To bring the Growth Wheel to life, I will use examples from my own company, Xinfu.
From a conventional growth standpoint, we decided to work with CEOs from Australia, as we moved into a new market. We also filmed BBC CEO Guru in Australia as we attempted to help Australian CEOs best manage their global companies.
Our CEO Masterclass series is a good example of the 2nd Quadrant, namely using our capabilities. I’ve worked with CEOs for over 30 years, and decided to summarise this best practice and make it accessible to a wider audience.
A good example of the 3rd Quadrant – Smart Transactions – is Xinfu entering value partnerships. In this instance, we don’t just work on a fee basis, we work with a value partnership, so that if we helped to double the value of the company we work with, then we share some of the upside.
Regarding Quadrant 4, Disruptive Moves, we made the decision that we wanted to work with some of the top Chinese CEOs.
We partnered with the Chinese Entrepreneur Club, met the top 50 Chinese CEOs, wrote a book about them, and now we’re actively coaching a number of China’s top CEOs.
Your Turn To Implement The Growth Wheel:
I would like you to focus on implementing Quadrants 3 + 4, Smart Transactions & Disruptive Moves, because that’s where the disruptive growth is most likely to come from. I would like you to think of the 5 big moves that could double, or maybe even quadruple the value of your company.
That’s the challenge for the CEO and the Executive Team.
Originally published on LinkedIn.com