Sustainable company performance is driven by the extent to which corporations are able to link their strategic and cost and resources agendas, a report said.

“Since the 2008 economic crisis, when many firms had to slash costs and resources in a rush, executives have been increasingly pressured to determine how to best reposition their companies for growth and economic recovery,” said Vinay Couto, senior partner at global management consulting firm Booz & Company and coauthor of the 2013 Fit for Growth Index study.

“Many companies are sitting on healthy balance sheets, but few are really clear about how to make the most of their resources.”

Dr Walid Fayad, Booz & Company partner, said: “Booz & Company’s Fit for Growth approach is a proven way forward for companies that want to more efficiently utilize their resources to grow stronger.”

“The Fit for Growth Index measures how well a company connects its cost and resources and growth agendas by assessing companies in three key areas: strategic clarity and coherence with a clear and aligned set of capabilities; aligned resource base and cost structure; and supportive organization.”

The study analyzed nearly 200 public companies across a wide range of industries. Each company’s index score was calculated and compared with its total shareholder return over the past two years.

Key Findings

•    There is a clear correlation between a company’s Fit for Growth Index score and its market performance. Companies that focus on the three key elements of strategic clarity and coherence, resource alignment, and supportive organization generate higher shareholder returns.

•    Although the steps may seem clear and the positive impact is obvious, less than one-fifth of the companies (17 per cent) are well positioned to grow. Only a small subset of those (6 per cent of the total) perform well along all three dimensions of the Fit for Growth Index.

•    Companies fall into five broad “archetypes,” each with its own characteristics and challenges. The study identifies a specific set of recommendations for companies in each archetype.

•    Companies with the highest Fit for Growth Index score tightly link their strategic and cost and resources’ agendas while building supportive organizations. They clearly understand which capabilities are truly critical for winning with their strategy, and they funnel the bulk of their resources to those differentiating capabilities. Finally, they strive to build supportive organizations so that the collective actions of their people align more closely to their strategy.

“Having worked with many leading companies across a variety of industries, we have the unique opportunity to gain insights into what winning organizations do to return to sustainable high performance,” said Booz & Company principal Manish Mahajan.

“The Fit for Growth Index provides a measurable, quantifiable metric that assesses the benefits of how a company can build competitive muscle while cutting the corporate fat that weighs the company down.” – TradeArabia News Service