We Need To Talk About Growth Metrics: What Does Success Mean Moving Forward?
When Crowe Global launched The Art of Smart in 2018, we determined that growth was one of the four pillars for smart decision-making, alongside diversity, boldness and innovation. The premise was: firms that grow are successful.
It’s important to stress at the outset that growth remains one of Crowe’s core values as an organization. However, in the context of The Art of Smart, which aims to provide business leaders with the tools to make better choices, the definition of growth has become both more nuanced and expansive since the beginning of the coronavirus crisis.
Given that the UK economy shrank by a record 9.9 percent in 2020, while across the Eurozone it contracted by 6.6 percent, and that the only major economy to grow last year was China (2.3 percent), some business leaders would not measure their success in smart decision-making by growth.
Indeed, those operating in the hospitality, travel, or high-street retail sectors will not find top-line growth a relevant – or fair – metric by which to measure success and smart decisions in the last 18 months.
I found myself musing: if this is the case, then what growth is relevant? How have organizations in these sectors, for example, evolved to ensure they’re growing their bottom line and resilience? Because we know the survivors of tomorrow adapt fastest to what’s happening today. How have businesses grown their workforce or grown creativity and innovation?
I don’t have all the answers, but I firmly believe leaders must rethink what growth means and I’m happy to open this fascinating and – in my opinion – much-needed discussion.
Required: new definitions of growth
To begin this thought process, I brainstormed words more readily associated with growth today than before the pandemic. Two that came to mind were “sustainability” and “resilience.” Again, there needs to be a sharper definition of sustainable growth. Should leaders look for sustainable growth over a medium-term timescale, the sustainability of their workforce, a sustainable business model, or something else?
Linking to sustainability, over the past five years, I have been advising that environmental, social and corporate governance (ESG) will be a significant growth area for the future. Last year’s events have pushed ESG higher up the list of priorities for business leaders, propelled by grassroots demand.
As there is no internationally recognized standard of ESG regulation today, organizations have a great opportunity – and accountancy firms, such as Crowe, in particular – to measure growth in these initiatives. By being transparent and proactive, businesses can stand out from competitors if they publish an environmental impact statement, such as a new section in their accounts.
Given the increasing influence of B Corporation, which provides for-profit organizations that balance purpose and profits with certificates, this trend for growing ESG focus will continue. The metrics to measure this growth need to be carefully worked out though.
Measuring resilience
Similarly, how does one measure the growth of resilience? Many businesses, large and small, have been forced to evolve since March 2020 and become more agile, with most investing in digital technologies.
One point that has been evident since the pandemic hit, has been the need for greater visibility to grow resilience across the global supply chain, which is more complex than most people realized. For a more sustainable, transparent and resilient supply chain, data-driven solutions will help empower local teams and reduce costs and emissions. Your clients and customers will likely pay closer attention to these areas in the coming years.
Alongside corporate resilience and supply-chain resilience, leaders also have had to grow their personal resilience for the sake of their workforce. And from thinking about sustainability and resilience, it’s not a giant leap to reach words like “values”, “community”, “diversity”, and “society”, and to look deeper at areas that have accelerated across the world in the last year.
For leaders seeking to move a sustainable business forward, you have to consider the impact on the communities in which you operate and, with the war for top talent raging, how attractive your company is to local people.
Placing values in the right place
Wishing to delve further into this topic about growth and also the future of accountancy, I revisited the presentation I made in 2017 for my current role and found surprisingly prescient themes. I suggested that businesses should consider the following four things in the next ten years:
- Embrace technology in everything you do to stay relevant in serving clients and customers and running your business. The coronavirus crisis has accelerated the need for digital transformation.
- Embrace thought leadership to add meaningful value and remain a trusted advisor for your clients, and to have a role in the boardroom as an accountant. As basic services become commoditized, growth is achieved through that added value. And as we use more technology, leaders have to become more human in providing expert judgement and communication – this is their unique selling point.
- Take ownership of the trust agenda. Auditors, specifically, have been blamed for corporate failure in the recent past, and, my point was, if you’re going to win the war for talent and expect people to want to train to become an accountant, and if you want to remain relevant in the boardrooms of clients, you have to own the societal need to talk about where trust sits with the accountancy profession. Otherwise you don’t have a future. The desire for greater trust and transparency across industries has increased since the beginning of the pandemic.
- Finally, I said that organizations have to have someone horizon-scanning to futureproof their business, because, if not, something will come along and destroy your business model. While few could have predicted the vast and long-lasting disruption wrought by COVID-19, those with an eye on the future would have coped better than others.
Reflecting on these four points, I found myself coming back to the critical question: what is growth in terms of smart decisions today? As a leader running a global accountancy network, I need to consider all of the above elements when I’m looking at which smart decisions lead to a sustainable, growing business for the future. If you don’t, your business will no longer be relevant to or trusted by the communities and markets you serve.
The boardroom conversation must now be about whether the overarching values of an organization that drove growth as a measure of success yesterday are the same today and relevant for tomorrow. If you position your values in the right place, how you measure success against your vision statement and your mission should be secondary.
