Elephant in the room
Are you on the board or a top manager for a company that has little to no top line growth? Have you ever pondered how little your company is actually able to stand out in comparison to your competitors? How often do you discuss these issues, or is the lack of top-line growth the famous “elephant in the room”?
When I joined SAS in 2012 as the Executive Vice President for Commercial Services, I was asked: «How do you manage to charge 20-30% more than Norwegian Air when you only sell one seat? An airplane seat is just an airplane seat, right? It was a relevant question, as relevant as saying that a car is a car, a bag is a bag, a PC is a PC and an accountant is an accountant. For SAS, with investments in the award-winning SAS app and the development of the EuroBonus program the “We Are Travelers’ concept became one of many tools that acted as differentiators. SAS went from being the worst in its class, to becoming the most attractive airline from 2013 until the pandemic hit, changing all the conditions.
Cupole, a company in the QNTM ecosystem, has analyzed 1,400 Nordic companies’ top-line growth over the past 3 years. The results should be a wake up call for all boards and top level managers. Nordic companies have an alarmingly low top-line growth (3-4% organic growth). The survey indicates a connection between a lack of digital competence in boards and management groups, and a lack of top-line growth. Companies with digital expertise invest significantly more in digital solutions and have an average top-line growth of 12% vs 3% for companies that invest a little in digital solutions. The fastest growing companies are investing primarily in digital solutions in order to differentiate their products / services from their competitors.
By 2021, consumers and decision makers are “born digital”. The fact that the boards have not ensured that top managers and top management have better digital competence shows a lack of understanding of the connections. Our survey further shows a connection between lack of digital competence in management and boards and low investment in digital solutions, which in turn results in flat or no top-line growth. Here, as elsewhere, it all starts at the top.
In the COVID year of 2020, a number of companies realized that they were not prepared to digitally meet their customers. This has led to an explosion of home-made solutions that do little to effectively differentiate companies. Today’s consumers expect you to meet them digitally with premier solutions, not with a web or mobile site that appears to have been built in the early 2000s. Matas, which is a listed Danish group that sells products within make-up, hair and care. In addition to their more than 200 physical stores, they have accelerated investments in digital solutions, which has gone from 4% of sales to almost 30% of sales in just 3 years. The award-winning company Hesehus, which is a part of the QNTM Group, has been developing and delivering the eCommerce platform to Matas for more than 10 years. In 2020, Matas digital sales increased by more than 200%, making them now the second largest eCom website in Denmark, despite the fact that they sell the same products as their competitors. Shareholders have seen their shares value increase by more than 80% in the last year – which, some of the shareholders have actually understood.
The companies that win in competitive situations have secured heavy digital expertise in their board and top management. Their digital investments are not only focused on reducing costs internally, but they have also developed sophisticated ways to digitally communicate with customers, gain deep insight into which digital marketing works, and implemented leading solutions so that customers can easily gain knowledge digitally regarding products, as well as the ability to purchase products digitally.
Our research indicates that very few management teams know how to create top-line growth – which should cause most shareholders to stay awake at night, leading to the creation of a shareholder revolt and higher demands for new expertise and more digital investments. As for some, a car is not just a car, and an airplane seat is not just an airplane seat.
Click here to read more about how digital maturity, expertise in top line management, and digitalization all play an important part in a company’s top-line growth.