The CEOs who drove growth during the pandemic all shared a common approach. What can you learn from them?

Delivering growth during the COVID pandemic was no mean feat. In unprecedented market conditions several businesses not only ‘weathered the storm’, but thrived and in some cases delivered record revenue growth and market share gain.

The companies we’re discussing here are not the success stories that are easy for anybody to see and that we now all already know about. We know that Amazon increased delivery volume and revenues as, stuck at home, we all ordered more to keep us entertained and fulfil household needs. For a handful of firms, like Amazon, the result of the pandemic was a natural ‘spiky’ buying pattern, with sales rising in line with local lockdown rules and falling somewhat once restrictions were eased.

We’re also not talking here about companies who made the change from bricks and mortar to digital, when it became clear that consumers would not be able to visit them for some time. These businesses deserve recognition for a change perhaps a long time in the making, but this was again a relatively natural change driven by external forces, rather than a proactive change driven by board strategy.?

So we know about those well-covered success stories, but the success stories that are really interesting are those where the CEO and board made deliberate decisions during difficult market conditions, which changed their company and delivered record growth.?

How did they do it? Why make drastic changes when external forces were so volatile? And what can we learn from the CEOs in question when looking at our own businesses?

A real world business example will help, by way of introduction to the commonality a lot of these success stories share.

LG exits the mobile phone market

In Q3 2020 LG had a 13% share of the gigantic US mobile phone market, third behind only Samsung and Apple.?

LG was an innovator in the space, announcing the ‘LG Rollable’ at CES 2021, the sector trade show, and launching products that focused on dual screens and flexible displays.

Despite that, in April 2021, LG announced the sunsetting of its entire mobile business unit, effectively and literally meaning that, almost overnight, LG stopped making mobile phones and walked away from its 13% market share. The LG Rollable never was to see the light of day.

Q3 2021 data on sales in the US mobile phone marketplace shows that “Motorola and OnePlus were big gainers… capitalizing on LG’s exit from the market.”

In effect LG had sacrificed their stake in a major market to their competitors, introducing significant business change at the same time. You might realistically expect this to have kicked off some level of transformation in LG, perhaps a period of uncertainty and stagnation, or even falling revenues.

In fact, the opposite happened. In January 2022 LG reported sales of just over $63 billion for 2021, an increase of almost 29% over 2020. The four remaining areas of LG (home appliances, home entertainment, vehicle components and business solutions) all reported revenue increases, some to a record setting level.

How and why did LG walk away from such a major market and at the same time produce record business growth, during incredibly difficult market conditions?

CEOs who drove growth in 2020 and 2021 provided clarity and simplicity

LG is one example of a trend we can spot again and again over the last few years.

During turbulent market conditions the CEOs who have delivered growth have delivered clarity and embraced a mantra of ‘less is more’.? These CEOs acted with speed, certainty and humility. They were not afraid to engage in ‘addition by subtraction’ activities, recognising that 2020 and beyond was a time to show that their company knew what they were good at and did it really well for their customers.

LG benefited from consumer demand during the pandemic, there is no doubt. Premium TVs, for example, saw a huge boost, as we chose to upgrade our home viewing packages when cinema visits were off the table.?

But where previously we might have turned to Sony or Samsung, LG’s Home Entertainment Company showed growth of over 30%. In terms of market share that shift has been from a 10% share of the US TV market in 2017 to a 21% share in 2021.

LG’s mobile business unit did not fit into this narrative. Though innovative, a 13% US market share at its peak was reflective of the fact that LG mobile phones were not market leaders, nor were they ever likely to be.

Instead, the company simplified, directing resource to high-performance business units who were either seen as market leaders or had the chance to become market leaders. Each of LG’s remaining business units has a clear pattern of growth and has established a method of market performance in their sector.?

Customers know what LG’s remaining units do, how they do it and what they can expect. That sort of certainty is valuable in a changing market. The same cannot be said for how LG’s mobile unit was performing in 2021, so LG’s leadership made a brave call to sunset it entirely and move the business forwards based on what it was known for and what it could deliver well. LG simplified and reaped the results.

Simplification: a strategy with history

Simplification is a strategy with a long history. Its applicability to the last few years of global pandemic is significant, but there has long been evidence that CEOs who engage in strategies built around clarity and simplicity deliver positive results for their companies and investors.

A global media company hired me for an engagement focused on looking at their service lines and go to market approach. We quickly found a customer base who were confused. The company, customers told us, had too many offerings to truly understand what they were getting. Selecting an offering needed a lot of manual explanation - contact time with a salesperson - and because of the lack of clarity customers often felt distrustful of whether they were getting what they were paying for.

The company eventually underwent a process of consolidation, reducing service lines down to three in total and standardising the language and value provided across all offerings. Customers reacted. The company saw a 22% increase in sales year on year and a 41% increase in customers purchasing via self-sevice platforms. Simplification - fewer service lines - had once again delivered more sales.

For wider application and evidence, this article includes data on reducing SKUs across different countries and product lines. In every example, from candy to Champagne, revenue increased when SKUs were reduced.?

DHL provides a famous example in multiple business studies texts of a business that underwent a successful turnaround, delivering growth and profit after years of stagnation. Ken Allen, the CEO who turned DHL around, released a book in 2019. The title? Radical Simplicity: How simplicity transformed a loss making mega-brand into a world class performer.

The complexity with simplification

Simple though, does not mean the same thing as easy, or common. If simplification was easy then everyone would be doing it. There are multiple examples of businesses that are not, despite the storied history of simplification being a successful strategy.

One could argue, looking at our LG mobile phone example, that whilst Motorola and OnePlus are being celebrated for grabbing LG’s market share, what they should be doing is reassessing whether their performance in the market warrants their dedication to it, a question at least one of those brands seems to have wrestled with for years.

Elsewhere Standard Chartered provides a high profile example of a business in almost constant need of simplification. In April 2022 the bank announced that they would exit seven markets in Africa and the Middle East, in an effort to “refocus and simplify”. The announcement came less than three years after the bank had proudly entered those markets to deliver digital consumer banking in 2019. The company’s focus for 2014, it should be noted, was to have “a relentless focus on simplifying and streamlining the way we work.”

In Standard Chartered’s case, their work to deliver simplification to their customers, through digital initiatives and products, has led to endless complexity for their business. Unlike the companies who thrived during the pandemic, who showed a relentless drive to let go of areas that were not helpful to their overall growth, Standard Chartered often seem to have taken a more scattergun approach, chasing the latest market movement, even if they are not set up to deliver into that market.

When you scale rapidly, you cannot have complexity and confusion around how your people or products are expected to work. The most successful firms, in terms of growth, have found a way to streamline their organisations, to remove blockers and unnecessary distractions. Where this is not the case, the pursuit of new markets leads to the opposite.

Four things CEOs can do now to mirror the behaviours of CEOs who drove growth during the pandemic

Simplicity and clarity, as we’ve seen, never go out of fashion. CEOs who are yet to engage in similar behaviours to LG or the other businesses and markets mentioned here can implement changes today that are likely to have widely positive effects on their companies. But how do you get started on what could seem a huge task? Simplification isn’t always easy, but these four approaches will help you to bring more clarity and streamline your operations.

Know what you’re good at and know how to do it well

As a first step, you must have real clarity within your business about what it is you do really well for customers, how you do it really well, what needs to be done and what ‘good’ looks like. This could be part ‘business as usual’ and part utopian vision; you may know what you do really well for customers but also know that behind the scenes you need process improvements to deliver more effectively. This is part of achieving clarity and simplicity.?

You must approach this task without ego or preconceived notions about what customers value. Look at your products and services and identify lines that are not, and may never be, in the top 3 available products in their marketplace. These are products that customers are telling you they don’t value as highly as some of your other offerings.?

For products and services that are in the top 3, the inverse is true. These are cash cows and will drive growth within the business or, in the case of a pandemic, create the conditions for your business to carry on thriving.?

Sunset underperforming business areas

This process - from identifying your cash cows, to sunsetting underperforming lines - is covered in more detail here and involves approaching your products and your innovation efforts as you would a balance sheet.

In general, businesses are reluctant to sunset underperforming products or services in an appropriate timeframe. This creates a situation where innovation efforts endlessly suck revenue from the business, without ever delivering the promised growth that led you to pursue the innovation in the first place. This is also why businesses that act with humility and certainty, and therefore sunset quickly, stand out from the crowd and deliver significant growth.

To identify products that may need sunsetting you can ask some relatively simple questions of anything that is not currently a cash cow;

• Is your business ‘known’ for this product or service?
• Do customers value it (you will need evidence for this)?
• What is its route to achieving top 3 in its class or sector?
• Can you clearly communicate why the product or service is a part of your future, why it fits in with who you are and what you do as a business?

Once the decision has been made to sunset a product, celebrate those involved in the process. This is traditionally a difficult task, but they are the heroes of your new simplicity, delivering savings that you can deploy to products which generate more growth.

Know why you have engaged in this exercise

From everything we’ve covered here, we know that simplicity is good, but at this point, and probably long before it, you need to know why simplicity is good for you and your company. The reasons could be varied, but commonly the argument for simplicity will involve generating revenue in other areas, generating savings by sunsetting expensive cost centres or streamlining business operations to deliver efficiencies. Each of those though is too general still for you at this step.

If your business needs to attract investment, for example, then delivering clarity and simplicity can be presented as a way of achieving that business goal. In this article, the managing partner of a venture fund, specifically cites simplicity as a key factor in investing:

“Many startups are surprised to learn we prefer companies that have perfected one product or service line. We advise them to focus on aggressive growth with a single product before increasing their offerings.”

During a project in 2019 we took a team into a major telecommunications firm to deliver a project on streamlining their business. The outcome was that they went from three moderately successful business lines, to one business line with two new digital products. The result was double digit growth in the very next year. In this case the business was explicitly simplifying because it needed to do so, to hit its future revenue targets.

The arguments for engaging in the process can be simple (we want to grow), but they will also be influenced by the unique circumstances and goals of your business. It’s imperative to know exactly what these are and the link to your simplification.

Communicate what’s happening clearly

In the businesses who drove growth during the pandemic there was a trend that, amidst all of the noise, everyone knew what they should do, why and where it would get themselves and the company.

This is why knowing your reasons for simplifying is so important. Once you know the specific links and benefits simplification will deliver, you can communicate clearly to the board, your team and external stakeholders exactly what you are doing, why and where you believe it will take the business.

This communication should not be undervalued. In enterprise-level business transformations the success rate jumps from 30% to 80% where the CEO provides clear communication of what change is happening, why it is happening, where the business will be as a result and what the CEO is doing themselves to facilitate the change.

The same logic applies to a transformation around simplifying your business and the same results, in terms of success rates, can be achieved if this clear communication is delivered personally and effectively.?

Lessons from businesses in the pandemic

There are multiple lessons from the achievements of a variety of business leaders during the period from 2000-present day. We may never see a business environment like it, hopefully never again during our lifetime. In that environment numerous businesses struggled, whilst some were very naturally aligned to take advantage of the very unique conditions and grow as a result.

A third group provides arguably the biggest lessons for CEOs today. This group saw what was happening in the market and made proactive, sometimes drastic, certainly brave changes to ensure their business was aligned to grow during a challenging period and far beyond. There will be multiple lessons from this group, but of clear distinction are those businesses who acted immediately to embrace simplicity and clarity, and grew as a result.

What can you do to simplify your business?