solar, wind or hydroelectric) and largely emission-free, or have an overall lower emission intensity than individual internal combustion engines. These centralized generators may be of renewable energy (e.g. Similar to all-electric vehicles (BEVs), PHEVs displace greenhouse gas emissions from the car tailpipe exhaust to the power station generators powering the electricity grid. Most PHEVs are passenger cars, but there are also PHEV versions of sports cars, commercial vehicles and vans, utility trucks, buses, trains, motorcycles, mopeds, and even military vehicles. That “phew” you’re hearing is the sound of investors exhaling.A plug-in hybrid electric vehicle ( PHEV) is a hybrid electric vehicle whose battery pack can be recharged by plugging a charging cable into an external electric power source, in addition to internally by its on-board internal combustion engine-powered generator. Recent quarterly reports suggest that corporate profits rose for a 10th consecutive quarter, defying predictions that U.S. companies would show no earnings growth in the early part of this year. This preserved an indicator that has consistently pointed north since the economy emerged from recession in 2009.īut CEOs can’t rely on cost-cutting to keep their profit momentum going - it’s gone about as far as it can at most companies. Nor can they rely on macroeconomic growth. In fact, we are now experiencing the lowest-growth recovery on record, including the recovery from the Great Depression. Today’s business leaders must be able to boost their organic growth in other ways. I am often amazed at the helter-skelter way that companies pursue organic growth. Many chase market share they’ll never get. Others focus too much on their most loyal customers or, worse, on their competitors’ most loyal customers. A lot of companies throw money at the problem - more R&D, more marketing, more sales people. Some senior leaders simply lean harder on their operating units, increasing their targets and demanding more growth.Īll of these approaches lead to initiatives that will never pay off - sometimes a multitude of them. Its focus was to get more people into the store (“foot traffic”) and, once in the store, to get them to shop more categories (“cross the aisle”).Ī few years ago, one of the world’s largest retailers had literally hundreds of initiatives going after same-store sales growth. But when the retailer took a more careful look, it found that its best opportunity was to get people to buy more in the categories they were already shopping (such as apparel or electronics or groceries). This realization - which came from a headroom analysis, just one method companies can use - made the retailer more focused and dramatically reduced the number of initiatives its managers had to support. Make growth “net free.” The problem with investing in organic growth is that the costs hit the books before the revenues do, creating a tension between short-term profitability and long-term growth. Encouraging companies to be more focused on the long term is not the answer. Better to recognize that no company is 100% efficient and that there is always a chance to fund organic growth through savings generated by efficiency gains. This was essential to Jim Kilts’ turnaround of Gillette a few years ago. He instituted a policy of continuous productivity improvement, but also allowed - even encouraged - his operating units to use the savings to fuel future growth. Companies sometimes have practices that subtly - but powerfully - discourage organic growth.īy the time Gillette sold itself to Procter & Gamble, Kilts had turned Gillette into an organic growth machine with far higher margins than before he took over.ģ. One is surrendering to the business cycle - under-investing in the down cycle and over-investing in the up cycle. Another is senior leaders typecasting their portfolio, referring to this unit as a “cash cow” and that one as a “growth engine” - unhelpful labels that result in missed opportunities (in the first case) or overly aggressive behaviors (in the second).
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