Once upon a time, achieving top-line growth was relatively simple. “Back in the late ’90s and even 2000, growth was everywhere,” recalls Pat Russo, CEO of Lucent Technologies. “You could place lots of bets and most of them paid off because somebody was willing to buy.” But now, says Russo, “we are living in a very different world.”
No doubt about that. After blowing so much money in the bubble days, companies have spent several years focusing on the bottom line. They’ve been on the defensive because of a climate of scandal and economic volatility. But the pendulum is shifting again. “Now, we want top-line growth,” says Ginni Rometty, global head of IBM Business Consulting Services, which sponsored a roundtable on the subject. “Cost-cutting is not going to go away. But now the challenge is getting work forces that can do both of these at the same time.”
So the burning question is how technology can be employed to pump up revenue growth. Data mining—essentially, a deep, intelligent analysis of corporate and customer information using computerized databases—is one such trend. It’s not exactly brand new, but many companies have begun to regard the once experimental technology as an essential tool, both to defend existing business and to go after new business. “Any of the things anybody with lots and lots of customers can do pretty effectively—if they can use this technology well—is to learn which customers really make them money,” said Fred Smith, founder and CEO of FedEx. “Then, you try to get more of those customers and less of the customers that lose you money or cause you problems. You can also relate customer retention with specific incidents and specific activities.
“If you want to grow your top line,” Smith continued, “the easiest way is just to stop the leakage out of the bottom of your boat, because turnover in most businesses is enormous.” Rometty agreed. Data-mining technologies, she said, “are now available that would have been cost-prohibitive before. Even stochastic analysis—what you have to do to feed out all that noise and data—you can do it now in an economically feasible way.”
Consider Karl Rove. “That’s what he did to win the election,” said Smith. “They correlated Republican buyers and Democratic buyers to zip code by type of car, size of house, watching NFL, NASCAR, the whole thing. They did it with a lot of relational databases and data mining, a rifle shot into that household or that voter.”
As important as it’s become, data mining is hardly the only technology used to raise revenue. But whatever technologies are considered and adopted, whether the scale be large or small, whether the technology is being sold to customers or used internally, just about everyone at the roundtable agreed on several principles that should guide top executives:
Manufacturing industries turned to advanced technology long before most service companies did. But now it is the service sector that could be ripest for technology-generated growth. In the past several years, for instance, the travel service industry has been utterly transformed by the Internet. Agencies that failed to adapt to the changes either sold their businesses or closed their doors. Those that embraced the new technologies took advantage of the ensuing industry consolidation. “We’re not calling ourselves just a travel management company anymore,” said Gloria Bohan, president and CEO of Omega World Travel, which she built from a one-woman shop into a $1-billion-a-year company. Rather than simply schedule travel over the phone or online, “we’re going into corporations and into the federal government, offering them new technology that will make booking online easier. We’re helping them automate their authorizations, and we’re helping companies attach a travel and entertainment system to a reservation system.” Her core advice: “You have to know the business, know what needs to be done and apply that to technology.”
Remember that technology is not just for productivity. “The issue you have in all businesses is how you get your business leaders to remove their blinders,” said Harold Yoh, CEO of Day & Zimmermann. “They’ve been so used to competing in one dimension. Now, they have to compete in another dimension. They’re used to technology being a way to either streamline processes or cut costs. The question is, How can you change your business model and accelerate your customers’ success by using technology?” Unleashing the next wave of innovation could obviously have a major impact on the growth of the American economy, allowing it to rise above competitive pressures from China and elsewhere. In fact, the economy’s future may hinge on whether a new burst of ideas can reach the marketplace. Hopefully, this time around, CEOs will be wiser and better equipped than they were in the go-go days of the 1990s.