Do it once. Do it big. Do it on your own terms

Look out three to five years: if the trend shows that your P&L performance will fall significantly below market expectations, you need to reset the target. Closing this gap depends on the senior leadership team’s prioritization of this earnings expansion target. This focus brings uncommon clarity to the endeavor and allows you to control your own destiny.

Rapid Earnings Expansion is all about closing the P&L gap. Over the initial four to six weeks of a Rapid Earnings Expansion project, an appropriately composed team taps a multitude of internal perspectives and external expectations, completes a range of analyses, and conducts interviews, as needed, with the company’s bankers, analysts, and board members. This provides a data- and insight-rich context to your leadership team as you resolve the most fundamental and crucial questions:

Is our target the right number?
Do we agree that achieving the new target is absolutely necessary, and thus non-negotiable?
What do we already have in flight that might help us get there?
What competing priorities could block us from reaching our target?

These deliberations bring your leadership team to a moment of truth: the earnings expansion target is always bold (for example, doubling EBIT within 18 to 24 months), but it is also practically attainable via a disciplined and rigorously defined program.

The target is then pushed out to a series of solution groups (in global companies usually ranging from 12 to 36 total), each tasked with determining how best to achieve a distinct portion of the earnings expansion goal. Defining P&L improvement in terms of solutions, Rapid Earnings Expansion opens major opportunities in the space between the organization’s silos.

All the solution teams adhere to a single source of truth: your non-negotiable earnings expansion target. All teams share accountability for reaching this numerical goal; as a result, solution teams can work concurrently under a relatively tight timeline. If one solution team credibly demonstrates it cannot find a practical way to meet its portion of the target, the unmet share is not taken out of the program’s scope. Rather, it is added to the targets of other teams so as to meet the overarching goal. This collective (and unbending) accountability drives a high degree of cross-fertilization of ideas among groups, while senior leadership maintains ultimate control over all trade-offs and related decisions. Only the goal itself is beyond discussion.

Assessments conducted solely within functions typically uncover savings potential in the 3 to 5 percent range; by contrast, the solution team approach regularly unlocks improvement opportunities of 20 to 30 percent, or more. Rather than operating on the mere hope that the earnings expansion target can be reached—which places pressure mainly on the assumptions and analysis—the new target is built into the company’s forecast, placing the pressure squarely on the implementation. Ultimately, senior leadership determines when to report P&L gains to shareholders and the investment community.

The specific measure of victory will differ, as will the team that commits to it, the priorities scoped into it, and the leadership that brings it to life. The factors that make bouncing back difficult are what make it worthwhile—even beautiful.