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Commercial Excellence: The World Awakens

November 19, 2018

Is your organization on the path to commercial excellence? McKinsey, the global strategic consultants, are just the latest to grasp the critical role that commercial competence plays in delivering performance and growth. In a recent article, they observe that leading organizations ‘are now using superior execution rather than better offerings to outperform incumbents and drive growth’.

Commercial innovation is scarcely a new concept (and it has lain at the heart of IACCM’s work for the last 20 years), but it has been relatively unfashionable as an area of business focus. The era of globalization drove different priorities – cost cutting, standardization, efficiency and compliance. But these focus areas resulted in operational improvements and often ignored market and competitive effectiveness.

The need for challenge

A range of new forces – not least emerging technologies – are creating new possibilities and demands. Business models are shifting – for example, towards the delivery of outcomes, as-a-service offerings – and these require different internal capabilities as well as altered relationships with customers and suppliers. Having reduced (or in some cases eliminated) commercial resources, many organizations are now struggling to respond. They have become good at folllowing rules, less good at challenging or changing them.

McKinsey suggests that top performers – ‘those with superior commercial capabilities’ – consistently deliver revenue growth about 1.9 points higher and earnings growth about 4.7 points higher than peers in the same sector. They also extoll the virtue of benchmarking and its importance in driving continuous improvement.

Support for the new direcction

It is gratifying to have this endorsement of the work that IACCM undertakes with its members worldwide, providing not only regular comparative reesearch, but also undertaking capability assessments for many of the world’s biggest organizations. Our soon-to-be published 2018 benchmark report contains data from 742 companies. In addition, we have recently completed a detailed study of ten major public sector jurisdictions, comparing them also with private sector leaders.

It is exciting to find the world re-awakening to the role and importance of commercial capability. For those who have developed expertise in this area, the future indeed looks bright.

To learn more about IACCM’s research and the IACCM commercial capability assessment, visit www.iaccm.com

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