The power of 1%: why marginal growth matters

Too often, businesses undergoing a digital transformation deploy a “launch and leave” approach to innovation. As they search for the next big transformation, they overlook the potential of continuously improving the performance of their existing assets and the power of compounding marginal growth. All it takes is the right mindset and metrics.

Most businesses focus on achieving double-digit growth, and understandably do so. However, continuous performance improvement is really the low hanging fruit that can drive growth. To put it in concrete terms: if you start with €1,000 and it grows at 1% per day, you’d end up with €37,783.43 after a year. Not bad. But if you have a hosting cost of €1,000 that you’re seeking to optimize by 1% a day, you can reduce that cost to €500 in just 69 days.

False dilemma

I believe focusing on continuous improvement of existing assets to unlock value and reduce operational costs should be a no-brainer and a perpetual priority. In contrast to innovation, optimization is wrongly interpreted as a euphemism for cost-cutting rather than something that contributes to the growth of your company. The best example to disprove this belief is Google’s search results page. The starting point hasn’t changed, but the experience has gotten better and better, day after day.

Innovation and cost optimization are not mutually exclusive. Transformation is essential to every enterprise; innovation and new ideas need to be implemented and existing assets need to be retired. But it’s the “launch and leave mindset” companies use to move from one big transformation to another — overlooking performance optimization — that must be addressed, especially when it comes to large corporate cultures.

Sales growth driver

At Portera, we know that increases in margin can drive sales growth. We helped an e-commerce client to increase their market share by 500% through marketplace media optimization. But similar gains are there for the taking when it comes to cost optimization — if you put the right reporting and metrics in place.

Portera offers an AI tool that intelligently monitors assets and alerts you to the cost of over-specified or underutilized resources using an automated mailing system. This reduces hosting costs by an impressive 14% per year. And that 14% goes straight to your bottom line.

Mindset

All it takes is adopting a compound margin mindset that connects with the entire business and its IT objectives.

Portera is an innovation partner to many multinationals at various stages of their innovation journey. We have supported a range of major companies in building their corporate strategies and helped them to successfully implement and execute them, for example with the Portera Cent portfolio that can increase marginal gains across your business.

Let’s discuss the challenges your company is facing. My team is always ready to help.