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Companies, like people, should nurture not only their current performance but also their long-range health, which is often defined as the ability to perform in the future. McKinsey surveys and empirical research suggest that for companies, as for people, the key to attaining these goals is a balanced lifestyle that promotes short- and long-term well-being alike.
The exhibit presents a European retail bank’s approach to nurturing both the performance of its existing operations and two aspects of health: renewal and execution in the future. Some of the bank’s initiatives are meant to improve the performance of its current operations (for instance, by increasing its low-cost deposits). Others, focused on execution, extend its current capabilities; one such project is an effort to cross-sell existing products to holders of the bank’s credit cards. These initiatives tend to involve relatively low levels of risk, since the bank already understands the required skills. Initiatives to renew the bank’s business by moving into new lines (selling mutual funds, for example) generally involve longer timelines and a higher exposure to risk.
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