Article

The Quest for Full Potential

Companies truly striving to become their best share three consistent characteristics.

By Michael Mankins

Published on November 04, 2021
min read


An obsession with reaching full potential is the hallmark of great leadership. The best executives strive to demonstrate that their company could not be worth more were it managed by any other team or in any other way. Every day, they set out to make their company the very best that it can possibly be. Full potential is the ultimate “big, hairy, audacious goal.” It is an ever-escalating, stretching ambition. As a company moves closer to realizing its full potential, it amasses more capital and better talent. This expands its full potential and gives its leadership even more to prove. Full potential is not a target. It can never be achieved. It is an aspiration, a company’s unifying North Star—whether the company is struggling or doing well already but could do better. Although its attainment is elusive, the quest for full potential is worthy and inspiring. It sets a high bar for everyone in the organization, from senior management to the front line. The quest encourages everyone to do their very best—from bringing top-notch products and services to market, to managing operations as efficiently and effectively as feasible, to delighting every customer with the best experience imaginable, every day. The pursuit of full potential is not for the faint of heart. It takes a willingness to question every facet of a company, from its strategy to its operations, organization, and finances. It requires relentless prioritization, maniacal focus, and the fortitude to make tough choices. And it demands that the entire leadership team march in the same direction, with locked arms, their sights set on delivering breakthrough performance. Most companies are unwilling to take this on. So they plod along, settling for good performance rather than striving for the extraordinary. For companies willing to embark on the quest, however, the rewards are substantial. Our research finds that the top quartile of the largest 2,100 public companies by market cap generate operating margins 15 to 20 percentage points higher than their peers, grow nearly twice as fast, and, consequently, generate annual shareholder returns roughly 20% to 25% higher than sector averages. These companies populate the lists of “most admired” and “best workplaces.” They set the standard for all other organizations. Over the last three decades, Bain & Company has supported many of the world’s best-known companies in their pursuit of full potential—efforts we call full-potential transformations. In our experience, three factors most distinguish full-potential transformations from other companywide turnarounds or restructuring efforts. The passion starts at the top All leaders set the level of performance that is acceptable (and unacceptable), given their company’s capabilities and assets. The best leaders raise the bar. They see what’s possible and encourage everyone to push for better performance, every day. These leaders may be pleased by their team’s achievements, but they are never satisfied with the organization’s results. As one CEO told me, “Great leaders hold their team’s nose to the grindstone as they raise their eyes to the horizon.” In our experience, aligned and focused leadership is the foundation for any quest for full potential. The transformation of Dell Technologies is a case in point. After taking the PC maker private in 2013, Michael Dell focused his leadership team on building a technology powerhouse. Dell rebuilt its market leadership in commercial PCs and servers. And the acquisition of EMC in 2016 established Dell as a leader in storage, networking, and other critical enterprise technology businesses. In just five years, Dell Technologies’ profitability soared and its market value increased more than sixfold. Today, leadership continues to push, striving to achieve even more, even faster. The work is holistic and cross-functional Producing the best possible results at any company never comes from fixing a single, discrete problem or improving a single function. Companies fall short for many reasons. Their strategy may be out of step with market shifts or competitive assaults. Their organizations may be bloated and slow. Their operations may underleverage new technologies and processes. Or, just as likely, everything at the company is fine and delivering good results; it’s just that it could be even better. An integrated and cross-functional approach means every business and function is stretched; everything is on the table. The holistic nature of transformation means that the quest for full potential is a team sport. Every member of the team plays a critical role in ensuring that the organization’s resources are put to their very best and highest-value use. The team must be aligned in its approach and consistent in its communications. A strong CEO or CFO can be an effective catalyst to help spark a turnaround or guide a restructuring. But it takes a team to reach—or attempt to reach—full potential. Adobe’s transformation relied on this cross-functional, team-based approach. For most of its history, Adobe was primarily a software company, focused on applications for creative professionals. Starting in the early 2000s and under current CEO Shantanu Narayen, the company has moved beyond its core creative and document management software into digital experiences, marketing analytics, commerce platforms, and other services. In its core software business, Adobe fundamentally changed its business model, moving from the sale of packaged software to cloud subscriptions. This transformation required coordination and cooperation across every function—from software engineering to marketing, sales, and even finance. Working cross-functionally, Adobe leadership created a SaaS and digital technology powerhouse, with 27% of sales coming from digital experiences and other growth areas, according to Innosight, and the company’s stock price soaring to new heights. Transformation is a journey, not a destination The quest for full potential often leads a company to reach milestones it might never otherwise have considered possible. As one CEO used to tell his team, “There is always a better alternative, we just haven’t thought of it yet. Our job is to keep everyone exploring new and potentially better options.” The insatiable desire to be better tomorrow than an organization is today is at the heart of any full-potential transformation. John Deere’s transformation, from a farm equipment manufacturer to a farm management company focused on helping farmers increase productivity, illustrates how the journey itself can inspire creative thinking and great results. Several years ago, leadership at Deere recognized that productive farms require more than state-of-the-art equipment. Farmers need information about future weather conditions, access to leading-edge thinking on seed plantation, and greater control over all facets of the farm. So Deere partnered with weather services to provide better forecasts. The company hired data scientists to analyze soil, temperature, moisture, and other data to develop algorithms that would help farmers manage crop yields. And Deere joined forces with telecommunications companies to allow farmers to put chips and sensors into irrigation systems to maintain proper soil moisture levels. Although dramatic in themselves, these moves are just the initial steps in John Deere’s transformation—steps leadership might never have considered taking had the company not set out on the quest for full potential. Becoming the best one can be is a bold ambition. Companies that have pursued their full potential and transformed their organizations in the process have seen extraordinary results. We would encourage more executives to lead the charge for full potential at their own companies. There is no more rewarding quest.

An obsession with reaching full potential is the hallmark of great leadership. The best executives strive to demonstrate that their company could not be worth more were it managed by any other team or in any other way. Every day, they set out to make their company the very best that it can possibly be.

Full potential is the ultimate “big, hairy, audacious goal.” It is an ever-escalating, stretching ambition. As a company moves closer to realizing its full potential, it amasses more capital and better talent. This expands its full potential and gives its leadership even more to prove. Full potential is not a target. It can never be achieved. It is an aspiration, a company’s unifying North Star—whether the company is struggling or doing well already but could do better.

Although its attainment is elusive, the quest for full potential is worthy and inspiring. It sets a high bar for everyone in the organization, from senior management to the front line. The quest encourages everyone to do their very best—from bringing top-notch products and services to market, to managing operations as efficiently and effectively as feasible, to delighting every customer with the best experience imaginable, every day.

The pursuit of full potential is not for the faint of heart. It takes a willingness to question every facet of a company, from its strategy to its operations, organization, and finances. It requires relentless prioritization, maniacal focus, and the fortitude to make tough choices. And it demands that the entire leadership team march in the same direction, with locked arms, their sights set on delivering breakthrough performance.

Most companies are unwilling to take this on. So they plod along, settling for good performance rather than striving for the extraordinary. For companies willing to embark on the quest, however, the rewards are substantial. Our research finds that the top quartile of the largest 2,100 public companies by market cap generate operating margins 15 to 20 percentage points higher than their peers, grow nearly twice as fast, and, consequently, generate annual shareholder returns roughly 20% to 25% higher than sector averages. These companies populate the lists of “most admired” and “best workplaces.” They set the standard for all other organizations.

Over the last three decades, Bain & Company has supported many of the world’s best-known companies in their pursuit of full potential—efforts we call full-potential transformations. In our experience, three factors most distinguish full-potential transformations from other companywide turnarounds or restructuring efforts.

The passion starts at the top

All leaders set the level of performance that is acceptable (and unacceptable), given their company’s capabilities and assets. The best leaders raise the bar. They see what’s possible and encourage everyone to push for better performance, every day. These leaders may be pleased by their team’s achievements, but they are never satisfied with the organization’s results. As one CEO told me, “Great leaders hold their team’s nose to the grindstone as they raise their eyes to the horizon.” In our experience, aligned and focused leadership is the foundation for any quest for full potential.

The transformation of Dell Technologies is a case in point. After taking the PC maker private in 2013, Michael Dell focused his leadership team on building a technology powerhouse. Dell rebuilt its market leadership in commercial PCs and servers. And the acquisition of EMC in 2016 established Dell as a leader in storage, networking, and other critical enterprise technology businesses. In just five years, Dell Technologies’ profitability soared and its market value increased more than sixfold. Today, leadership continues to push, striving to achieve even more, even faster.

The work is holistic and cross-functional

Producing the best possible results at any company never comes from fixing a single, discrete problem or improving a single function. Companies fall short for many reasons. Their strategy may be out of step with market shifts or competitive assaults. Their organizations may be bloated and slow. Their operations may underleverage new technologies and processes. Or, just as likely, everything at the company is fine and delivering good results; it’s just that it could be even better. An integrated and cross-functional approach means every business and function is stretched; everything is on the table.

The holistic nature of transformation means that the quest for full potential is a team sport. Every member of the team plays a critical role in ensuring that the organization’s resources are put to their very best and highest-value use. The team must be aligned in its approach and consistent in its communications. A strong CEO or CFO can be an effective catalyst to help spark a turnaround or guide a restructuring. But it takes a team to reach—or attempt to reach—full potential.

Adobe’s transformation relied on this cross-functional, team-based approach. For most of its history, Adobe was primarily a software company, focused on applications for creative professionals. Starting in the early 2000s and under current CEO Shantanu Narayen, the company has moved beyond its core creative and document management software into digital experiences, marketing analytics, commerce platforms, and other services. In its core software business, Adobe fundamentally changed its business model, moving from the sale of packaged software to cloud subscriptions. This transformation required coordination and cooperation across every function—from software engineering to marketing, sales, and even finance. Working cross-functionally, Adobe leadership created a SaaS and digital technology powerhouse, with 27% of sales coming from digital experiences and other growth areas, according to Innosight, and the company’s stock price soaring to new heights.

Transformation is a journey, not a destination

The quest for full potential often leads a company to reach milestones it might never otherwise have considered possible. As one CEO used to tell his team, “There is always a better alternative, we just haven’t thought of it yet. Our job is to keep everyone exploring new and potentially better options.” The insatiable desire to be better tomorrow than an organization is today is at the heart of any full-potential transformation.

John Deere’s transformation, from a farm equipment manufacturer to a farm management company focused on helping farmers increase productivity, illustrates how the journey itself can inspire creative thinking and great results. Several years ago, leadership at Deere recognized that productive farms require more than state-of-the-art equipment. Farmers need information about future weather conditions, access to leading-edge thinking on seed plantation, and greater control over all facets of the farm. So Deere partnered with weather services to provide better forecasts. The company hired data scientists to analyze soil, temperature, moisture, and other data to develop algorithms that would help farmers manage crop yields. And Deere joined forces with telecommunications companies to allow farmers to put chips and sensors into irrigation systems to maintain proper soil moisture levels. Although dramatic in themselves, these moves are just the initial steps in John Deere’s transformation—steps leadership might never have considered taking had the company not set out on the quest for full potential.

Becoming the best one can be is a bold ambition. Companies that have pursued their full potential and transformed their organizations in the process have seen extraordinary results. We would encourage more executives to lead the charge for full potential at their own companies. There is no more rewarding quest.