While our uphill growers were diverse in their starting positions and strategic choices, they followed common disciplines to achieve valuable growth. Among our clients, we have found these lessons on the how of growth to apply nearly universally:
- The nature, number, and risk profile of growth initiatives cannot be set without a clear view of the gap to be closed. The start of any successful growth strategy requires an honest and rigorous assessment of the growth of all current initiatives, a clear and shared upside growth objective, and quantification of the gap between them over the plan horizon.
- The effort spent looking outward at the marketplace must be matched by the effort spent looking inward at a company’s unique advantages and capabilities. Hidden advantage can be missed. Known advantage may be overstated relative to traditional or maverick competitors. And today’s advantage can be rendered obsolete or even become a liability as consumers, customers, and industries change.
- To best leverage their advantage, companies must stretch their thinking. New perspectives can upend longstanding beliefs about “stagnant cores” or “distant adjacencies.” Often, faint signals lost in the noise of today’s core suggest opportunities. And unattractive adjacencies can become attractive when paired with an acquired capability, or when their collateral value in reinforcing the core is considered.
- For many companies, finding growth ideas is less difficult than focusing on the ones that matter. We like to ask three questions of all growth ideas: What is the size of the prize? What is our right to win? And what is the path to success? A strong business case is built on these three questions, and a strong strategy is built on a cohesive, qualified set of business cases.
Above and across all of these disciplines, one observation recurs among valuable growers: they pursue growth in the right order. They first earn the right to grow through operational efficiencies and the cultivation of advantage in the core business—whether that advantage comes from strong brands, cost control, or better customer insight. And as they pursue growth, they bring the same creativity and discipline to funding that growth through concurrent operational and cost initiatives. Repeatedly, our breakout, value-creating growers demonstrated the ability to hold or expand margins as they grew.
Even when you have a growth strategy that is clear in ambition, creative in ideation, discriminating in investment, and supported with leadership and funding, two hurdles remain.
Internally, the operational effectiveness that earns a company the right to grow can often restrain growth. Strong operators fight waste, avoid uncertainty, concentrate on the near term, and replicate past success. But breakthrough growth frequently requires a tolerance for experimentation and a departure from past playbooks. Shifting to a growth mind-set requires doing some things differently, without degrading the core and its foundational advantages. This balancing act, whether achieved by luck or design, explains the success of most of our breakout growers. Operationally strong incumbents can make moves to redefine their business, create distinct attack structures, and gain needed capabilities through partnerships, new hires, or acquisitions. Better to bet on these than on luck.
Externally, building credibility with investors about growth investments, especially their risk profile and speed of payback, is a critical enabler of breakout growth. Growth strategies require capital and don’t pay off immediately. Successful migration toward an investor base that embraces the growth strategy usually requires a clear medium-term roadmap, several quarters of transparent communication, and “doing what we said we would do.” Most of all, companies need to keep their investor messaging realistic, talking candidly about the drivers of performance and returns.
As with most things worthwhile and difficult, valuable growth has its reward. Organizations are strengthened, share price responds, and a virtuous circle is initiated in which expansion creates fuel for further expansion. Across companies that get there, we see diversity but not randomness. There are patterns of investment keyed to starting position, employment of both short- and long-term growth levers, and equal attention to external change and internal advantage. Players that master these disciplines can, across every industry, grow when the growing gets tough.
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