Double-Digit Growth in No-Growth Times

By: Adrian Slywotzky , Richard WiseWed Dec 19, 2007 at 12:40 AM

From the book How to Grow When Markets Don't by Adrian Slywotsky and Richard Wise with Karl Weber. Copyright 2003 by Mercer Management Consulting, Inc. Reprinted by permission of Warner Books, Inc., New York, NY. All rights reserved.

It's every company's goal -- but it's one that few manage to achieve. Here are strategies and tactics to make your company grow again, drawn from in-depth research on companies that have been registering double-digit growth for years. Tired of cutting costs and downsizing dreams? This is your wake-up call.

Sidebar: From Past to Future

Running a growth company means shifting your strategies from outmoded models of expansion to new ideas about customers and innovation. Here are a few of the required shifts.

From...	To...
Viewing your business through a product lens	Studying customers through an economic lens
Creating growth based on traditional tools (products, factories, personnel)	Creating growth based on hidden assets (relationships, market position, information)
Thinking of company size as a growth inhibitor	Thinking of company size as a multiplier of opportunities
Worrying that marginal growth will cannibalize your base business	Building growth initiatives that reinforce and strengthen your base
Relying on blockbusters to revolutionize your market	Developing incremental moves based on structured creativity and operating discipline
Scrambling to eke out margin points in a world of diminishing opportunity	Expanding horizons to include an arena that is 5 to 10 times larger than your traditional market space

Sidebar: The Trouble With Product Extensions

(And Other Old-Style Growth Strategies)

Traditional growth strategies are as important as ever. But for most companies, old-style moves will replace revenue and profits lost to commoditization and increased competition rather than fuel overall growth.

After years of brand extensions, for example, most spin-off products are serving ever-smaller niche markets. Between 1980 and 1998, the number of annual new food-product SKUs in the United States grew fivefold, to nearly 11,000. Similarly daunting statistics could be cited for cars and CDs, books and cosmetics. In a world of utter saturation, is anyone waiting with great anticipation for your next product extension? Not likely.

That's why most product extensions are producing increasingly small returns in terms of growth, especially as a percentage of total revenue. And the bigger your company, the bigger the growth opportunities that you need.

Product enhancement is another depleted avenue for new growth. In most industries, product breakthroughs are increasingly rare. As a result, competition is reduced to back-and-forth jockeying. Think of Nintendo and Sony, Intel and AMD, Boeing and Airbus, Avis and Hertz. The advantages gained in this tit-for-tat combat are invariably slender and fleeting. And because meaningful breakthroughs have become rare, customers are extending their product-replacement cycles. If the newest car, copier, or computer is only marginally better than last year's model, customers can wait longer to replace it. Sales growth shrinks even further.

The end result of these and other traditional growth strategies? Companies and their executives work harder and harder to generate smaller and smaller benefits.

Adrian Slywotzky (adrian.slywotzky@mercermc.com) and Richard Wise (rick.wise@mercermc.com) are vice presidents of Mercer Management Consulting Inc. and authors (with Karl Weber) of How to Grow When Markets Don't (Warner Books, 2003), from which this article is adapted. Slywotzky's last cover story for Fast Company was "How Digital Are You?" (February:March 1999). For more on their thinking, visit the Web (www.demandinnovation.com).