Corporate Growth Efforts Lead to Waste, Admit Execs

A recent Booz & Company survey of over 1,800 executives around the globe confirms the importance of — and difficulty with — growth. For 41% of executives, growth is the most significant challenge their company faces.

 

But less than half of executives (48%) actually believe their strategy will lead to success. In fact, executives concur that they’re chasing too many conflicting opportunities (64%) and that growth efforts lead to waste (81%).

 

“Too many companies pursue growth via acquisitions, or adjacent markets, or expansion into emerging markets. They look everywhere but inside the company. The companies that do grow sustainably do so because they invest in a few differentiating capabilities and leverage what is uniquely strong about the company to grow where they will win,” says Booz & Company Partner Paul Leinwand.

 

Leinwand adds that companies and their leaders feel caught between delivering the required growth performance and building a strategy focused around the company’s unique strengths. "In actuality, doubling down on what the company’s great at is the best enabler for the growth they need,” he notes.

 

Booz & Company Managing Director Cesare Mainardi adds that growth must not be the first objective. "When it is, companies chase any opportunity that has short-term revenue potential, independent of whether they can profitably and sustainably win in that market. Building a coherent company, one differentiated through what it does better than anyone else, should be the prime objective; that approach leads directly to growth and performance.”

 

Leinwand and Mainardi believe that an effective growth strategy has to start inside the company. Executives can’t just look outside the company at where the money is, or where the perceived market opportunity is.

 

Executives have to ask whether the company actually has a right to get it. Do they have the capabilities to win?

 

They also adds that good leadership means building a company that's competitively advantaged. “They need to dedicate resources to build up the capabilities that really matter. Because companies with distinctive capabilities will create value — in good times and in bad times,” says Leinwand.

 

Leaders must also force their organisations to be focused and disciplined. “It’s very difficult within a company to commit to a few things that make a difference, and then tell everybody else that they're just not integral to the success of the firm over time,” says Mainardi.

“But that’s what has to happen if companies are to gain focus and achieve strong top-line growth.”

 

 

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