How successful companies challenge conventional wisdom about the limits to growth

Vivek Kapur (Partner in the Strategy and Change practice of IBM Business Consulting Services (BCS) and leads its Global Growth Initiative (vivek.kapur@us.ibm.com).)
Jeffere Ferris (Consultant within the Strategy and Change practice at IBM BCS (jeffere.ferris@us.ibm.com).)
John Juliano (Strategy & operations consultant with IBM BCS (john.juliano@us.ibm.com).)
Saul J. Berman (Partner at IBM BCS, and is also the strategy and change leader for IBM's Global Media & Entertainment industry (saul.berman@us.ibm.com). More information on this IBM research is available at www.ibm.com/iibv)

Strategy & Leadership

ISSN: 1087-8572

Publication date: 1 December 2005

Abstract

Purpose

Growth is the top priority on the CEO agenda, but the question they confront is “What factors constrain growth?” And, “How do successful companies drive growth?”

Design/methodology/approach

IBM Institute for Business Value conducted a global study that focused on three questions: Who are the successful growers and what patterns are associated with them? What do successful growers do differently? How can other companies apply what they do?

Findings

The major finding were: that limits to growth are often self‐imposed and, as such, can be overcome; firms with the will to be successful growers can break free of perceived constraints related to size, industry boundaries and geographic neighborhood; and despite the widely held belief that mergers and acquisitions inherently destroy value for the acquirer, companies that learn to become successful growers use M&A strategies effectively.

Research limitations/implications

Looking at 1,238 Global S&P 1200 companies, the IBM team analyzed the patterns of revenue growth and shareholder value creation over the decade, segmenting results by four component geographies and 18 industry groups. It selected three industries (consumer products, telecom services and electronics) for detailed assessment, developing cases studies for about 20 companies in each industry, picked to represent a range of successful and unsuccessful results.

Practical implications

Winning the growth game requires companies to excel in three vital areas: course, capability and conviction. Successful growers set the right growth direction – the course – by forming a clear point of view on the future, evolving the product‐market portfolio without being limited by history, building a competitive model to win and pursuing reinforcing initiatives to sustain growth. They truly understand their capabilities – based on realistic assessments of their strengths and limitations – and evolve their operational model to support the growth strategy. Finally, while many companies develop excellent plans, truly successful growers build organization‐wide conviction that translates intent into action for everyone from top leaders to front line managers.

Originality/value

The message is clear: neighborhood is not destiny. Executives have more room to be ambitious than they tend to believe. Winning companies set ambitious growth plans regardless of industry or geographic “limits.” They aim for targets above and beyond what they and their peers typically expect.

Keywords

Citation

Kapur, V., Ferris, J., Juliano, J. and Berman, S. (2005), "How successful companies challenge conventional wisdom about the limits to growth", Strategy & Leadership, Vol. 33 No. 6, pp. 5-12. https://doi.org/10.1108/10878570510631602

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Publisher

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Emerald Group Publishing Limited

Copyright © 2005, Emerald Group Publishing Limited

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