The choice: to grow or not to grow

Strategy & Leadership

ISSN: 1087-8572

Article publication date: 1 February 2004

162

Citation

Gorrell, C. (2004), "The choice: to grow or not to grow", Strategy & Leadership, Vol. 32 No. 1. https://doi.org/10.1108/sl.2004.26132aae.001

Publisher

:

Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited


The choice: to grow or not to grow

Catherine Gorrell has 30 years of experience advising corporate management both as an internal and external advisor. Currently, she heads FORMAC, a consultancy in Dallas, TX. She is a contributing editor of Strategy & Leadership

Double-Digit Growth: How Great Companies Achieve It – No Matter WhatMichael TreacyPublished by Portfolio, 2003, 214 pp.

In his opening declaration, Michael Treacy challenges conventional wisdom about the health of a number of stars of the Fortune 500 and Fortune Global 500 such as IBM, Revlon, Gateway, Proctor & Gamble, AT&T, Motorola, Sun, and Caterpillar. Treacy, a former MIT professor who is now a full-time consultant, claims that many prominent corporations such as these are in fact either "in a comatose state of feeble growth, no growth, or actual shrinkage". His analysis of the situation: many blue chip companies in corporate North America, along with their counterparts in Asia and Europe, have fallen victim to no-growth paralysis. Their loss of the will to grow represents a serious threat to the health of the world business community, Treacy believes, because a company that is not growing is decaying.

Treacy contends that "growth management in many organizations is almost laughable". His diagnosis: they clearly lack the tools – the disciplines – to tackle growth in a structured, systematic way. Simply put, management teams must begin with the acknowledgement that "double-digit growth is a choice – a choice that lies entirely within their power and no one else's. Growing is a choice to succeed and not growing is a choice to fail".

To treat growth paralysis, Treacy first asks, "Why is it so hard to grow?" His prescription: "... the way we think about and pursue business growth is fundamentally flawed and overdue for a dramatically new approach. To that end, I have identified a portfolio of five growth disciplines that, followed with care and dedication, can aid any enterprise in achieving steady, double digit growth year after year".

  1. 1.

    Base retention – keep the growth you have already developed by continuously and innovatively improving customer value. Customer value leadership is essential to avoid a value gap that attracts predatory competitors.

  2. 2.

    Share gain – take business from your competitors by creating value innovations in products and services targeted at ever-expanding definitions of customers' problems. Be a feisty competitor who takes market share from rivals, but be aware that stealing share from competitors is the hardest way to grow a business.

  3. 3.

    Market positioning – continually seek to position your business in market segments that are growing faster than the market as a whole. Don't miss a significant value shift in the marketplace. Staking out a strong position in a part of the market that is growing and ascend with the rising tide is the easiest way to grow a business.

  4. 4.

    Adjacent-market penetration – because markets mature and/or shift, target growth into adjacent markets; if you develop and acquire enough resources in enough aspects of a particular market, your potential for penetrating nearby markets is enormously enhanced.

  5. 5.

    New lines of business – stretch to enter new markets with new offerings. Because this is the most risky, proceed with extreme caution into new lines of business.

Throughout the book he shows how companies of every size and variety have learned to mix and match the disciplines to fit their individual needs. Using case studies from more than 20 companies – such as First Data Corporation, Dell Computers, and AT&T – to show what to do and, equally important, what not to do, Treacy demonstrates how these companies have (or have not) implemented the five disciplines to ensure growth.

Treacy further explains that these five disciplines should be grouped as multi-front strategies. That is why he uses the concept of a "portfolio" to describe his recommended techniques for growth. According to his research findings, the steady-growth companies have chosen a mix of the five disciplines to be their multi-front strategies. As a result, their growth will continue even if one front collapses.

Treacy further suggests the use of a four-point methodology to develop a strong growth portfolio:

  1. 1.

    Prioritization: make growth through innovation the top priority for every manager in the organization. Help them all understand that they are responsible for growth. Remember that most management teams have a capacity to focus on no more than three priorities, and current operating performance will always be one of these three. If double-digit growth is ever to happen, it must be one of the other two.

  2. 2.

    Perspective: start looking at your business through the lens of the growth portfolio. That means you must measure performance for the past five years in each of the five growth disciplines, and set stretch objectives for growth in each of them. Most management teams don't really understand their growth history. When you assess this history in terms of how well the company has practiced the five disciplines of growth, you will discover basic truths about past performance, your company's strengths and weaknesses, and where to focus energy for growth.

  3. 3.

    People: to increase your managers' capacity to grow, make significant investments in internal development and targeted recruiting. This will be the deciding factor in the success or failure of double-digit growth. Accelerating growth adds to the demands on management, and most management teams will not be able to grow at a double-digit pace unless they are reinforced with coaching and fresh talent.

  4. 4.

    Plans: build growth plans for each of your business units that will prepare them to exceed the stretch objectives you have already set. Each unit's plan will balance its growth portfolio in a different way to fit the realities of its individual market.

So the Treacy growth formula is: five growth disciplines, four underlying principles, key selection criteria for factoring in market and internal forces, plus the concept of mixing the disciplines into a portfolio of actions.

Treacy makes convincing points throughout the book and supports them with numerous examples of successes and failures. His mini case studies effectively illustrate the points being presented.

However, before adopting this book as your action plan, consider first whether its conclusions and prescriptions have been properly tested in randomly selected trials. In short, how much of Treacy's premises are based on science and how much are based on his anecdotal experience? If the intent of this book is to stimulate management teams to question their current assumptions about growth, to reassess their past practices, and to reinvigorate their choice for success, then it should definitely be read. But keep in mind that Treacy's book is more of an inspirational sermon than a scientific treatise. Read it for what it is and move on.

Related articles