Companies that lack prudence Particularly in turbulent times, we often survive to see the next day but fail to reach our full growth potential. Given the historical turmoil of the past five years, it's no wonder that fewer than one in four of the companies we analyzed outperformed their peers in revenue and profit growth. What are the characteristics of these blue-chip companies that continue to grow?
In one word, it's courage.
The world goes from low inflation and a relatively calm business environment to being disrupted by the COVID-19 pandemic, generational high inflation, deepening geopolitical tensions, accelerating climate change, and the rise of climate change. The mettle of CEOs has certainly been tested in recent years as companies have moved into the environment. Generation AI. Our new research reveals that business leaders who had the courage to pursue and stick to full-cycle growth strategies during these challenging times led their organizations to outperform their business performance. I did.
In the latest installment of our groundbreaking research series for CEOs who clearly choose growth by establishing an ambitious mindset and culture, activating their path by following the 10 Rules of Growth, and executing with excellence. It offers six key strategies for leaders aiming to reach the pinnacle of growth. Continue the industry and stay there.
6 strategies to outperform growth
Multiple paths through bold investments deliver growth that outperforms performance.
Select a strategy to see details.
Companies that have braved these strategies have dominated the growth charts in recent years, helping executives create value and even reinvent their industries no matter what the global business environment faces. We have proven that we can indeed unlock significant growth opportunities that define
While growth priorities vary from company to company, these insights serve as a clarion call to leaders. Read more about our latest research, including profiles of the companies we have identified as Courageous Producers.
1. Build a culture and mindset of innovation
Superior innovation enables companies to outperform their peers.
To foster new sources of growth and outperform other best-performing companies, companies build a mindset and culture of innovation driven by investments in research and development, digital capabilities, analytics, and AI.
The best innovative companies are committed to innovation and have mastered its eight fundamentals. They talk about innovation on earnings calls twice as often as their peers, communicate achievable aspirations to their employees, set clear goals, and foster a culture that is unafraid to take risks.
2. Commit to sustainable and inclusive growth
“Triple Outperforming Companies” will drive strong growth.
If your budget is tight, pursuing ESG goals may not feel like a priority. Our research also shows that high ESG scores cannot compensate for weak fundamentals. However, “triple outperforming companies” that grow revenue and profits while improving sustainability and their ESG scores are better positioned to reach peak growth performance than other outperforming companies. .
From 2017 to 2021, when fewer than one in four companies achieved annual revenue growth of more than 10%, half of the Triple Outperformers achieved or exceeded that benchmark. It has exceeded that, proving that companies can not only do well by doing good, they can do better. their friends.
3. Grow your core with data, analytics, and AI
Companies that continually grow their core will win.
Growth starts at the core. Outperforming companies accelerate core growth through powerful capability-building programs that energize people and fundamentally change the way they work.
These companies are devoting more resources than their peers to driving sales and marketing productivity through digitally-driven transformation, analytics, and AI with clear customer use cases and a robust business case. . They are courageously investing in people, processes, and innovative technologies to create what we call “institutional superpowers”—the functional capabilities that enable companies to gain and maintain an advantage over their competitors. Masu.
4. Expansion to Right-to-Win business
Successful adjacency and breakout business moves create multiple value streams.
Complacency is the enemy of growth. That's why companies pursue adjacent and breakthrough opportunities. The hallmark of great companies is that they do so with insight.
Executives who leverage their unique capabilities and customer or value chain connections to pursue adjacent businesses with a “right to win” position their companies to generate the strongest shareholder returns.
Following these rationales can create value in a variety of ways. In our study of 274 industrial, technology, and communications companies, recent growth companies that successfully leveraged two or more rights rationales achieved 12 percent higher excess TSR growth compared to their peers. I found out that I did it.
5. Shrink and expand as needed
Net sales may drive future outperformance.
For some companies, the path to outperforming growth begins with downsizing. A company may choose to spin off a business because its fundamentals do not complement the core business or because market trends suggest a sale.
Whatever the underlying rationale, a strategy of downsizing to grow requires a disciplined approach to how resources, both financial and human, are allocated and the ability to move from spin-offs to higher growth in the future. A supporting operating model is required for a successful transition. Our research shows that companies that engage in dynamic portfolio management to regularly assess whether they are the best owners of their business are in high-growth areas that lack a competitive advantage. We found that companies that make acquisitions to jump into the market have a better growth track record than companies that make acquisitions to jump into the market.
6. Mobilize talent to quickly capture value
Employee ownership of growth initiatives drives performance.
High-performing CEOs not only envision ambitious growth transformations, but also mobilize employees from the C-suite to the front line, building the skills and capabilities to quickly deliver value.
These companies foster bold thinking and develop the right strategies to first determine which growth paths have the greatest potential for value creation. They mobilize employees and instill ownership by investing in building skills and deepening functional expertise with a focus on customers and the external ecosystem. If you can't develop talent internally, build talent acquisition to fill the gap.
We also create rigorous performance controls for both agile and traditional initiatives, establishing baselines and KPIs tied to performance objectives.
Successful transformation can build resiliency across the enterprise and ensure continued growth beyond performance. That's why executive leaders maintain a through-the-cycle mindset to guide and sustain their companies to peak growth performance, even when capital is scarce and the economic outlook is uncertain. Because sustained growth that outperforms performance doesn't happen by chance. It happens because executive leaders have the courage to make it happen.