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Wednesday, 04 March 2015 18:02

Ready Set Grow


The CEO is confronted with a dilemma:

The revenue and profits of his company’s existing businesses are rising slowly, and the businesses have already slashed their costs as much as they dare. Because their markets are mature, he knows that the company must grow if the share price is to increase, but acquisitions are expensive and risky. So he launches a slew of initiatives in areas with high growth potential and appoints some promising young managers to lead them. To ensure that the new ventures aren’t stifled, he has their managers report to a special growth committee headed by a trusted staff executive and locates them a safe distance from the established businesses.

Sound familiar? It should, because that story has played out at hundreds if not thousands of large and midsize companies over the past 20 to 30 years. But after working for, advising, and studying scores of companies, we have learned that this conventional wisdom about how best to pursue growth is a recipe for failure—which explains why most new businesses launched by established companies die, and why only a tiny fraction of companies around today, including major corporations, will be here in 25 years.

All too often CEOs and their senior teams see managing today’s earnings as their main job and don’t spend enough time on the pursuit of growth and building the kind of learning organization and culture that growth requires. They fail to identify specific policies and actions that only they can take to create the conditions for success and signal to the organization the seriousness of their commitment to growth. In this article we explore six common mistakes that executives make in this arena and offer guidelines for leading growth initiatives. (See the exhibit “How to Lead Growth Initiatives: Guidelines for CEOs.”) The approach we describe has created billions of dollars in new revenue and value for companies such as Alere, Cognizant, IBM, Johnson & Johnson, Medtronic, Procter & Gamble, and Unilever.

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