How Great Companies Grow No Matter What
Every business demands growth, and double-digit growth is a dream for every executive who presides over a company that is seeing lackluster results every quarter. According to management expert Michael Treacy, these dreams can become a reality if managers follow a few basic principles and build solid portfolios of growth initiatives. In Double-Digit Growth, Treacy writes that corporate America's systemic growth problem is a result of constant denial, and it does not have to be that way.
Treacy writes that the goal of his book is to provide a simple, practical map that will help companies navigate their way toward substantial, sustainable growth. They need a guide, he explains, because his research has shown him that most senior managers do not have the skills or resources they need to meet the ample challenges that block their way toward healthy growth.
But some do have what it takes. Numerous companies have been able to sustain growth in the slow economy that has loomed for the past several years, including Harley Davidson, Starbucks, and Wal-Mart. Even much smaller companies, such as Paychex, Oshkosh Truck, and the 120-year-old carpet manufacturer Mohawk Industries have been able to achieve double-digit gains in revenues, gross profits and net income for many years. By looking at these and many other companies that have been able to sustain growth strategies even while the market has stopped growing, Treacy has been able to identify a single characteristic that has set them apart: a solid portfolio of growth initiatives that is built on at least a few of the five distinct disciplines he describes throughout Double-Digit Growth.
Five Disciplines of Sustained Growth
The five disciplines that Treacy recommends are:
- Retain your customer base. Keep the growth you have already earned by enticing customers into complex relationships that make it a hassle for them to switch to a competitor. Tailoring your products or services using the data you have gathered from your customers can also give you an advantage over those who aim to steal your customers away from you. Proactively managing customer defections can help you anticipate and pre-empt them. Bonding with customers wherever emotion is involved with an interaction is another great way to retain customers who might seek value elsewhere.
- Gain market share at the expense of your rivals. Give customers a reason to abandon another product or service for yours. Do what it takes to lower the switching costs. Treacy writes that pulling customers away from a competitor can be very difficult, so you must devote many resources to raiding its customer base. Blunting a competitor's incumbent advantages is one way to go, so higher value and quality are crucial. Buying a competitor is another way to do this.
- Exploit market position. Show up where growth is going to happen by spotting it early. This can be done by watching the industry for shifts in buying criteria, product or service innovations pulling new customers into a long-dormant segment, and population trends that produce more potential customers. You must be able to spot positioning opportunities to make the most of them. Continually using a systematic approach to managing the process can help.
- Invade adjacent markets. Before moving into a nearby market, decide whether it offers significant opportunities for long-term growth and profitability, determine whether you have an advantage over a competitor, and ensure you can match its standards of quality and value.
- Invest in new lines of business. Treacy writes that businesses taking this approach must never overpay for a new line of business, must find simple strategies instead of complex ones, and must partner with the new business by assessing its leadership team and its balance sheet.
Although a successful growth portfolio might not include all five of the disciplines Treacy describes, he writes that it must contain more than one - because only a balanced growth portfolio can keep an organization growing when the market shifts dramatically.
Why We Like This Book
Michael Treacy presents a multifront strategy for steady growth in simple and easy-to-follow terms, allowing business leaders to see how each principle can be applied to specific types of organizations or economic situations. His expertise shines as he clearly states his goal and backs it up with relevant case studies, experiences and numbers that illustrate the benefits of his plan. Double-Digit Growth presents bold explanations of what is troubling many companies, and without mincing words, points out the flaws of some with one hand while pointing the way toward sustained growth with the other.