The Granularity of Growth

THE SECOND PART OF the growth journey that we want to explore with you has to do with your growth direction. If you’ve decided to fire on more cylinders over time, you’ll have to shift your portfolio to some extent. The question then becomes where, how, and when to move. The mechanism you need to adopt is that of granular choice: allocating resources toward those businesses, countries, segments, customers, and products that have plenty of headroom for growth, and away from those that offer less potential. Moving may take time, but as we’ll show, it often pays off.

The task is daunting, but not impossible. If you can adopt a well-informed perspective on your growth, you can plan a compelling future growth direction. But how do you find out how your cylinders are performing and decide which ones to count on for future growth? How long might it take to move a cylinder from not firing to firing? How can you move the different parts of your business so that they each fire on more cylinders over time?

We’ll show how you can develop your cylinder-firing strategy in a way that both builds on your past performance and helps you realize your future potential. By the time you reach the end of part II, we hope you will have concluded that you can “choose” your growth direction—and that you might need to spend more of your time on choice than on execution.

• In chapter 5, “Firing on momentum,” we show that choosing where to compete and constructing a corresponding portfolio at a granular level can take five or more years. We explore the difference between catching a tailwind and creating fresh momentum in the marketplace. We also explain how the hazards of new market entry can be reduced through advance analysis.

• In chapter 6, “Firing on M&A,” we show that M&A is the best way to affect short-term growth and examine the way that companies can use advantage to pursue it. As an extreme example, we describe what it is about the operating methods of top private-equity firms that makes them such formidable acquirers.

• In chapter 7, “Firing on share gain,” we show that though this is a difficult area to execute well, companies that make bold choices can succeed—and it’s just as important to avoid misfiring on this cylinder. Although tactical actions can move the needle in the short term, reinventing the business model to gain market share will take some time to yield results.

• In chapter 8, “Mapping your growth direction,” we bring the insights about the three different cylinders together and show you how to test the robustness of your strategy over multiple time horizons.

• In chapter 9, “To move or not to move?” we look at the portfolio in the context of the growth cylinders. This reveals that companies in low-momentum businesses have been rewarded for portfolio moves both within and outside their core business, but that high-momentum companies should be cautious about venturing beyond the core.