Corporate leaders can be forgiven for taking an increasingly cautious view of the future: growth in the developed markets remains slow while growth in the emerging markets is falling from a once-great height. But those who fail to pursue top-line growth and, instead, focus on cost cutting to improve the bottom line risk falling behind more enterprising competitors. Around the world, and in every industry, sector, and business, there are companies managing to grow fast and to build an enduring lead over their rivals.
BCG’s research shows that the gap in operating margin between corporations in the top-performing quartile (companies achieving high growth and high operating margins) and those in the bottom quartile has widened dramatically as the global economy has become ever more volatile and unpredictable. In 1950, the gap was 13 percent. Sixty years later, it was 59 percent.
What is the secret of the fast-growing companies?
In essence, leaders at these organizations understand that there is a growth imperative. This drives them forward. They see opportunities everywhere, pursue them relentlessly, and never think that their job is done. For these leaders, there is always more commercial space to be conquered. There are always more holes than cheese.
Why Growth Is Imperative
In the boom years, before the financial crisis struck in 2008, companies could succeed simply by riding market growth. Now, however, CEOs have no such luxury. Competition is more intense than ever—not least because global challenger companies from emerging markets have burst on the scene just as global growth has slowed. The presiding law is Darwinian natural selection. You either grow or you die.
Growth itself is not a strategy, however, and it cannot be the sole focus of any company. As Edward Abbey, an American essayist, warned, “growth for the sake of growth is the ideology of the cancer cell.” Before anything else, companies must win what we call the “right” to grow—and this means building a sound operational foundation. more
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