How the Growth Outliers Do It

  • Reference: HBS-R1201J

  • Publication Date: Jul 4, 6

  • Source: HBSP (USA)

  • Type of Document: Article

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Description

Steady, predictable growth is what every big company strives for, and what investors prize above all else. McGrath set out to discover how many companies actually deliver. To meet her initial criteria, a company had to have a market capitalization of at least US$1 billion and to have grown by 5% each year over a five-year period. Only 8% of the companies in her sample of 4,793 qualified. When the five-year period was doubled, only 10 companies qualified--and of those, only five had grown both revenues and net income every year. The success of these "growth outliers" can't be explained by industry, company age or ownership structure, global location or economy (emerging versus developed). They do, however, share a lot of practices. For example, they diversify their portfolios with early, small bets, manage major resource allocations centrally, focus attention on culture and shared values, and hold on to their talent. Their practices add up to an intriguing, counterintuitive profile: Although they are nimble and adaptive, their leadership, strategy, and values are extraordinarily stable. The author concludes that this seeming paradox is a feature, not a bug: Stability is what enables these companies to innovate and to maintain steady growth.

Keywords

Business growth Innovation Organizational culture Resource allocation Resource management Revenue growth