Courageous growth: Six strategies for continuous growth outperformance

Weekly Business Insights from Top Ten Business Magazines

Week 321 | Strategy & Business Model Section | 1

Extractive summaries and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Since September 2017 | Week 321 | November 3-9, 2023

Courageous growth: Six strategies for continuous growth outperformance

By Matt Banholzer | McKinsey & Company | October 23, 2023

Extractive Summary of the Article | Listen

Companies that err on the side of caution, especially during turbulent times, may survive to see another day but often fail to achieve their full growth potential. Given the historic disruptions of the past five years, it’s little wonder that fewer than one in four companies analyzed for this research outpaced their industry peers on revenue and profit growth. What sets these continuous growth outperformers apart?  In a word, courage.

This latest installment in McKinsey landmark research series for CEOs who explicitly choose growth by setting an aspirational mindset and culture, activating pathways with the ten rules of growth, and executing with excellence offers six key strategies for leaders who aspire to reach the growth pinnacle of their industries and stay there.

1. Build an innovation culture and mindset.  By investments in R&D, digital capabilities, analytics, and AI.  They talk about innovation on earnings calls at twice the rate of their peers, convey achievable aspirations to employees, set clear targets, and foster a culture that is not afraid to take risks.
2. Commit to sustainable, inclusive growth.  Pursuing ESG goals may not feel like a priority when budgets are tight, and research shows that strong ESG scores won’t compensate for weak fundamentals. However, “triple outperformers” that grow revenues and profits while improving sustainability and ESG scores are better positioned than other outperformers to reach peak growth performance.
3. Grow your core with data, analytics, and AI.  Growth begins with the core. Growth outperformers accelerate core growth through a robust capability-building program that energizes people and fundamentally changes how work gets done.  These companies devote more resources than their peers to boosting sales and marketing productivity through digital-led transformations, analytics, and AI that have clear customer use cases and robust business cases. They courageously invest in people, processes, and innovative technologies to create what the authors call an “institutional superpower”—functional capabilities that enable a company to gain and maintain an edge over competitors.
4. Expand into right-to-win businesses.  C-suite leaders who pursue adjacent businesses where they have a “right-to-win” by leveraging unique capabilities and customer or value chain connections position their companies to generate the strongest shareholder returns.
5. Shrink to grow when necessary.  For some companies, the journey to growth outperformance starts with getting smaller. Companies may choose to spin off a business because its fundamentals do not complement the core business or the trajectory of market dynamics suggests divesting.  No matter the underlying rationale, the strategy of shrinking to grow requires a disciplined approach to how resources—both financial and people—are allocated and a supporting operating model that enables a successful transition from spin-off to a higher growth future. 
6. Mobilize people to capture value quickly.  Outperforming CEOs not only envision ambitious growth transformations, but they also mobilize employees from the C-suite to the front lines, building skills and capabilities to realize value quickly.  These companies foster bold mindsets and create appropriate strategies to determine at the outset which growth pathways have the greatest value-creating potential. They mobilize employees and instill ownership by investing in building their skills and deepening their functional expertise with a focus on customers and the external ecosystem. 

3 key takeaways from the article

1. Companies that err on the side of caution, especially during turbulent times, may survive to see another day but often fail to achieve their full growth potential. Given the historic disruptions of the past five years, it’s little wonder that fewer than one in four companies analyzed for this research outpaced their industry peers on revenue and profit growth. What sets these continuous growth outperformers apart?  In a word, courage.
2. McKinsey landmark research series for CEOs who explicitly choose growth offers six key strategies for leaders who aspire to reach the growth pinnacle of their industries and stay there.  These strategies are: build an innovation culture and mindset; commit to sustainable, inclusive growth; grow your core with data, analytics, and AI; expand into right-to-win businesses; shrink to grow when necessary, and mobilize people to capture value quickly.

Full Article

(Copyright)

Topics:  Strategy, Business Model, Growth