Create a System to Grow Consistently

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Strategy & Business Model | 2

Create a System to Grow Consistently

By Paul Blase and Paul Leinwand | Harvard Business Review Magazine | March–April 2024 Issue

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Delivering sustained growth is one of the hardest things a company can do.  Some companies have cracked the code on sustained growth, however, while realizing the elusive goal of knowing precisely where next quarter’s revenue will come from.  The highest-performing organizations invested in a growth system, an integrated collection of capabilities and assets that drove both short-term and long-term growth.

This approach is fundamentally different from the way companies tend to manage growth. Most are stuck on a treadmill, searching for growth in places where they have no fundamental advantage (or, worse, are disadvantaged). To deliver consistent growth over time, companies must get off the treadmill, which invariably requires a big mindset shift: Leaders need to focus less on tactics for achieving short-term growth and more on building a fundamental engine of long-term growth.

The authors’ research shows that a growth system has the following five components:  

1. Define a compelling customer outcome. The foundation of a growth system is a differentiated and compelling customer offering—a clear, relevant, and unique promise that defines what you will deliver and to whom. 
2. Architect the right capabilities. Growth champions create highly specific blueprints that detail how all the capabilities of their growth system work together to create products, solutions, and services that deliver the desired customer outcomes. These blueprints are much like those for complex buildings, specifying all the resources, technology, data, and processes required to do the work. Growth champions invest heavily in these capabilities, taking resources from other places as necessary. 
3. Create the right operating model. To build the kind of integration necessary in a growth system, companies must rethink how they organize the most important parts of their businesses, setting up outcome-oriented, cross-functional teams with the right expertise.
4. Renew insights continuously. Companies that build these next-generation insights capabilities look for all opportunities to engage with and learn about their customers, from the ordering and delivery of products and services, to postsale interactions like warranty support. Growth-system companies use those insights to find the “white space” where opportunity lies, improve features, fine-tune service models, and understand what competitors are doing to capture mindshare and wallet share.
5. Measure return and reallocate investment. Growth champions allocate resources to capabilities that help them achieve differentiated customer outcomes, and they reinvest the profits in those resources. They also carefully measure the relationships between inputs (investments) and outputs (performance). 

So where to start? In studying companies that have successfully built elements of a growth system, the authors observed four behaviors that help create momentum. First, growth-system companies have the full support of the CEO, who is often the person instigating the work and who plays a vital role in getting companywide buy-in.  Second, they acknowledge that growth systems require a multiple-year journey to build and scale.  Third, these companies create a three- to five-year timetable, listing milestones and deliverables against the blueprint, and they inspire their teams to create the most-differentiated and -valuable capabilities to propel the system forward over the long term.

3 key takeaways from the article

1. Delivering sustained growth is one of the hardest things a company can do.  Some companies have cracked the code on sustained growth.  These organizations invested in a growth system, an integrated collection of capabilities and assets that drove both short-term and long-term growth.
2. Most are stuck on a treadmill, searching for growth in places where they have no fundamental advantage (or, worse, are disadvantaged). To deliver consistent growth over time, companies must get off the treadmill, which invariably requires a big mindset shift: Leaders need to focus less on tactics for achieving short-term growth and more on building a fundamental engine of long-term growth.
3. The growth system has the following five components:  define a compelling customer outcome, architect the right capabilities, create the right operating model, renew insights continuously, and measure return and reallocate investment.  No company has developed all five elements perfectly, but these companies have a keen sense of how to improve their growth system over time.

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Topics:  Strategy, Business Operational Model, Performance