Growth Strategies

Growth Strategies

It is not enough to be profitable. Companies must also grow. In fact, if you don’t grow, you won’t be profitable for long. Staying with the same customers, products, and markets is a recipe for disaster.

Investors want to see a growing top line; employees want to have more advancement opportunities; and distributors want to serve a growing company. Growth is energizing. An old maxim says: “If you stand still, you get shot.”

Companies often excuse their lack of growth by saying that they are in a mature market. All they are expressing is a lack of imagination. Larry Bossidy, CEO of Honeywell, observed: “There’s no such thing as a mature market. We need mature executives who can find ways to grow.... Growth is a mind-set.”

If the car market was mature, how come the minivan sent Chrysler into a growth spurt? If the steel industry is mature, how do we explain Nucor? If Sears thought that there was no growth in retailing, how do we explain Wal-Mart or Home Depot?


Companies have tried several paths to growth: cost and price cutting, aggressive price increases, international expansion, acquisition, and new products. Each has problems. Price cuts are usually matched and neutralized. Price increases are difficult to pass on during sluggish economic times.

Most international markets are now highly competitive or protected. Company acquisitions are expensive and have not proven very profitable. And the numbers of new product winners are few.

What companies fail to realize is that their markets are rarely fully penetrated. All markets consist of segments and niches. American Express recognized this and created the Corporate Card, the Gold Card, and the Platinum Card. To grow, a company can make four segment moves:

1. Move into adjacent segments. Nike’s first success was making superior running shoes for serious runners. Later it moved into shoes for basketball, tennis, and football. Still later, it moved into aerobic shoes.
2. Do a finer segmentation. Nike found that it could segment the basketball shoe market into finer segments: shoes for the aggressive player, the high-jumping player, and so on.
3. Skip into new segments (categories). Nike moved into selling clothing tied to the various sports.
4. Resegment the whole market. Nike’s competitor, Reebok, resegmented the market by introducing stylish shoes for the leisure market that could be worn every day without a sport in mind.

working capital.

They have spent much less time thinking about how to use a combination of relationships, market position, networks, and information—their hidden assets—to create value for customers and growth for investors.”