Guidelines for Expansion or Progression

Growth Hacks for Thriving Businesses

Strong growth is vital for business survival. Over the past few years, growth has been sluggish due to the pandemic, global economic slowdown, geopolitical instability, and inflation.

To navigate these challenging trends, business leaders must adopt a comprehensive approach that includes:

A bold, forward-thinking mindset
The right organizational infrastructure
A consistent set of growth initiatives

A study reveals that companies aiming to outpace their competitors in their industry should focus on ten crucial factors:

Establish a competitive advantage
Embrace market trends
Avoid being behind the curve
Bolster your core business
Explore beyond the core
Grow where you excel
Be a hometown hero
Expand globally if you've conquered locally
Acquire systematically
Prune for growth

Let's delve deeper into these factors:

Establish a Competitive Advantage

Companies with high returns on invested capital typically have a business model based on competitive advantage. This draws in more capital, leading to faster growth and better returns.

Embrace Market Trends

To capitalize on fast-growing market segments, companies should either increase or maintain their exposure. If already in a growth market, they should invest aggressively. Companies facing uncertainty shouldallocate resources to fast-growing segments.

Avoid Being a Straggle

Growing faster than the industry average signals a robust business model. Companies able to capture market share often benefit from better growth and returns.

Amplify Your Core Business

Identify your primary industry and pour resources into it. Secondary industries are essential as they contribute significantly to revenue, and new industries could be future growth drivers. However, focus primarily on strengthening your core industry.

Look Beyond the Core

While growth is often primarily driven by the core industry, secondary and new industries can be valuable. Secondary industries may have synergies with the core industry in terms of inputs or outputs. Diversifying into new industries prepares companies for future growth opportunities.

Grow Where You Shine

When expanding into new industries, focus on adjacent segments where your expertise and advantages can be put to best use. This allows companies to generate optimal value from their existing resources.

Be a Local Star

Businesses should prioritize their local market. A robust local presence can offset slow growth in other territories, especially in a slow-growing market.

Expand Globally, if You're Best-in-Class

Companies well-established in their local markets can look to expand internationally to counter slow growth at home. New international markets offer faster growth opportunities. To flourish abroad, though, companies need a competitive edge relevant across territories.

Acquire strategically

Mergers and acquisitions are part of a growth strategy toolkit. Systematic acquisition, or buying many small companies over time, can build local expertise and market savvy while protecting against hefty losses.

Prune for Growth

Periodically divest slow-growing parts of your product line and reinvest the funds in new growth areas to keep the growth engine running.

Business growth is an intricate puzzle, and mastering these ten rules of growth is just one piece. Begin with a clear growth target, develop a consistent growth strategy, and put in place capabilities and processes to execute flawlessly.

The Ten Rules of Growth

By Chris Bradley, Rebecca Doherty, Nicholas Northcote, and Tido Roeder

McK 2022/08

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In the challenging business climate, forward-thinking companies could harness the power of artificial intelligence (AI) to enhance their financial growth. By integrating AI in their investing strategies, businesses can leverage data-driven insights to identify lucrative opportunities in the market.

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Guidelines for Expansion or Progression