Granularity of Growth
Overview
The challenges large companies face in driving and sustaining growth are significant. First there is the basic challenge of numbers: the bigger you are, the harder it is to achieve the next quantum of growth. Second, there is a problem of maturity. As companies mature, they often become less wired for growth and innovation tends to wane. The sheer size of the organization begins to produce inertia and growth rates decline.
Large company growth has long been an area of focus for McKinsey & Company. A decade ago this thinking was captured in The Alchemy of Growth with the introduction of the three horizon framework. Over the past three years, McKinsey has undertaken a new extensive study of large company growth to deepen its insight and support its clients. In The Granularity of Growth, the three horizon model is enhanced by integrating it with a more robust and granular understanding of the sources of revenue growth.
In The Granularity of Growth, the authors demonstrate a problem with the broad-brush way that many companies describe their business opportunities. Large companies in particular suffer from the tyranny of the aggregated and average view: "China is where the action is". "Aging will generate increased demand for healthcare". Although popular, these generalizations offer very little help to executives looking for meaningful growth opportunities. Instead, real winning plays can only emerge when companies take a much finer and more granular view of their market segments, their needs, and the capabilities required to serve them well.
The Granularity of Growth is divided in three parts, each devoted to one of the key decisions you need to take to drive and sustain granular growth at scale.
I Your growth ambition
Sustaining superior value creation in the long-run requires companies to choose either to grow or to go. For companies that choose to grow, The Granularity of Growth provides a new methodology that allows you to analyze and gain real insight into the sources of growth and your growth performance, enabling robust growth benchmarking relative to peers.
II Your growth direction
The book offers a rigorous basis for setting your growth strategy and deciding on growth initiatives in the short, medium and long terms. Moving your portfolio in pursuit of growth is more common and less risky than you think and is where real value is derived.
III Your growth architecture
To wire your organization for growth, you must enable it to make more granular growth choices while maintaining the benefits of scale. To achieve this, the book outlines an approach for ensuring your organizational model is consistent with your granular growth strategy.