The granularity of growth

| Book Excerpt

"Just running faster on the market share treadmill will not secure the future of your company. With typical McKinsey rigor, [the authors show] that where you compete is even more important than how. A great corporate strategy book with very practical applications."
—Dick Anderson, former vice-chairman, BellSouth

Identifying opportunities on a granular level is key

We all know intuitively that growth is good. It creates healthy companies, opens up opportunities, and excites talent. Without it, companies cannot deliver the continuous increases in revenues and returns that shareholders demand.

But where does growth come from, especially in large, global companies where a reasonable growth rate can mean hundreds of millions, if not billions of dollars in additional revenues a year? That is the question that Patrick Viguerie and Sven Smit, directors at McKinsey & Company, and Mehrdad Baghai, managing director of Alchemy Growth Partners, answer in The Granularity Of Growth (Wiley, April 2008).

Unlike previous books based solely on anecdotal evidence, The Granularity Of Growth derives from the authors' three-year, in-depth, analysis of four hundred of the world's largest companies. One of their most surprising conclusions is that increased market-share is seldom a driver of growth. They contend, instead, that growth is driven by where a company chooses to compete: which market segments it participates in and how much merger-and-acquisition activity it pursues in these markets. The key is to focus on granularity, to breakdown big-picture strategy into its smallest relevant components.

To uncover pockets of opportunity, executives need to dig down to deeper levels of their businesses and organizations. In other words, they need to analyze their businesses at a more granular level. The seemingly counterintuitive findings in The Granularity Of Growth have important implications for management teams and the way they think about their companies' resources, not least of all, how they allocate their own time, as well as which businesses and market segments they chose to compete in.