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Unlock Profitable Growth: Secrets of High-Performance Companies

Companies often believe they must choose between pursuing growth or protecting profits, thinking the two goals are at odds. However, new research on extraordinary growth performers debunks this resoundingly. [Link to the original article included at the end of the of this article].

The analysis found that one in five publicly traded companies were able to double their revenues every five years while also increasing profits in parallel. These "growth champions" saw an average 20%(2) annual profit growth rate, compared to less than 9% for their peers.

The data reveals a strong 0.95(2) correlation between revenue growth and profit growth for these elite companies. Far from growth being a profit-killer through ballooning costs, the most successful firms were able to leverage scale benefits and operational efficiencies to expand both the top and bottom lines in tandem.

So how did they pull off this seeming magic trick of having it all?

Growth champions employed a variety of tactics:

  • First, they unleashed the full potential of digital technologies and data analytics to streamline processes and enhance capabilities across pricing, marketing, operations and decision-making. Around 40%(2) of growth champions turbocharged performance through ambitious digital transformations. This MIT Sloan Management Review article offers a roadmap for digital transformation, a key driver of growth for the "growth champions"

  • They also dynamically reallocated resources with an agile mindset. Whether repositioning for faster-growing segments, doubling down on underpenetrated geographies, or prioritizing new channels like e-commerce, growth champions constantly optimized where they invested. For additional insights on how to foster a culture that develops agile mind set check this article.

  • Crucially, these firms developed and empowered next-generation leadership depth across their organizations. With strong leaders at all levels, they could execute more nimbly while freeing up executive bandwidth for bold growth initiatives.

  • But growth champions didn't stop at fortifying the core business. They simultaneously pursued aggressive moves to diversify into new arenas through adjacent launches, creating breakout businesses, global expansion, and acquisitive growth. These new engines stoked future growth while profit discipline paid off in the present.

The research shatters the conventional belief that companies must pick growth or profit. The extraordinary winners grew their profit pools by expanding revenues - powered by digital mastery, operational agility, leadership strength, and diversification into new frontiers.

For companies ambitious enough to rewrite the tradeoff rules, outsized rewards await through the simultaneous multipliers of profit and growth working in virtuous lockstep. You really can have it all.

Don't believe growth comes at the expense of profits. Don't neglect digital transformation.Don't maintain static resourcing and leadership. Don't take an ingrown mindset. Don't play it too safe with your core business.

More resources:

  1. Unlocking growth: The imperative for every business- This McKinsey report delves deeper into the concept of profitable growth, outlining various frameworks and approaches used by successful companies.

  2. Achieving extraordinary growth: Myths and realities


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