Companies should rely on ten rules in mapping their path to sustainable, value-creating growth—but these rules don’t all affect returns in the same way, find senior partners Chris Bradley and Jill Zucker and coauthors. Looking at a data set of almost 1,600 companies, they learned that winning market share away from competitors indicates a superior business model, as does investing in a core industry or region.
Image description:
A clock-like graphic displays the relative impact on profitability of companies that adopt any of 10 trends or strategies for growth. Profitability was measured in multiples compared with the industry average, which shows that all of these trends or strategies—such as priming the core business for growth and having a winning formula for the local market—can improve a company’s total shareholder returns (TSR) from between 1.1 times to 1.7 times based on data.
Footnote 1: Share of TSR outperformers that mastered a rule divided by share of TSR outperformers that did not master a rule.
Footnote 2: Largest 3,000 publicly listed companies by revenue in 2018 with an average revenue of >$1 billion in 2003–07 and reliable business segment and TSR data.
End of image description.
To read the article, see “Growth rules: Which matter most?,” March 6, 2023.