Bain has extracted some key messages from the growth performance of the Global 2000 companies. It’s not pretty. Over the last decade only 20% of these companies grew their top line at twice global GDP growth rates (5.5%), but only about 10% of the Global 2000 companies actually earned their cost of capital. Sustainable growth is very difficult.
Bain’s first two pillars: focus on and extend the core to full potential, take it to a leadership position. Their data show extraordinary economic upside if companies achieve industry dominance. Professor Michael Porter similarly argues that a company can usually grow faster – and far more profitably – by better penetrating markets where it is distinctive than by slugging it out in potentially higher growth arenas where they lack uniqueness. Tick. Tick.
Bain’s third pillar: maniacally focus on customer advocacy. Their data show 80% of companies believe they provide a superior value proposition, but less than 10% of customers agree! Again, this resonates with Tom Peters (In Search of Excellence) mantra “exceptional care of your customers”. Tick.
Their fourth pillar: if you have to move to adjacencies, make sure your existing core is at full potential because adjacencies can kill a business. Again, Porter argues “the pressure to grow is among the greatest threats to strategy”. Tick.
And finally, Bain’s fifth pillar: use repeatable models. This is based on their earlier work which emphasises three core design principles – focus; embed; and adapt – and is consistent with the other comments above. Tick.
Watch the Bain video clip here: Bain: Five Pillars of Sustainable Growth
