Companies that want to grow in a way that fits their capabilities system and way to play can pursue one of four avenues.
1. They can grow the core of their business, getting more from their existing customers within the "headroom" of their current products and services.
2. They can look for capability adjacencies, typically products and services that they haven't offered before, that allow them to apply their existing way to play and capabilities system in new market domains, in ways that complement their existing offerings.
3. They can expand their geographic footprint, extending their existing capabilities system and offerings to new places and new customers.
4. Most exceptionally, they can build new capabilities that expand (or replace) their existing way to play, potentially giving themselves a completely new platform for growth. This is by far the riskiest growth approach.
We present the four types of growth as a bull's-eye. The approach that tends to generate the most value is the one at the center. Options get more expensive and riskier as you move toward the periphery.
Cesare Mainardi, Ken Favaro and Tom Stewart in conversation: Why is it so difficult to achieve sustainable growth? What is the most promising growth avenue that companies should pursue? And how can they capture the headroom of their business?
Shifting into a hot, new industry probably won’t revive growth. Leaders should focus instead on building the capabilities to win in their home industry.
Our analysis of shareholder returns of more than 6,000 companies globally, however, shows that the idea that some industries are superior does not hold true.
New HBR article highlighting the need for emerging-market companies to focus on capabilities building from the very beginning.
Growing numbers of companies based in emerging markets are going abroad to claim their share of international trade. The journeys of seven Brazilian multinationals offer a framework for companies new to globalization.
Stop thinking about whether the industry you are in is "good" or "bad" and focus instead on what you can do to win where you are.
Your company has amazing growth opportunities in front of it—the question for every CEO is putting the organization’s energy behind the ones where your capabilities give you a right to win.
Most companies can manage only three to six capabilities into a reinforcing, winning system. It’s another case of the old saying: quality over quantity.
Your capabilities—what you do better than anyone else—should drive your decision—making as the economy recovers.