Sustaining top-line growth: The real picture

This article by Bing Cao, Bin Jiang, and Tim Koller comes from the McKinsey Quarterly.

Maintaining high growth rates for a company is a lot harder than many business seems to think.

Finally, it’s worth bearing in mind just how many casualties the growth game has. Beginning in the mid-1970s, a quarter of all the large companies we studied actually shrank in real terms in a given year. That’s sobering, since most companies today are publicly projecting healthy growth over the next five years. In fact, many of these mature companies will get smaller in real terms. In related research, we find that a startling 44 percent of all companies that grew at rates faster than 15 percent from 1994 to 1997 were growing at rates lower than 5 percent ten years later.

The last sentence in particular illustrates the problem and suggests just how important entrepreneurship within a company can be. Without ongoing innovation a firm can die, there is always the need to find new products to replace revenue declines from current offerings as they mature. As markets grow sometimes large amount market share must be grabbed to meet growth goals. Given that all your competitors will be doing the same thing, this is not easy task.