Company growth


Broadly speaking companies also grow across three dimensions:

  • Dimension 1: ‘existing market growth’ – Once established a firm can expand by increasing existing market share through price and other sources of competitive advantage.
  • Dimension 2: ‘customer-driven market growth’ – A business grows by gaining a share of GDP by helping to create new customers for existing offerings.
  • Dimension 3: ‘innovation-driven products and services growth’ – This occurs when companies create new markets by offering innovative products, services, or business models.

Within each of these dimensions, different techniques to drive growth and improve efficiency have been used by organizations in order to win. It’s what Michael Porter describes as competitive rivalry in the industry. High-growth companies excel across one or more of these dimensions. This means that they achieve disproportionate shares of growth.

Linking the national and company views together, it is clear that because high growth firms contribute a disproportionate amount to employment levels and/or have higher productivity than their peers, they are also responsible for a significant proportion of economic growth. High-growth companies are attractive because they are more successful within a sector, but also help make a country more economically competitive on a global scale. Therefore they become the heroes – not just because they are the organizations people want to work for, but also because they are the companies that countries either want to nurture or to attract.

Reviewing the varied archives of The Economist, the Financial Times, Business Week, and the Wall Street Journal, large companies have clearly been the main drivers of sustained growth over the last 50 years or so. The likes of Exxon, General Motors, General Electric, IBM, Boeing, Procter & Gamble, United Technologies, AT&T, and Caterpillar in the United States; Tata and Reliance in India; and BP, Shell, Rolls-Royce, Ericsson, Bosch, Fiat, Novartis, and Volkswagen in Europe have all played a pivotal role. Big companies like these have grown in both scope and scale, increased incomes, employed more people, paid more dividends to shareholders, and taxes to governments. However, we argue that continued large company-led growth is no longer a certain bet. As new organizations are formed to tackle emerging challenges, the old models that supported large companies in the past, are being replaced by new ones.

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