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Management article
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Reference no. R0503E
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 2005

Abstract

If company leaders were granted a single wish, it would surely be for a reliable way to create new growth businesses. Business practitioners' overwhelming interest in this subject prompted the authors to conduct a three-year study of organizational growth - specifically, to find out which growth strategies were most successful. They discovered, somewhat to their surprise, that even companies in mature industries found rich new sources of growth when they reconfigured their unit of business (what they bill customers for) or their key metrics (how they measure success). In this article, the authors outline these and other moves companies can make to redefine their profit drivers and realize low-risk growth. They offer plenty of real-world examples. For instance, once a conventional printing house, Madden Communications not only prints promotional materials for customers but also manages the distribution and installation of those materials on-site. Its revenues grew from $10 million in 1990 to $133 million in 2004, in an industry that many had come to regard as hopelessly mature. The authors also suggest ways to identify your unit of business and associated key metrics and recognize the obstacles to changing them; review the key customer segments you serve; assess the need for new capabilities and the potential for internal resistance to change; and communicate to internal and external constituencies the changes you wish to make in your unit of business or key metrics.

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Abstract

If company leaders were granted a single wish, it would surely be for a reliable way to create new growth businesses. Business practitioners' overwhelming interest in this subject prompted the authors to conduct a three-year study of organizational growth - specifically, to find out which growth strategies were most successful. They discovered, somewhat to their surprise, that even companies in mature industries found rich new sources of growth when they reconfigured their unit of business (what they bill customers for) or their key metrics (how they measure success). In this article, the authors outline these and other moves companies can make to redefine their profit drivers and realize low-risk growth. They offer plenty of real-world examples. For instance, once a conventional printing house, Madden Communications not only prints promotional materials for customers but also manages the distribution and installation of those materials on-site. Its revenues grew from $10 million in 1990 to $133 million in 2004, in an industry that many had come to regard as hopelessly mature. The authors also suggest ways to identify your unit of business and associated key metrics and recognize the obstacles to changing them; review the key customer segments you serve; assess the need for new capabilities and the potential for internal resistance to change; and communicate to internal and external constituencies the changes you wish to make in your unit of business or key metrics.

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