Growth from the core and beyond
by Chris Zook
The penalties for failing to grow a business have rarely been so severe. Even the innuendo of
slowing growth can cause shares to dive. As if that weren't enough, two-thirds of executives
believe that growth is much harder to achieve than it was five years ago, according to a Bain & Company
survey. And the pressure to grow is only increasing. The average company sets revenue targets at more
than two times its market growth rate, with earnings targets four times as high.
Click for further reading on this topic: "Growth Outside the Core" by Chris Zook and James Allen, published in Harvard Business Review, December 2003, or visit www.beyondthecore.com
Finding Global Growth
by James Root and John Smith
With global expansion as challenging as it's ever been, Bain has analyzed what it takes to
prosper internationally. Starting with 7,500 public companies over a five-year period, we
focused on the relative few that manage to sustain profitable international growth. Our
findings are summarized here from an article first published in the European Business Forum.
Click for further reading on this topic: "Matching Global Growth to Industry Structure" European Business Forum, by James Root and John Smith, July 2003.
Measuring What Matters in Telecoms
by Michael Garstka, Pierre Lavallee & Paul Smith
We're seeing more companies interested in how they can grow by measuring their performance
more effectively. Most executives need a handful of metrics-the vital few-that can guide them
effectively to achieving their targets. But defining the vital few is difficult. The insights
in this summary of findings come from the telecoms industry, but they apply to many other industries.
Click for further reading on this topic: "Why it matters to measure what matters" Financial Times, by Michael Garstka, Pierre Lavallée and Paul Smith, September 2003.
Getting to Full Potential
by Vernon Altman, Lisa Walsh and Stan Pace
With many companies in transition, here are some of the lessons we've learned from successful
turnarounds. In the latest Harvard Management Update, Vernon Altman, Lisa Walsh and Stan Pace
show how some companies have been able to move from bad to great, in some cases leapfrogging
competitors and claiming industry leadership, using an approach we call Full Potential Transformation.
Click for further reading on this topic: "From Bad to Great," Harvard Business Review, by Vernon Altman, Lisa Walsh and Stan Pace, June 2003.
Also featured in this issue, our ninth Management Tools survey, based on data from 708 companies
on five continents, which shows a dramatic increase in tool use over the past two years.
Download the complete survey: Management Tools 2003 or visit the Management Tools site on Bain.com for more information.
Beating the Odds of Brand Growth
by John Blasberg and Vijay Vishwanath
Quick, pick the best indicator a brand will grow faster than its category: Brand size? Newness?
Leadership within a category? Such is conventional wisdom, but a recent Bain study of 524 brands
across 100 categories found none of the above. The study "winners"defined as any brand that
beat its category's growth each year from 19972001invested differentially in just two
components of the marketing mix: product innovation and advertising
Click for further reading on this topic: "Making Cool Brands Hot," Harvard Business Review, by John Blasberg and Vijay Vishwanath June 2003.
Buy Low, Buy High
by Sam Rovit and Catherine Lemire
Corporate transactions may fall out of vogue, but shareholders gain most when companies maintain a
disciplined, constant program of acquisitions in boom times and bust. This Results Brief profiles a
Bain study published in last month's Harvard Business Review that finds that winning companies buy
low and high.
The Right Way to Cut Costs
by Vernon Altman, Marty Kaplan and Alistair Corbett
For most managers, cost discipline holds as much appeal as a cold shower. The prevailing attitude,
even in harsh economic conditions, is that costs must be cut from time to time. Usually, the grueling
work of taking out costs is a reaction to events, a periodic program rather than an operating principle
and an ongoing way of life. But the most competitive companies have embedded cost discipline in the way
they do business.
Fixing Executive Pay
by Orit Gadiesh, Marcia Blenko and Robin Buchanan
In an era of ambiguous executive compensation plans, a Bain study of 40 institutional investors uncovered
a surprise: Sixty-three percent of respondents would approve pay plans that increased senior managers'
share of profits and stock appreciation. The caveat? Respondents want executives to share more in the
downside when they miss their targets. In
"Fixing Executive Pay," Bain authors recommend four means to better link pay to performance.