Since then, inflation has declined to almost nothing, GDP has been stagnant during the Bush administration (with a recent up tick), and the dollar has been plummeting (making overseas revenues worth much less). That's a tougher environment to grow in than even the 1960s. So Double-Digit Growth is talking about a difficult target for those who are not in the highest growth industries. In appreciation of that point, Michael Treacy (coauthor of The Discipline of Market Leaders) says that companies should measure their growth in terms of total gross profits. So if you are expanding your value-added enough, you may be able to have double-digit growth while having less than double-digit revenue growth. That said, he argues that ANY company can have double-digit growth. I assume that he means it is POSSIBLE. Based on the track record of the last three years, most would agree that it?s IMPROBABLE though if we look at time frames of five years or more.
As with The Discipline of Market Leaders, Mr. Treacy looks at a few successful companies that have met his targets in the past (Johnson Controls, Mohawk Industries, Paychex, Biomet, Oshkosh Truck and Dell) and extrapolates what they did into a few simple lessons. The strategic lessons are:
1) Spread your risk by pursuing many growth initiatives
2) Take on small growth challenges so you don't become overwhelmed by the size of the task
3) Use a variety of strategies involving organic growth and acquisitions, as appropriate to grow
4) Be committed to providing superior value
5) Develop your management to handle growth opportunities before tackling more opportunities
6) Make growth a central focus of your management processes (using Balanced Scorecard-like measures).
To implement these six strategic perspectives, he counsels that each company should focus on five management disciplines:
a) Reduce customer turnover
b) Take business from competitors
c) Emphasize those areas in your industry that are growing fastest
d) Invade adjacent markets where you can bring important advantages to bear
e) Invest in new lines of business
The heart of the book is devoted to these five disciplines. Each receives a chapter that talks about the difficulties involved and how to over come those difficulties. I thought that the book's advice was most practical and interesting when it talked about the disciplines.
If I look back to when I was first learning about strategy, I think that every article or book I read talked about the last four disciplines . . . but omitted the first. In fact, the best chapter in the book is on the first discipline, especially in debunking those who advocate that you can build loyalty in customers with any method other than making your value proposition be terrific.
Another excellent part of the book comes in the case history of First Data which used these disciplines to improve its situation. Presumably First Data was a consulting client of Mr. Treacy's.
I was pleased to see that Mr. Treacy noted that many of his champion growers frequently changed business models in positive ways (especially Paychex and Dell). Double-Digit Growth is rare book in noting and describing such management excellence. In doing so, the book's only weaknesses were that few examples of continuing business model innovation were included and not enough attention was paid to describing the key elements of this new and important management discipline. I hope in future books that Mr. Treacy will place more emphasis on the best practices in this area.
The book's perspective is that of the strategist and marketing executive, so those who come from other perspectives will probably gain the most from this book. Double-Digit Growth will give other executives a chance to understand what they should be focusing on as they meld their talents together with others in the organization.
If you are, however, a veteran strategist or marketing executive, you may get little benefit except from reading whichever company cases in the book (listed above) you have not read or heard about before.
As I finished the book, I wondered about how companies can make it more exciting to work on customer retention. Perhaps Raving Fans! has it right in that regard.
If you are not in a high growth market, though, I would still rate your chances of double-digit growth in revenues or gross profits to be slim . . . unless you become a master of continuing business model innovation.
He provides five disciplines:
1) Keep the growth you already have
2) Take business away from your competitiors
3) Show up where the growth is going to happen
4) Invade adjacent markets
5) Invest in new lines of business
The disciplines and their explaination are make in lively action oriented prose with actionable advice. This is a powerful book written about a powerful subject. I have been dismayed by the quality if business book ideas over the past three years and now with this book and some others, ideas and interest in them seem to be getting off the ground.
Read this book, if nothing more than to check yourself and your company against these disciplines. Look at what you are doing and how you are positioning yourself for growth. I think that you will be surprised at what you uncover.