Do companies chase growth at the expense of success?

• Author: Ladd, Scott
• Position: GROWTH

Two consultants with Booz & Co. conclude in their new book that a strategy that promotes growth outside a company's comfort zone--at the expense of doing what a company does best--can pull the enterprise in too many different directions.

Paul Leinwand and Cesare Mainardi, authors of The Essential Advantage: How to Win With a Capabilities-Driven Strategy (Harvard Business Review Press, 2011), argue that too many companies are preoccupied with the next big thing--trying to play in too many disparate markets and pursuing strategies that may tend to undermine rather than reinforce one another. That's a bad recipe for smart, effective growth, the authors write.

Leinwand is a partner in the global consumer, media and retail practice, while Mainardi is managing director of the company's North American business and a member of the firm's executive committee.

The winning formula, by comparison, say Leinwand and Mainardi, is defining the fundamental identity of the company by developing a dear idea of what it does best and how it creates value for customers. These corporate "winners" then hone a distinctive system of capabilities that is difficult for a competitor to match, and it often enables the company to sustain an enduring advantage competitively.

"Most companies would be better off leveraging what they already do well, but instead they are too focused on near-term growth and find themselves pulled in too many directions, trying to play and win in too many places," says Leinwand. "Sustainable growth, however, comes as a result of picking the markets that value what the company does better than...