Michael Treacy: Double-Digit Growth.

• Position: Co-founder and chief strategist of GEN3 Partners - Interview

Michael Treacy is a speaker, management thinker and entrepreneur. He is co-founder and chief strategist of GEN3 Partners, a firm based in Boston and St. Petersburg, Russia, dedicated to creating science-based product breakthroughs for a wide range of clients. He is the author of the newly published book, "Double-Digit Growth: How Great Companies Achieve It--No Matter What" (Portfolio).

Q: What are the critical components of double-digit growth?

A: To achieve double-digit growth, you must recognize the five sources of revenue growth, develop the disciplines to grow, and build a portfolio of growth initiatives balanced across these five sources: Base retention. One of the easiest ways to improve growth is to slow the rate at which you lose your existing customers. Retaining customers requires much more than the simple loyalty programs employed by many banks today. Market share gain. This is usually the toughest, nastiest way to grow, because it requires tearing customers away from a competitor. No company gives up market share without a struggle. Market positioning. When done correctly, this is perhaps the easiest way to grow because it means establishing a presence in the fastest-growing segments of a market and getting a piece of the action. Spotting those growth opportunities early and getting sufficient market share, however, is a major challenge. Penetrating adjacent markets. This requires a steely appraisal of whether your core operating capabilities can give you an advantage in an ancillary market, and whether your organization can build the additional capabilities needed to meet the competitive standards. Invading new lines of business. This discipline is built on smart investing rather than management skills. It's a growth discipline that few management teams are able to master.

Q: Why is double-digit growth critical for the financial services industry?

A: As consolidations change the banking industry, it has become commonplace to believe that mergers and acquisitions are the only way to achieve double-digit growth. In fact, the recent announcement that Bank of America will acquire FleetBoston Financial seems to confirm this notion. Bank of America has chosen to follow growth discipline Number 2, and buy its market share. Since there are few banks that are able to completely absorb their primary competition, smaller institutions must...