3 Secrets to Driving Sustainable, Long-Term Growth

Many of today’s business leaders, when planning for growth, admit to lacking a clear view of how to achieve their aspirations, and they say they are distracted by a wealth of potential opportunities.

According to a recent Strategy& survey of over 500 executives worldwide, nearly three-quarters (74%) agree that there are more options for growth today than there were 10 years ago. Yet 66% say that knowing which one to pursue is harder than ever. Further, only 22% of executives say they think their leaders are “excellent” at driving growth.

Here’s the solution: The most successful leaders and companies figure out how to build a “growth engine”—a handful of capabilities that provide real differentiation in the market. They devote a great deal of energy to exploring the company’s core identity and what they do better than their competitors. Consistent growth then comes from leveraging those differentiated advantages again and again.

“The route to growth is more important than the growth target itself.”

Great companies learn to resist the temptation to “search” high and low for growth. They know that even if a seemingly good opportunity arises, they may not have the capabilities to beat competitors at it in the long run. In short, they know that “one hit wonders” in new products and services can only take them so far.

Leaders who succeed in creating growth engines have generally internalized 3 key points.

1. The route to growth is more important than the growth target itself. Targets can be very helpful, of course, but, in our experience, CEOs too often encourage their people to commit to a number—say, annual revenue growth of 7%—even though the path to achieving it isn’t clear. This kind of target-number focus can lead companies off course into uncharted territory, chasing growth in too many directions. That, in turn, tends to deplete resources and siphon attention away from the opportunities that matter the most. For example, instead of expanding beyond its means, Natura has achieved success in Latin America by staying true to its relationship-focused business model and focusing on launching new products that promote well-being, relationships and connection to nature.

2. Leveraging a unique set of differentiating capabilities is more valuable than simply trying to respond to the market. Often companies try to grow by looking outside for attractive markets and trends. Instead, the most sustainable growth comes from looking within to find a growth driver that indisputably belongs to that company. IKEA is a good example: by combining price-conscious and stylish product design, highly efficient operations and customer-focused retail design, they were able to become a true “supercompetitor” in the home furnishings market.

3. You can create a growth engine by exploiting opportunities in your core market. There is often more “headroom” for growth in core markets than companies think. By identifying unmet needs in new ways, companies can find growth at home, as well as in nearby market opportunities, or “adjacencies,” that take advantage of existing capabilities. Such a strategy can help companies avoid chasing attractive illusions and create a sustainable growth engine by steadily expanding their core. A great example is Walmart, which was struggling to continue its growth rate in the early 2000s, and chose to refocus on the core by re-thinking its core value proposition: ensuring everyday low prices for shoppers. The retailer re-invested to lower its costs relative to competitors, and in communicating its pricing better to consumers (including some innovation in helping consumers compare baskets from other retailers).

Keeping these 3 points in mind and designing your approach to strategy around them leads to a leg up when it comes to long-term, sustained growth. It also greatly reduces frustration.

A successful growth strategy requires a CEO to combine his or her company’s existing competitive advantage with deep market insight. Such an approach can allow a company to capture strong and sustainable growth, for the long term.


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