Amp It Up

12Grow Fast or Die Slow

Why Focus on Growth?

“Grow Fast or Die Slow” is the title of a 2014 study by McKinsey & Co that examined thousands of software and services companies between 1980 and 2012. It concluded that growth trumps everything else as a driver and predictor of long‐term success. “Super grower” companies, which McKinsey defined as 60% or more annual growth, had five times higher returns than medium growth companies (which had less than 20% annual growth). Super growers also had an eight times greater likelihood of reaching $1 billion in annual revenue.

The study found that when evaluating a young company, growth matters even more than profit margin or cost structure. Increases in growth drove twice as much valuation increase than equivalent improvements in profitability. No correlation was observed between cost structure and growth.

Wall Street has never needed a consultant's report to understand the magic of growth. Super growers are rewarded with rich valuation multiples, both before and after they go public. Since every business leader's job is to increase the value of the enterprise, you might assume they'd all be obsessed with growth. But you'd be wrong. Relatively few make growth as big a priority as it should be. Quite a few even seem content to remain slow growers. Why?

Two Problems: Uncertainty and Fear

One major reason is that too few leaders truly grasp the importance of growth. They have the misguided belief that their mission is to reach profitability ...