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Introduction: Staring Down the Growth Challenge

IN 2012, two of the world’s largest multinationals celebrated momentous anniversaries: Procter & Gamble turned 175 years old, while Citigroup reached 200 years. While both companies have naturally had good days and bad days, surviving over such long periods is impressive and unusual. In fact, Citi is the oldest of America’s thirty largest companies and P&G is the fourth oldest.

Most leaders, of course, want to do more than survive over the long term. They want to perform. And to perform they need to grow. The bigger a company gets, the stiffer its growth challenge. P&G, whose annual revenues are about $80 billion, seeks an organic growth rate of about 5 percent a year. At first blush, that may seem mundane. But framed a different way, that’s like creating a brand the size of Tide (which is sixty-five years old), or a company the size of Hasbro (which is almost ninety years old) every single year. Hitting that target matters; growth creates the opportunities that attract and motivate top talent, ensures that P&G fends off competition, is a primary driver of long-term performance, and provides cash for investment in future growth.

When growth stalls, it can set off a devastating chain reaction. Company assets go underutilized, jobs are eliminated, competitors diffuse talent, and capital markets react. Management is forced to fight day-to-day fires rather than focus on innovation and growth, and the downward spiral intensifies.

The leadership challenge for many companies is finding a way to keep their growth engines humming to avoid this downward spiral. Common responses include declaring innovation a strategic imperative, launching a handful of high-profile new-growth ventures, and starting focused internal efforts to develop a stronger “culture of innovation.” But these piecemeal efforts often disappoint.

Every stalled company was, at one point, a great growth company. How can company leaders keep the momentum going?