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Patrick Viguerie, Sven Smit, Mehrdad Baghai

Just running faster on the market share treadmill will not secure

the future of your company. With typical McKinsey rigor, [theauthors show] that where you compete is even more important

than how. A great corporate strategy book with very practical

applications.

Dick Anderson, former vice-chairman, BellSouth

Patrick Viguerie is a director in McKinsey's Atlanta office, andleads the Firm's Strategy Practice in the Americas. His workfocuses on helping companies develop and implement strategies

for renewal and growth. He has served companies in a wide rangeof industries, and has published a number of articles on corporatestrategy issues. He holds an A.B. from Dartmouth College and anM.B.A. from Harvard Business School.

Sven Smit is a director in McKinsey's Amsterdam office. Sven co-leads McKinsey & Co,'s initiatives on growth. He has servedcompanies in a range of industries including telecommunications,high-tech and media across geographies (Europe, US, Africa andAsia). He holds a degree in mechanical engineering from Delft

University of Technology and an M.B.A. from INSEAD.

Mehrdad Baghai is managing director ofAlchemy GrowthPartners, an advisory and venture firm in Sydney. He is co-authorof the international bestseller The Alchemy of Growth and was apartner in the Sydney and Toronto offices of McKinsey. Hereceived a B.S.E. from Princeton University, an M.P.P. from theKennedy School of Government, and a J.D. from Harvard LawSchool.

Identifying Opportunities On A Granular Level Is Key

We all know intuitively that growth is good. It creates healthy companies, opens

up opportunities, and excites talent. Without it, companies cannot deliver the

continuous increases in revenues and returns that shareholders demand.

But where does growth come from, especially in large, global companies where

a reasonable growth rate can mean hundreds of millions, if not billions of

dollars in additional revenues a year? That is the question that Patrick Viguerie

and Sven Smit, directors at McKinsey & Company, and Mehrdad Baghai,

managing director of Alchemy Growth Partners, answer in The Granularity Of

http://www.alchemygrowth.com/http://www.alchemygrowth.com/http://www.alchemygrowth.com/http://www.alchemygrowth.com/

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Growth (Wiley, April 2008).

Unlike previous books based solely on anecdotal evidence, The Granularity Of

Growth derives from the authors' three-year, in-depth, analysis of four hundred

of the world's largest companies. One of their most surprising conclusions is

that increased market-share is seldom a driver of growth. They contend,instead, that growth is driven by where a company chooses to compete: which

market segments it participates in and how much merger-and-acquisition

activity it pursues in these markets. The key is to focus on granularity, to

breakdown big-picture strategy into its smallest relevant components.

To uncover pockets of opportunity, executives need to dig down to deeper

levels of their businesses and organizations." In other words, they need to

analyze their businesses at a more granular level. The seemingly

counterintuitive findings in The Granularity Of Growth have important

implications for management teams and the way they think about their

companies' resources, not least of all, how they allocate their own time, as well

as which businesses and market segments they chose to compete in.

The authors' objective is to help leaders make strategic decisions on a granular

level without increasing complexity providing a step-by-step method for

understanding growth, delineating strategy, and building an organizational

structure for carrying it out.

The challenges large companies face in driving and sustaining growthare significant. First there is the basic challenge of numbers: thebigger you are, the harder it is to achieve the next quantum of growth.Second, there is a problem of maturity. As companies mature, theyoften become less wired for growth and innovation tends to wane.

The sheer size of the organization begins to produce inertia andgrowth rates decline.

Large company growth has long been an area of focus for McKinsey

& Company. A decade ago this thinking was captured in The Alchemy

of Growth with the introduction of the three horizon framework. Over

the past three years, McKinsey has undertaken a new extensive

study of large company growth to deepen its insight and support its

clients. In The Granularity of Growth, the three horizon model is

enhanced by integrating it with a more robust and granular

understanding of the sources of revenue growth.

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In The Granularity of Growth, the authors demonstrate a problem with

the broad-brush way that many companies describe their business

opportunities. Large companies in particular suffer from the tyranny of

the aggregated and average view: "China is where the action is".

"Aging will generate increased demand for healthcare". Although

popular, these generalizations offer very little help to executiveslooking for meaningful growth opportunities. Instead, real winning

plays can only emerge when companies take a much finer and more

granular view of their market segments, their needs, and the

capabilities required to serve them well.

The Granularity of Growth is divided in three parts, each devoted to

one of the key decisions you need to take to drive and sustain

granular growth at scale.

I Your growth ambition

Sustaining superior value creation in the long-run requires companies

to choose either to grow or to go. For companies that choose to grow,

The Granularity of Growth provides a new methodology that allows

you to analyze and gain real insight into the sources of growth and

your growth performance, enabling robust growth benchmarking

relative to peers.

II Your growth direction

The book offers a rigorous basis for setting your growth strategy and

deciding on growth initiatives in the short, medium and long terms.

Moving your portfolio in pursuit of growth is more common and less

risky than you think and is where real value is derived.

III Your growth architecture

To wire your organization for growth, you must enable it to make moregranular growth choices while maintaining the benefits of scale. To

achieve this, the book outlines an approach for ensuring your

organizational model is consistent with your granular growth strategy.

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