The Alchemy of Growth
Book

The Alchemy of Growth

Practical Insights for Building the Enduring Enterprise

Mehrdad Baghai, Stephen Coley and David White
Perseus Books, 2000
First Edition: 1999
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Editorial Rating

8

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  • Innovative

Recommendation

Growth in business today is like alchemy, as business leaders try to turn everyday metals into gold. Authors Mehrdad Baghai, Stephen Coley and David White, who are McKinsey consultants or alumni, explain that growth can transform an ordinary business into an exciting, vibrant environment where employees feel a sense of purpose. Then they present a step-by-step recipe for achieving growth. Along with their method, which is based on practical advice and real-life case studies, they include profiles of growing companies. Although the authors boil down a complex endeavor into a step-by-step formula, they make it clear that even a sustained effort to grow can take years to show results. If you seek a quick fix, this is not the book for you. However, if you are interested in a tested framework for growth, getAbstract recommends this clear, methodical approach.

Summary

“Three Horizons of Growth”

First, the bad news: All businesses mature and eventually decline. For example, in 1988, Reynolds & Reynolds Company finished a decade of work with an average annual growth of 18%. As the decade ended, the company experienced “customer consolidation, a market shift to low-margin products and heightened competition.” It had acquired a printer company at the precise moment that the industry grew most competitive. Reynolds & Reynolds’s new CEO, David Holmes, recognized that its core businesses would not sustain growth. He boldly divested several units and integrated “multiple acquisitions.” This fueled a rebound in stock price and profitability.

Then, the good news, which Reynolds & Reynolds incarnates: A company can outlive its lines of business, which will contract and expand as necessary. As one revenue stream matures, you must have another ready to take its place and another after that. Developing a continuous pipeline of new businesses – that represent new profit sources – is the only way to sustain growth. The pipeline of continuous business creation operates in three distinct stages that require your active management – the...

About the Authors

Mehrdad Baghai, managing director of Alchemy Growth Partners in Sydney, co-authored Granularity of Growth and As One. David White and Stephen Coley are directors with McKinsey, and Coley authored Le Chapeau a disparu.

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