The Alchemy of Growth

“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...