How the Growth Outliers do it?

By Rita Gumber McGrath (HBR JanFeb 2012)

Introduction
Steady, predictable growth is what every big company strives for and what investors prize above all. Only few companies manage to prosper over the long term.

These companies are both more stable and more innovative than their competition.

Defining Outliers
Criteria 1: Organizations with a Market Capitalization of $ 1 billion and above. Criteria 2: Consistently achieving growth of 5% and above YOY ending with year 2009. Criteria 3: Consistently growing in profits of 5% and above YOY ending with year 2009. Criteria 4: Continuingly performance was checked for a period of 10 years.

Companies those who met the criteria are

Only 10 companies of 2347 list qualified in criteria 4 and only 5 companies grew in both the parameters.

Just 8% of 4,793 companies meet the criteria 2 (5% YOY growth in revenue).

And 4% of the total list just met the criteria 3 (5% YOY growth in profits).

Eg: Infosys and HDFC Bank (India), Yahoo, Japan etc.

Rapid Adapters

Making small bets early and diversifying the portfolios.

Being active in acquisitions.

Managing the resource allocation centrally.

Have built processes that speed and flexibility.

Imbibing innovation into everyday operations.

Stability Champions
Management paying close attention to culture and shared values.
Avoiding dramatic divestitures. Holding of the talent in organization. Stabilizing the high-level strategies. Building organization on a reliable customer base.

Keeping their senior leadership stable.

Conclusion.
Stability is what enables companies to innovate and to maintain steady growth coupled with transparent values and allowing employees to feel confident about taking risks that experimentation and innovation require in the current environment.