This library organizes company cases under the seven building blocks of Real Growth: abundant view, multiple models, evolving experiences, open culture, anticipative organization, whole-brained, and humanized growth.
Each block opens with published statistics and then works through companies in detail, covering what they changed, why, and what happened to the business.
Key findings
- Category creation is presented as a growth route in itself. Half of the top 20 fastest-growing companies on one 2010 list grew through category creation, and the 13 firms that created their categories accounted for 53 percent of incremental revenue growth and 74 percent of incremental market capitalization growth over three years.
- Most acquisitions fail, and the library attributes that to focus. Typically 70 to 90 percent are failures because attention goes to what a company will get rather than what it can give.
- Experience-led businesses are reported to grow at 23 percent against 13 percent for other companies surveyed, and to draw 1.8 times the brand awareness of laggards.
- The barrier to growth is internal. Eighty-five percent of executives surveyed cited internal rather than external barriers as the main obstacle, rising to 94 percent among companies with more than 5 billion dollars in revenue.
- Decisions are still made on instinct. According to one cited survey, 58 percent of companies base over half their business on gut feeling or past experience, and 64 percent have no documented data analytics strategy.
Abundant view: Mars Petcare and Adobe
Mars Petcare moved from pet food to pet care after recognizing that people increasingly treat pets as family members and spend accordingly, and that the category benefits from online shopping and urbanization.
The result is a business well beyond food: a leading veterinary health provider through a network of more than 2,000 pet hospitals, genetic health screening and DNA testing for dogs, a dog tracker, and an accelerator for industry disruptors.
Adobe made the same kind of move by changing how it sells. Founded in 1982 and grounded in Photoshop and PDFs for two decades, it shifted from license-based packaged software to enterprise software as a service.
Creative Cloud launched in 2012 on a monthly subscription and had nearly 700,000 paid subscribers by May 2013, exceeding expectations and overtaking Photoshop on customer satisfaction. Acquisitions in B2B marketing and e-commerce widened the offer further.
The company’s chief executive frames it as a question of aperture: if growth is a fundamental imperative and you already lead many spaces, you have to broaden the lens through which you look at opportunities.
Multiple models: Shell and PepsiCo
Shell’s premise is that electricity will rise from under 20 percent of world energy consumption to about half in coming decades, largely at the expense of oil, and that its aim is to turn that transition into an opportunity rather than a threat.
A New Energies division was set up in 2016 covering new transport fuels and power. It invests up to 2 billion dollars a year, which the library notes is less than 10 percent of total capital expenditure, with the majority still going to fossil fuels.
The acquisitions span solar, offshore wind, electric vehicle charging, smart energy storage, and a domestic utility supplying 825,000 households. The library notes utilities operate on low margins, and reads the moves as small investments now to ease entry later.
PepsiCo faced declining sugary carbonated sales and growing concern about artificial sweeteners, with a third of revenue coming from beverages, and bought SodaStream to move beyond its reliance on sodas.
The acquisition brought a home carbonation business selling in more than 80,000 stores across 45 countries with over 30 percent year-on-year growth in the US, an environmental positioning, and a direct to consumer capability the company had never had.
Evolving experiences: Hyatt and Spotify
Hyatt’s problem was sameness. Despite record revenue and a high share price it faced declining loyalty, competition from independents and short-term rental platforms, and an offer that matched everyone else’s.
The response was human-centered design thinking developed with Stanford University, which the library says changed the culture from transactional operations to providing caring experiences for guests and employees alike.
Ten properties were turned into laboratories running iterative experiments on real customers, testing everything from lighting to furniture. Innovations included mobile room entry, an app for personalizing a stay, and interpreter mode covering 27 languages.
It also extended past hotel stays into wellness resorts and fitness and spa brands, on the finding that wellbeing mattered increasingly to guests, and reached a record 65 new hotels in 2017.
Spotify appears here for the same reason: a personalized weekly discovery playlist, and a partnership letting riders play their own music in a car journey, which drives uptake of the premium subscription.
Open culture: Microsoft and Pernod Ricard
The library credits Microsoft’s turnaround not to the cloud shift or to billion dollar acquisitions but to the changing culture of a 130,000 strong workforce.
The starting point was a culture built on competition with a reputation for infighting. One of the new chief executive’s first acts was to ask top executives to read a book on empathetic collaboration.
The mission was rewritten from a computer on every desk to empowering every person and organization to achieve more, reflecting an effort to become a people company rather than a product company.
The growth mindset idea replaced a fear of pursuing ideas that might fail, and the stack ranking performance review was replaced by a process encouraging employees to solicit peer opinions in conversations that feel more like coaching.
The company’s own summary of the shift is quoted from its CMO: from a culture of know-it-alls to a culture of learn-it-alls. Over five years the share price trebled.
Pernod Ricard is the second case: clearly defined roles instead of traditional hierarchy, an open-door policy, and freedom to make mistakes, with the lowest attrition rate in the industry and 94 percent of the workforce proud to be part of it.
Anticipative organization: Gojek and Haier
Gojek began in 2010 as a motorcycle ride-hailing service and became an on-demand platform covering transport, logistics, food and grocery delivery, and personal services with integrated payments.
Because its breadth creates many competitors it has to move fast, so product managers are appointed as mini-CEOs across more than 18 verticals with end-to-end ownership, and teams are trusted with unlimited sick leave and no office hours.
Drivers are treated the same way. Micro-battle teams mean a driver who spots an opportunity to create value can expect support, and drivers are invited to storytelling sessions to feed continuous innovation.
Expansion works the same way, with local teams given independence over which products to launch, pricing, brand changes, and recruitment. Its first international market reached a 35 percent share of motorbike ride-hailing in six weeks.
Haier eliminated a middle management layer of more than 12,000 people and reorganized into micro-enterprises with their own profit and loss responsibility, replacing the linear relationship between research, production, and sales with small units that can invest without central approval.
Employees can propose a new product or service, and if the idea gains traction with colleagues, suppliers, and customers they can form their own micro-enterprise by recruiting a team across the company. Rewards include non-financial measures such as active users and lifetime users.
The model was exported through acquisition. After buying GE Appliances in 2016, Haier broke a company of 60,000 employees into more than 1,000 independent business units guided by local markets, and the library reports profit growth of 22.4 percent in 2018.
Internal connectivity is covered through collaboration platforms. One example describes a store manager posting about an off-menu drink, nearly 40 other managers reporting the same demand, and the product being made available to order within 24 hours.
Whole-brained: Netflix and Adecco
Netflix is presented as a company that used data intelligence to compete with traditional media. It collects viewing figures, the time of day, pauses and rewinds, device and location, abandonment, about 4 million ratings a day, and about 3 million searches a day.
Two decisions came from that data: reviving a cancelled series after noticing high engagement with it, and outbidding television channels with more than 100 million dollars for a drama because the data showed the audience was there.
Adecco is the counterpart case, pairing qualitative and quantitative research to understand candidate and client needs, including branch immersions and storytelling circles validated by quantitative analysis.
The worked outcome is small and specific. The research identified the wait between interview and outcome as a particularly stressful moment, and the company introduced timely notifications through its candidate portal.
Humanized growth: Cisco, Sweetgreen, and Haidilao
Cisco moved from a hardware business toward software and services because customers wanted to consume technology as a service, which leads to subscription and more recurring revenue.
Its People Deal is a three-part promise between company and employees: connect people, processes, data, and opportunities, innovate in an open and agile environment, and benefit by working with integrity to positively impact the world.
Its community work includes a networking academy that taught almost 1.5 million people in a year, with 97 percent of students in one Italian graduate program finding work within six months in a country with 40 percent youth unemployment.
A 2018 brand platform invited people to pledge their skills toward positive impact. Social engagement was twelve times anything the company had achieved before, and 98 percent of employees thought the campaign felt authentic.
Sweetgreen’s founders credit their growth to building intimacy at scale rather than prioritizing short-term revenue, and adopted a policy of slowing down to speed up, refusing immediate expansion until they had a scalable blueprint.
The founders work at least one restaurant shift after each seasonal menu change to find the pain points employees live with, and the most anticipated event on the company calendar is a pitch session where employees propose how the business should evolve.
Haidilao is the employee-centric case. Front-line servers are given authority to do whatever makes customers happy, including refunding meals without involving a manager, on the view that they know the customer’s needs best.
Staff receive roughly 3 percent of restaurant profits through an equity-like scheme, and the company promotes only from within, scaling by having a store manager open a new location with a third of the existing staff and leaving an apprentice behind.
Scope and limitations
The library states on its opening slide that it is work in progress and would be significantly updated. The cases are compiled from published sources and company statements rather than from primary research, and most of the figures date from 2017 to 2019.
Source
This page summarises Initiative for Real Growth: Case Study library, by Initiative for Real Growth, 2019.