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An interview with Patrick Viguerie, director in McKinsey & Company's Atlanta office and Mehrdad Baghai managing director of Alchemy Growth Partners on The Granularity of Growth, which looks at company growth and development with an emphasis on Global 600 sized organizations.

This briefing is prepared by an independent interviewer.

The interview discusses The Granularity of Growth and suggests that if you look at companies and particular industries you find that the growth rates within industries tend to vary more widely than growth rates across industries.

The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy‐to‐digest format.

When it comes to performance metrics, one size definitely does not fit ail—the right metric applied at the wrong time can stunt corporate growth.

The case study will provide an opportunity for students to identify the challenges a business-to-business (B2B) organization in a commodity product category faces in a growing environment. The students will learn to analyze and evaluate different strategies for growth and profitability. The students will be equipped to make decisions based on financial and nonfinancial data and the trade-offs therein. The case study will enable students to understand the application of the concept of operating leverage in different business conditions.

The leadership team at Mangalam Organics Limited (MOL) was worried about the company’s future in December 2021. The chief strategy officer (CSO), Akshay Dujodwala; the chairman, Kamal Dujodwala and the managing director, Pankaj Dujodwala had watched MOL go through many ups and downs. MOL manufactured camphor powder and supplied it to tableters [1], who would convert it into tablets, essentially used for Puja [2] purposes in India. Camphor was a white, waxy terpenoid with a strong aroma. It was mainly a commodity business with no pricing power when MOL supplied it in bulk to tableters. They had ventured into the business-to-customer (B2C) [3] space with their consumer brand “Mangalam” camphor tablets, positioned for religious uses in homes. However, this formed a very small percentage of their turnover. With thin margins and a low growth rate, it was difficult for MOL to sustain and grow, especially in the B2B [4] business. To make matters worse, their manufacturing unit caught fire in 2015, causing a major blow to their business. Under the leadership of their CSO, Akshay, they implemented strategies that helped the company bring down costs and wastage. Akshay helped MOL diversify further into the B2C market through their brands, “CamPure” for home care products and “Cam+” for health-care products. Huge expenditures on marketing and advertising were incurred to promote these brands. The COVID-19 pandemic watched the world go through a terrible phase with lockdown and rising health issues (both physical and mental). Camphor found an interesting place in immunity and religious purposes due to its aromatherapy properties and evoking feelings of relaxation. The newfound use helped MOL achieve an unexpectedly higher turnover. But Akshay knew that camphor, by itself, was fickle in providing profitability. To sustain growth post-COVID-19, MOL would urgently need to look for growth options. After giving it a lot of thought, he was faced with three options – he could either focus on CamPure as a B2C option, or concentrate completely on camphor powder and aroma as an existing B2B option or take the third option to go in for a first of its kind exclusive stores for all types of puja items called Pooja Sangam. While all these options had their own pros and cons, he had to now decide which was the best financially viable option for MOL as a way forward.

The case study is designed at the postgraduate level in an Master of Business Administration and executive education programs. Given the nature of the issues in the case study, it can be included in courses such as business strategy and strategic marketing.

Teaching notes are available for educators only.

CSS 8: Marketing.

As Stack was finishing up this column, Merrill Lynch made the stunning announcement it will offer low‐priced, un‐brokered, on‐line trading by the end of the year (it had previously delivered limited on‐line access only to selected highest net worth clients).

An established company's primary performance measures may revolve around operational excellence: squeezing out ever‐greater volume, quality, and service at declining cost, say. New staircases [new product/ business line development efforts], by contrast, must create revenue where none yet exists. Profitability may be years away. Holding the leaders of a new staircase accountable for goals they cannot achieve is a sure way to kill the business, and misses the point: if a new staircase is growing well, it should be a net cash consumer. Its goal is not making a profit but meeting project milestones, and ultimately generating high revenue growth. By exempting such a staircase from standard performance measures and giving it a different target, managers can foster growth.

Managers need research‐based guidance on how to find sources of new growth when their core business is maturing.

Authors shadowed managers responsible for finding and entering new businesses, interviewing them every three or four months for an average of two years. They surveyed over 100 corporate venturing units and corporate incubators and assembled a database of over 50 stories of companies that had successfully developed or acquired a significant new business. We interviewed managers in about half of these companies that had successfully diversified and we tested our emerging hypotheses against this database.

All research indicated that managers need to assess opportunities more strategically and be less activity driven. The authors concluded that managers were investing in too many projects, most of which had little chance of success.

If research is reported on in the paper this section must be completed and should include suggestions for future research and any identified limitations in the research process.

Ashridge Strategic Management Centre has developed a screening tool – The New Businesses Traffic Lights to test opportunities before a business plan has been developed, alongside a business plan to assess the strategic logic for the proposal, or to an existing investment that is failing to meet its short‐term targets.

Applying the screen to the portfolio of new business investments in most companies will result in red lights for many projects. Not only can significant money be saved from the “new businesses” budget, but also extra resources can be focused on improving the core businesses.

With the growing importance of services in the overall economy, it is surprising that the notion of service firms investing in systematic and dedicated innovation activities has taken so long to materialize. This is now set to change as service firms undertake the kind of research, design and development disciplines which for more than a century have been mainstays of modern manufacturing.

S&L interviews the well-known former editor of Harvard Business Review Thomas A. Stewart and his co-author, former BloombergBusinessweek.com editor Patricia O’Connell, in their latest book, Woo, Wow and Win: Service Design, Strategy and the Art of Customer Delight (Harper Business, 2016). They believe we are on the cusp of a “design revolution” in services.

The central thesis of their book is that services “should be designed with as much care as products are” and they include service “delivery” in that premise.

Service design principles offer powerful new ways to address the three basic strategy questions: What do we sell? To whom? And how do we win?

Service design helps you understand how to configure a set of activities, behaviors and touchpoints–a journey–that allows you to serve that customer well.

A major barrier for growth of large multi-business unit firms is the inability to resource the critical initiatives to win—both in terms of dollars and people. The underpinning of the challenge involves the conflict between resourcing current cash-generating legacy businesses vs. new initiatives which may not, in the short term, produce positive financial results. Most companies do not have a formal portfolio process to deal with this fundamental issue. Danaka is a fictional company based on real business experiences. The company has strong growth markets as well as markets that are commoditizing. Unfortunately, the latter represent a sizable portion of the company's business. A framework is given that establishes a matrix to analyze the Danaka businesses using their critical financial criteria—cash generation and top-line growth. Projects are divided into four categories based on how they fit into the matrix, and resource allocations are then analyzed. Students discover that the current allocation does not enable Danaka to meet its aggressive growth goals. The case incorporates an interactive spreadsheet model in which students can dynamically change the various resource allocations and see the impact on future top-line growth. The essence of the case is how to manage the resource allocation for a multi-business unit firm when present allocations will not meet future growth goals.

The key learning of this case is that when business leaders set financial goals, they must understand how they are expending their resources. More often than not, significant changes must occur that could be wrenching to the organization. The key learning objectives are: (1) realize the importance of performing a portfolio analysis; (2) discuss the issues involved in making the changes; and (3) understand how to put the decision process in place.