Many executives are fond of promising to deliver growth, but far fewer realize those ambitions. This is because many fundamentally mismanage the growth gap, which is the difference between their growth goals and what their base businesses can deliver. Filling the gap requires either innovative new offerings or acquisitions. That’s where the trouble starts — it is easy to be fooled by rosy assumptions that, when analyzed in a disciplined way, turn out not to be practical.
How to Set More-Realistic Growth Targets
Many companies eventually face a gap between their growth goals and what their base business can deliver. Filling the gap requires either innovative new offerings or acquisitions. That’s where the trouble starts — executives are easily fooled by rosy assumptions that, when analyzed in a disciplined way, turn out not to be practical. Spreadsheets, a favorite tool for projecting growth revenue, actually lead to unrealistic conclusions because they reduce the world to linear models, when in reality the growth process is non-linear, sometimes even exponential. Imposing just a bit of realistic discipline, beyond the linear spreadsheet, with respect to the likely times at which revenues will be realized leads to very different conclusions about when a growth program would show results and close the growth gap.