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Growth Gamble

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Growth Gamble

When Leaders Should Bet Big on New Business - and How They Can Avoid Expensive Failures

Nicholas Brealey Publishing,

15 min read
10 take-aways
Audio & text

What's inside?

Find out how you can keep your corporate growth initiative from going the way of 99% of new businesses: down the tubes.

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Editorial Rating

8

Qualities

  • Innovative
  • Applicable
  • Well Structured

Recommendation

Some senior executives are so eager for growth that they gamble their company’s riches on new business initiatives that will probably fail. Researchers estimate that the failure rate for company-spawned business initiatives is as high as 99%. Authors Andrew Campbell and Robert Park tell companies to be selective about which growth opportunities they pursue – even if that means standing pat and accepting low growth. Growth, they say, is simply not possible at all times for all companies. They provide valuable tools, including a "traffic light" evaluation filter and a "confidence check" mechanism, to help you choose and execute new business endeavors. Wall Street has almost no greater profanity than "low growth," but if you take seriously your fiduciary duty to spend shareholders’ dollars wisely, you should read this book. The time has come for a sober, systematic approach to growth.

Summary

Thwarted Hopes

What the great eighteenth century man of letters Samuel Johnson once said about second marriages can also be applied to new business ventures: they represent the triumph of hope over experience. Business leaders always hope that their new ventures will succeed, even when experience tells them that they probably won’t.

The Walt Disney Company, for example, lost millions on a failed Internet portal. Motorola poured money into its washed-up satellite telephone business. The Ford Motor Company misplayed its venture into the speedy oil-change business. The litany of failed corporate initiatives goes on and on, and yet companies spend mountains of dollars on high-risk ventures. History clearly indicates that failure is the probable outcome.

Of course, new business ventures aren’t all doom and gloom, and when you find a good new business, the upside can be substantial. General Electric diversified into special-design plastics, medical electronics and financial services. Virgin Group spawned more than a dozen new businesses. The U.K. supermarket chain Tesco leveraged its supermarket brand to create a rapidly expanding consumer financial services business...

About the Authors

As a director of Ashridge Strategic Management Center, Andrew Campbell consults with several major corporate clients. He also serves as a visiting professor at City University and was a fellow in the Center for Business Strategy at the London Business School. He’s a Harvard MBA who worked for six years at McKinsey & Co. Robert Park, also an independent consultant, has a quarter-century of banking experience.

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