The Alchemy of Growth: Practical Insights for Building the Enduring Enterprise

A perspective on corporate growth and change which works through the need to maintain a simultaneous focus on three 'horizons' - today's business, emerging businesses and longer term options and the implications for strategy, management and structures.As you would expect of a book out of the McKinsey stable, this is on an issue of importance to business, is well researched and analysed and very readable and well presented. As you would also expect, it is focused on large corporates, and on strategies for their business success, as measured by exceptional growth and returns to stockholders.It provides one important perspective on the issue of corporate growth and development, to be compared with other perspectives.There are obvious comparisons with Collins & Porras: 'Built to Last' both in the concern with continuing exceptional performance over an extended period and in the care taken to explain the research base from which the findings are derived. However, whereas Collins & Porras are concerned primarily with values and culture, Baghai et al are primarily interested in strategies for the selection, development and management of a portfolio of businesses and the implications of those strategies for structuring, staffing and operations.The fundamental thesis is simple and can be stated in a few propositions:The companies that have been successful in maintaining high rates of growth with superior profitability are those that have learnt to manage well to three different time horizons at the same time - today's business, the next generation of emerging businesses, and the longer term options out of which the next generation of businesses will arise.In order to develop longer term options into 'core profit engines', a series of measured steps (concerned with finding ways of profitably building core capabilities and markets) are required, which the authors call 'stairways'. In the nature of things, not all stairways will lead to future core businesses, so a variety of initiatives need to be carried forward together. Management of the 'stairways' should receive significant senior management attention.The skills and temperaments required to manage current business, to develop new business and to search out viable future options are widely different one from the other. The key to maximising the profitability of today's business is excellence of execution. Emerging businesses require business builders - the typical entrepreneurial temperament, while the identification of future options requires lateral thinkers and visionaries.In consequence, the style of organisation and internal culture most appropriate to each of these foci are also different. Large corporates tend to find difficulty in encompassing these very different cultures. The authors discuss in some depth the resulting issues of internal culture, recruitment, structuring and transition, and their strategic management. The strength of the book

The authors have focused on one type of real options - growth options - and written a useful book on the topic. They take a high-level strategy view of the topic and do not cover the actual pricing of growth options. However, such options represent the majority of the value of most technology and startup companies. As a result, focusing on growth options can provide useful insights for managers and break through some of the short-sighted management fads (such as Stern Stewart & Company's Economic Value Added (EVA) metric) which focus on short-term profits at the expense of long-term value creation.

From the management consulting firm that brought us In Search of Excellence here its latest contribution to the literature on business growth. Based on an worldwide Mckinsey research project, the book provides CEO's with a simple framework of understanding how businesses grow sustainably and easily applied metrics for understanding growths in different horizons. Another strength of the book lies in its emphasis on a differientated approach towards talent management in different horizons of growth. The challenge lies in maintaining growth in a company's core businesses while launching new ventures. As the book demonstrated, planning for growth is not formulaic but requires the nurturing of a pipeline of business opportunities

This book is based on research on 30 companies in Asia, Australia, Europe, and North American, selected for exceptional sales and profit growth. The research findings reveal a three-phase pattern for growth which is analyzed and illustrated with cases. The pattern encompasses the embryonic, emergent, and mature phases of a business's life cycle. The underlying pattern is a continuous pipeline of business-building initiatives that focuses on three horizons: extending and defending the core business; building emerging businesses, and creating viable future opportunities. This examination of growth strategies proves highly enlightening. The combination of insights based on solid research yields a great book. The appendix profiles each of the firms the authors' studied. Recommended. Reviewed by Gerry Stern, founder, Stern & Associates, author of Stern's Sourcefinder: The Master Directory to HR and Business Management Information & Resources, Stern's CyberSpace SourceFinder, and Stern's Compensation and Benefits SourceFinder.

"The Alchemy of Growth" is an easy read, full of examples involving companies and products every consumer knows about. The fundamental theory presented by the book - that business managers need to devote energy and resources today toward cultivating business on each of the "three horizons of growth" - is simple enough to understand easily, but is also extremely powerful. While the book seems targeted at the CEO of a large company, the concept can as easily apply to a small company or even an individual's plan for his or her own future. The book is surprisingly free of business school mumbo jumbo and can be read quickly by a busy person. I highly recommend it.