It is not enough to be profitable. Companies must also grow. In fact,if you don’t grow, you won’t be profitable for long. Staying with the
same customers, products, and markets is a recipe for disaster. have more advancement opportunities; and distributors want to
serve a growing company. Growth is energizing. An old maxim says:
“If you stand still, you get shot.”
Companies often excuse their lack of growth by saying that they
are in a mature market. All they are expressing is a lack of imagination.
Larry Bossidy, CEO of Honeywell, observed: “There’s no such
thing as a mature market. We need mature executives who can
find ways to grow. . . . Growth is a mind-set.” If the car market
was mature, how come the minivan sent Chrysler into a growth
spurt? If the steel industry is mature, how do we explain Nucor? If
Sears thought that there was no growth in retailing, how do we explain
Wal-Mart or Home Depot?
Companies have tried several paths to growth: cost and price
cutting, aggressive price increases, international expansion, acquisition,
and new products. Each has problems. Price cuts are usually
matched and neutralized. Price increases are difficult to pass on during
sluggish economic times. Most international markets are now
highly competitive or protected. Company acquisitions are expensive
and have not proven very profitable. And the numbers of new
product winners are few.
What companies fail to realize is that their markets are rarely
fully penetrated. All markets consist of segments and niches. American
Express recognized this and created the Corporate Card, the Gold
Card, and the Platinum Card. To grow, a company can make four
segment moves:
1. Move into adjacent segments. Nike’s first success was making
superior running shoes for serious runners. Later it moved
into shoes for basketball, tennis, and football. Still later, it
moved into aerobic shoes.
2. Do a finer segmentation. Nike found that it could segment
the basketball shoe market into finer segments: shoes for the
aggressive player, the high-jumping player, and so on.