Patrick Viguerie, Sven Smit, Mehrdad Baghai

“Just running faster on the market share treadmill will not secure
the future of your company. With typical McKinsey rigor, [the
authors show] that where you compete is even more important
than how. A great corporate strategy book with very practical
applications.”
—Dick Anderson, former vice-chairman, BellSouth

Patrick Viguerie is a director in McKinsey's Atlanta office, and

leads the Firm's Strategy Practice in the Americas. His work
focuses on helping companies develop and implement strategies
for renewal and growth. He has served companies in a wide range
of industries, and has published a number of articles on corporate
strategy issues. He holds an A.B. from Dartmouth College and an
M.B.A. from Harvard Business School.

Sven Smit is a director in McKinsey's Amsterdam office. Sven co-

leads McKinsey & Co,'s initiatives on growth. He has served
companies in a range of industries including telecommunications,
high-tech and media across geographies (Europe, US, Africa and
Asia). He holds a degree in mechanical engineering from Delft
University of Technology and an M.B.A. from INSEAD.

Mehrdad Baghai is managing director of Alchemy Growth

Partners, an advisory and venture firm in Sydney. He is co-author
of the international bestseller The Alchemy of Growth and was a
partner in the Sydney and Toronto offices of McKinsey. He
received a B.S.E. from Princeton University, an M.P.P. from the
Kennedy School of Government, and a J.D. from Harvard Law
School.

Identifying Opportunities On A Granular Level Is Key

We all know intuitively that growth is good. It creates healthy companies, opens
up opportunities, and excites talent. Without it, companies cannot deliver the
continuous increases in revenues and returns that shareholders demand.

But where does growth come from, especially in large, global companies where
a reasonable growth rate can mean hundreds of millions, if not billions of
dollars in additional revenues a year? That is the question that Patrick Viguerie
and Sven Smit, directors at McKinsey & Company, and Mehrdad Baghai,
managing director of Alchemy Growth Partners, answer in The Granularity Of
Growth (Wiley, April 2008).

Unlike previous books based solely on anecdotal evidence, The Granularity Of

Growth derives from the authors' three-year, in-depth, analysis of four hundred
of the world's largest companies. One of their most surprising conclusions is
that increased market-share is seldom a driver of growth. They contend,
instead, that growth is driven by where a company chooses to compete: which
market segments it participates in and how much merger-and-acquisition
activity it pursues in these markets. The key is to focus on granularity, to
breakdown big-picture strategy into its smallest relevant components.

To uncover pockets of opportunity, executives need to dig down to deeper

levels of their businesses and organizations." In other words, they need to
analyze their businesses at a more granular level. The seemingly
counterintuitive findings in The Granularity Of Growth have important
implications for management teams and the way they think about their
companies' resources, not least of all, how they allocate their own time, as well
as which businesses and market segments they chose to compete in.

The authors' objective is to help leaders make strategic decisions on a granular

level without increasing complexity providing a step-by-step method for
understanding growth, delineating strategy, and building an organizational
structure for carrying it out.

The challenges large companies face in driving and sustaining growth

are significant. First there is the basic challenge of numbers: the
bigger you are, the harder it is to achieve the next quantum of growth.
Second, there is a problem of maturity. As companies mature, they
often become less wired for growth and innovation tends to wane.
The sheer size of the organization begins to produce inertia and
growth rates decline.

Large company growth has long been an area of focus for McKinsey
& Company. A decade ago this thinking was captured in The Alchemy
of Growth with the introduction of the three horizon framework. Over
the past three years, McKinsey has undertaken a new extensive
study of large company growth to deepen its insight and support its
clients. In The Granularity of Growth, the three horizon model is
enhanced by integrating it with a more robust and granular
understanding of the sources of revenue growth.
In The Granularity of Growth, the authors demonstrate a problem with
the broad-brush way that many companies describe their business
opportunities. Large companies in particular suffer from the tyranny of
the aggregated and average view: "China is where the action is".
"Aging will generate increased demand for healthcare". Although
popular, these generalizations offer very little help to executives
looking for meaningful growth opportunities. Instead, real winning
plays can only emerge when companies take a much finer and more
granular view of their market segments, their needs, and the
capabilities required to serve them well.

The Granularity of Growth is divided in three parts, each devoted to

one of the key decisions you need to take to drive and sustain
granular growth at scale.

I Your growth ambition

Sustaining superior value creation in the long-run requires companies
to choose either to grow or to go. For companies that choose to grow,
The Granularity of Growth provides a new methodology that allows
you to analyze and gain real insight into the sources of growth and
your growth performance, enabling robust growth benchmarking
relative to peers.

II Your growth direction

The book offers a rigorous basis for setting your growth strategy and
deciding on growth initiatives in the short, medium and long terms.
Moving your portfolio in pursuit of growth is more common and less
risky than you think and is where real value is derived.

III Your growth architecture

To wire your organization for growth, you must enable it to make more
granular growth choices while maintaining the benefits of scale. To
achieve this, the book outlines an approach for ensuring your
organizational model is consistent with your granular growth strategy.