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What to Do When Growth Stalls

by Steve McKee  |  
April 28, 2009
  |  6,392 views

"We will have no growth before 2010."

That emphatic statement came from Norbert Reithofer, CEO of BMW, in the March 30 issue of Fortune magazine.

Even BMW—arguably the best-managed automotive manufacturer in the world—is not immune to the global economic crisis. And any growth the company does achieve in 2010 won't excite its shareholders if it's just rolling over miserable 2009 results.

As much as we would all like to believe that we're masters of our own destiny, the unfortunate truth in business is that growth stalls. In my research (comprising 60 months, two national quantitative studies, and a host of CEO interviews), I found that in any given year some 15% of companies stall.

Over the course of a decade, more than half of companies stall. That's in normal economic times. Given what we're facing in 2009, it wouldn't surprise me if 50%, 60%, or even 70% of companies report flat or negative revenue growth this year.


Yahoo CEO Carol Bartz described her friend (and former eBay CEO) Meg Whitman's last few years at eBay, when the company's performance was not so hot, this way: "Every CEO who has left their job recently has left a bit of a mess, because of internal or external circumstances."

She's right, of course, but if she's like most corporate leaders, she doesn't realize the significance of the word "internal." While most pundits continue to focus on the external circumstances befuddling every company, my research reveals that it really is what's inside that counts. Internal dynamics are much more significant predictors of how fast—if at all—a struggling company will return to growth.

Broadly speaking, the externalities that lead to stalled growth can be placed into three major categories that I collectively call market tectonics. The label fits, because just as shifting plate tectonics in the geological world can cause everything on the ground to shake, market tectonics affect all companies.


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Steve McKee is a BusinessWeek.com columnist and author of When Growth Stalls: How It Happens, Why You're Stuck & What to Do About It (Wiley/Jossey-Bass, 2009). Learn more at www.WhenGrowthStalls.com.

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  • by balan. k. Wed Apr 29, 2009 via web

    Its good stuff, encouraging. keep it up. its 3star, by chance I pressed 1,OK
    Bye

  • by Holly R. Fri May 1, 2009 via web

    Great article!

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