Growth Expanding the universe of choice

A necessary condition of successful growth is aligning growth opportunities with organizational capabilities. But from this statement of the obvious, there arise some not-so-obvious questions to which actionable answers can prove elusive. For example: Should an effective growth strategy emphasize the identification of new opportunities that leverage existing capabilities, or should an organization expand its capabilities in order to open up new opportunities? Or perhaps the better question is simply, how can an organization effectively pursue each of these approaches?

We have found it useful to begin making this unavoidably complex and nuanced problem somewhat more tractable by thinking about growth strategy in terms of expanding an organization’s universe of choice (figure 1). The truism that where opportunities and capabilities align defines where a company can legitimately choose to grow can now be supplemented by inquiries into how an organization increases that area of alignment. Growth strategy emerges as a series of choices that organizations find and create for themselves because they actively seek to expand their universe of choice: by increasing the scope of opportunities, the reach of capabilities, or both.

Expanding the scope of opportunities is often as much or more about recognizing opportunities as about creating them, or waiting for the marketplace to create them. For example, the successful use of Arm and Hammer baking soda as an ingredient in toothpaste or household deodorizers can be understood as the identification of new opportunities without the need to materially expand capabilities. Similarly, the US dairy industry is pursuing a new opportunity to leverage its existing brand and products by launching an educational campaign on the benefits of chocolate milk as a healthy after-sports drink.¹

Widening the scope of vision can be a matter of rethinking one’s approach—including making changes in organization, performance measurement, and culture—to pursue noncompetitive growth opportunities in less-conventional ways.

These are the kinds of “obvious in hindsight” moves that are too often missed, yet can often lead to robust, sustained growth and long-term value creation. And they are missed so often because of self-imposed limits. Many organizations myopically focus on what they can see in their current heavily contested markets and maneuver to seize more market share from their competition. Widening the scope of vision can be a matter of rethinking one’s approach—including making changes in organization, performance measurement, and culture—to pursue noncompetitive growth opportunities in less-conventional ways. It really does require taking the long view and investing in a solid platform for growth instead of getting stuck in near-term strategies that barely raise growth rates above the industry average.

There are times, of course, when shifts in the surrounding environment can engender entirely new growth options that require a relatively dramatic expansion of capabilities. This is particularly true with the rise of a billion new consumers into the middle class in emerging markets, as well as the increased connectivity of “always-on” consumers. In both cases, many companies will find it challenging to capitalize on these markets by relying largely on their existing complement of capabilities. The challenge here is to expand the scope of one’s vision hand in hand with the reach of one’s capabilities.

For example, Google successfully acquired and integrated several software programs (a static mapping tool, geospatial data visualization, and 3D capabilities) to build today’s Google Earth and Google Maps. By leveraging its capability in web-based search engines, Google was well positioned to create a dynamic web-based platform that can support the development of a steady stream of new map-based applications.² Success requires integrating new capabilities with existing ones, however. Not every capability is easy to integrate, especially those that fall between the cracks of preexisting organizational structures. Integration in such cases requires collaboration across internal boundaries—no easy matter for many organizations.

Pursuing growth has always required grappling with the unknown. The essays in this collection explore how organizations can and are expanding their universe of choice in spite of uncertainty. We hope that you, our reader, will find merit in considering these growth strategies for your organization.