From the course: Designing Growth Strategies
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Why profitable growth is hard
From the course: Designing Growth Strategies
Why profitable growth is hard
- As central as growth is to corporate survival and vitality, sustaining growth is brutally hard. The first of four big challenges emanates from what I call the law of large numbers. Growing a larger company is simply much harder than growing a smaller one. Look at Dell Computer. From 1990 to 2000, Dell's revenues went from $500 million to over 30 billion, an explosive growth at about 50% a year. Over the next decade, Dell's revenues grew at, relatively speaking, a snail's pace, only 7% a year. The law of large numbers is clearly at work here. If Dell were to keep growing at 50% a year from 2000 onwards, its revenues would reach almost two trillion by 2010, an impossibility given that the GDP of the entire world added up to less than $70 trillion. The second factor that makes it very difficult to sustain historical growth rates is limits to market dominance. Look at Walmart. Founded in 1962, Walmart expanded…
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