This chapter is from the book
This chapter is from the book
This chapter is from the book
What's Holding Us Back?
This book sets out to answer one question: How can I find a way to deliver continuous, exceptional growth, year after year?
By exceptional, we mean exceptional relative to expectations: growth that sets you apart. In some high-technology markets, this might mean 60 percent. In others, 6 percent might really stand out from the crowd if the market average is just 3 or 4. What we are talking about is growth that puts serious distance between you and your competitors. That is what this book is offering. It shows you how to get the traction you need to make sure that none of your effort is being wasted—to make sure that it all goes toward delivering tangible results. It will help you break free from the grind.
After all, grind is what most businesses endure. Most firms that manage to deliver growth do it the hard way. Measures that improve profitability often hold back top-line growth, while measures that drive revenue growth require investments that can drag down profitability. As one foot starts to run, the other starts sinking in the mire. It's devilishly hard to get the balance right and break free: It seems that all you can do is keep pushing. Companies have to push sales forward with big marketing investments while at the same time harrying their employees to become more productive and nagging their suppliers and partners for better deals. Pushing is hard work—it's exhausting and it churns through resources.
We thought: "There just has to be a better way than this." Some of our earlier work2 showed that firms with certain shared characteristics were delivering substantially better results than others. The performance of these firms suggested that, under certain conditions, there existed a phenomenon whereby growth could be achieved more efficiently. The disproportionately higher growth these firms delivered hinted at some hidden energy driving their growth—an energy that seemed to feed on itself without the need for excessive resources. Their progress has been natural, highly efficient, and realized with almost frictionless ease. Because they were not held back by the sheer weight of resources others were employing, they were able to get some speed up. They had momentum. We went looking to find out exactly what this momentum was and how these momentum-powered firms acquired it.
The insight came when we realized that if momentum was powering a firm's success, then its relative marketing spend should be decreasing. Contrary to conventional "spend money to make money" wisdom, our hunch was that firms with momentum achieved superior growth while spending a relatively smaller percentage of their revenue on marketing than those pursuing the traditional "push hard" methods.
To test our hypothesis, we investigated the effect of marketing investments on the long-term growth of large, established firms. We looked at the conduct and performance of well-known corporations among the world's 1,000 largest, covering a 20-year period from 1985 to 2004. We looked at these firms' marketing behavior and tracked the effect that changes in this behavior had on sales revenue, net earnings, and stock price.3
The results were astounding.