This only proves that in a rapidly globalizing world, companies have to venture into emerging markets to sustain their growth momentum.

Interesting article. In exhibit 1, I wonder which company has the compounded annual revenue growth rate of more than 50 percent, as the tail grows upward. Was it caused by the dot-com bubble?

Companies on a growth path with a horizon of more or less than a decade almost always find themselves in product or service environments that are commoditized. Great companies realize this and have always brought a change in their offerings, and moved across verticals or geographies to keep their projections realistic to claims. Most of the aberrations are around new growth sectors or niche areas in emerging economies where you find unrealistic projections to keep up the euphoria of newfound growth.

Revenue growth targets must emerge from the planning and budgeting process, rather than be set by a leader. The latter should, in my opinion, focus on a robust sensitivity analysis so that committed net rates of return on average capital employed are achieved.

Yes, much of the growth of US companies (48 percent, in 2008) came from countries outside the United States. But in the next few years, the competition will be harder in emerging countries that have already had the same industries where these companies are growing, such as cars, electronics, chemicals, and IT. It seems that strategic alliances or joint ventures would be a better way for US companies to enhance their growth in these emerging countries.

One of the best ways to forecast and achieve the targeted growth is to keep a tab on competitors’ strategies, followed by expansion to new markets before reaching the saturation of your successful product or service. A setback in either of these two simultaneously adopted approaches will at least keep growth at acceptable level without calling for any potential fallout strategy.

I’ve often found myself very cynical of growth projections, particularly over a long time span. They seem so arbitrary, presumptuous, and simply unreal. It is like an automatic “we’ve done well last year, so we are ratcheting up still higher for next year” thinking. This continuous “more is more” goal setting reminds me of a basketball coach who yelled that at his team, and after practice the team members all joked that by the end of the season, they should be able to leap tall buildings in a single bound. As Cao, Jiang, and Koller conclude, “the headlong pursuit of fast growth can also yield bad decisions.”

The note, “it’s worth bearing in mind just how many casualties the growth game has,” also touches on the numbers game of growth for growth’s sake. I recall reading a history of a furniture manufacturer founded by a family of immigrants intending to build furniture as they did in their homeland. A national financial crisis ended their first effort and so they started baking in their home. The baking business grew enormously, but they wanted to build furniture so they continued to sell it. Last that I saw, the food business was worth many times the value of their furniture business, but their furniture business is what they wanted, so they were happy. If a US business is intent on growth and pursues its operations globally, it may have the choice between becoming what the world wants and needs it to be or staying the course with the original enterprise. “Healthy growth” sounds good enough to me, but then I don’t sit in the big chair at the head of the table.

This is an important and valuable splash of cold water. In my own work on growth, I found that most companies were doing foolish things in a desperate effort to find new growth platforms. Getting more realism into growth plans will help managers keep their feet on the ground.

Moreover, chasing growth often causes managers to take their eyes off the ball. The number-one job should always be to run existing businesses well before looking for new pastures. But, when looking for new pastures, managers need a tough screening process to keep them from investing in low-probability initiatives. My own screen has four dimensions—degree of advantage, attractiveness of the market, quality of management, and the impact on existing activities—that often screen out more than half of the projects a company is investing in.

This article raises questions about the extent to which corporate growth goals are realistic. A key issue overlooked in the analysis, however, is how organizations respond if the growth is not forthcoming. Aiming high is not the risk; without stretch targets, many businesses can fall short of achieving their potential. What can be risky is being inflexibly wedded to an unrealistic target despite contrary internal, market, or economic data. Such an approach can lead to executives compounding the problem by making extreme or counterproductive decisions, such as blindly raising prices in a flat market in an attempt to achieve the targeted revenue growth. Those companies that are most likely to succeed in the long term are surely those that make the best decisions in the light of data on their customers and the external market. They should be guided by their strategy and their business plans, but not slaves to growth plans that are untenable.

US companies have been growing due to two main reasons—innovations and new markets. This model was good enough until the middle of 2005, after which the native consumption-based economy started to slip due to the housing bubble that finally burst in 2007-2008 and put the entire world’s financial markets in turmoil. It also brought out a stark reality, that an economy with pockets of both high growth and total poverty is not sustainable. There needs to a balance. What we are witnessing now, albeit in the name of energy security and food security, is multinationals investing and growing in regions that otherwise would not have made sense for them before. People are also realizing that they are here in this universe as part of a whole; they need to live in harmony with the rest of the world rather than exploit and destroy it.