Many leaders set unrealistic growth targets. Often, they don’t properly consider how fast their underlying markets are growing and thus how much market share must be grabbed to meet ambitious goals. Or they ignore the likelihood that their competitors are doing many of the same things to grow. They also underestimate the ongoing need to find new products to replace revenue declines from current offerings as they mature.
A historical look at corporate performance puts the growth challenge into perspective. The first exhibit shows the real revenue growth distribution for large nonfinancial companies from 1997 to 2007. (We ended the analysis in 2007 to avoid distortion resulting from the severity of the recession that began that year.) The median revenue growth rate was 5.9 percent. About one-third of these companies increased their revenues at rates faster than 10 percent. But that one-third figure probably overestimates organic growth, since it includes the effects of acquisitions.