Creating sustained growth is hard under the best of circumstances. For example, from 1990 to 2000, just 7 percent of publicly traded companies in the U.S. enjoyed eight or more years of double-digit growth in revenues and operating profits. As the growth crisis worsened over the last eight years this percentage has shrunk significantly. Since the official end of the Great Recession, the economy has barely grown by 2 percent annually. For companies, international markets have been viewed as a rich field for growth, but the easy pickings have been taken and competitors from emerging markets have become formidable world-class companies that now challenge U.S. firms not only on their home ground but elsewhere as well. Mergers and acquisitions have historically represented a strong source of growth, attaining a level close to $1.4 trillion per year from 1994 to 2000. But that pace of deal making has attenuated. In many industries, moreover, consolidation has reduced the number of acquisition targets. In any case, many studies have shown that acquisitions rarely produce new value and often lead to disaster.
Unfortunately, in the years to come, traditional product-centered strategies alone will be unable to generate the kind of growth most companies desire. In many cases, such moves will merely replace revenues and profits lost to commoditization. Technological innovation will remain critical as long as firms look at new ways to solve customers’ problems. The search for growth will require recognizing upstream opportunities and experimenting with paths not taken. In short, it will require a renewed sense of agility both to recognize as well as seize next-generation demand. Leaders who master the new ways of thinking will be able to generate meaningful long-term growth. For those who do not, the crisis will continue.