Tuesday, June 24, 2008

Stall Point - Growth Reversal - How to Prevent It

When Growth Stalls.
By: Olson, Matthew S., van Bever, Derek, Verry, Seth,
Harvard Business Review,
March 2008, Vol. 86, Issue 3

Many organizations actually accelerate into a stall, experiencing unprecedented progress along key measures just before growth rates tumble.

As part of our ongoing research into growth, the Corporate Executive Board recently completed a comprehensive analysis of the growth experiences of some 500 leading corporations in the past half century, focusing particularly on "stall points" - our term for the start of secular reversals in company growth fortunes, as opposed to quarterly stumbles or temporary corrections. The companies in our study included more than 400 that have appeared on the Fortune 100 since that index was created, some 50 years ago, along with about 90 non-U. S. companies of a similar size. The study revealed patterns in the incidence, costs, and root causes of growth stalls.

The research finds that nearly half of all root causes for stall fall into one of four categories: premium-position captivity, innovation management breakdown, premature core abandonment, and talent bench shortfall.

Matthew S. Olson (olsonm@executiveboard.com) is an executive director, Derek van Bever (vanbeverd@executiveboard.com) is the chief research officer, and Seth Verry (verrys@executiveboard.com) is a senior director at the Corporate Executive Board, an advisory and performance improvement network of leaders of the world's largest public and private organizations, based in Washington, DC. This article is adapted from the book Stall Points (Yale University Press), forthcoming in 2008.

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