The Momentum Effect: How to Ignite Exceptional Growth


A few rare companies have discovered the secret to sustained high growth: momentum. They’ve learned how to create the conditions that lead to exceptional organic growth–which feeds on itself, continually accelerating the business forward. In The Momentum Effect, J.C. Larreche introduces a complete framework for gaining momentum, keeping it, and harnessing its power. Drawing on new research and powerful case studies, Larreche demonstrates the stunning role of momentum in value creation. He sets out the process for...

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A few rare companies have discovered the secret to sustained high growth: momentum. They’ve learned how to create the conditions that lead to exceptional organic growth–which feeds on itself, continually accelerating the business forward. In The Momentum Effect, J.C. Larreche introduces a complete framework for gaining momentum, keeping it, and harnessing its power. Drawing on new research and powerful case studies, Larreche demonstrates the stunning role of momentum in value creation. He sets out the process for developing the “power offers” that lie at the heart of this powerful force. This book offers a systematic process for creating momentum that will work in any business, in any industry, and under any market conditions. You’ll learn how to create new value through a momentum strategy and build the leadership competencies to deliver highly profitable growth over the next six months…five years…even decades.

•Pioneer or die: drive momentum and harness its stunning power
How momentum-powered firms create 80% more shareholder value

•Understand the drivers of momentum strategy
Craft power offers, mobilize for growth, and more

•Master the Momentum Process: design and execution
Eight specific steps to implement a long-term winning momentum strategy

•Climb the five-step Momentum Leadership Ladder
How leaders can systematically generate and direct momentum

"This book shows you how to build momentum for growth and leave your competitors trailing far in your wake!"

—Sir Richard Branson

"J.C. Larreche’s book, The Momentum Effect, is a must-read. It highlights why more marketing spend and further value extraction are not the key determinants for future growth. To create powerful momentum for exceptional growth, it is essential to offer innovative value to the marketplace. The Momentum Effect outlines just how to achieve this. The results are illuminating.

–W. Chan Kim & Renée Mauborgne, Authors of Blue Ocean Strategy

"How can companies achieve exceptional and sustained growth? The Momentum Effect explores this challenge and reveals successful strategies for originating new sources of growth and value from customers with the power to unlock great potential.”

–Dr. Daniel Vasella, Chairman & CEO, Novartis AG, Basel/Switzerland

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Product Details

  • ISBN-13: 9780132363426
  • Publisher: Wharton School Publishing
  • Publication date: 4/11/2008
  • Pages: 324
  • Product dimensions: 6.12 (w) x 9.30 (h) x 1.13 (d)

Meet the Author

J.C. Larreche is Professor at INSEAD, the famous international business school, where he holds the Alfred H. Heineken Chair. It was as a student at Stanford that he was first nicknamed “J.C.” by his friends. It was also there, in the midst of Silicon Valley, that he developed an interest in the way some firms achieve exceptional growth while others don’t. Since then, his research, teaching, and consulting activities have focused on the discovery of systematic and practical ways to help businesses achieve quality growth that is not only exceptional but also sustainable.

J.C. has always combined his academic life with a business career, and is particularly sensitive to the practical day-to-day realities which executives have to deal with. He is a renowned consultant with leading global corporations, most of them listed in the global Fortune 500. Aged just 36, J.C. was appointed a nonexecutive director of the multinational firm that became ReckittBenckiser, and he kept that position for an exceptionally long tenure of 18 years. He is the Founding Chairman of StratX a strategic development consultancy with offices in Boston, Paris and Tokyo.

His academic work concentrates on fostering the fundamental capabilities that impact a firm’s ability to deliver growth and especially marketing excellence, customer focus, and innovation. J.C. is the author and coauthor of many books and articles, including Markstrat, the leading strategic marketing simulation used by more than one million executives worldwide. He has won many awards, including Marketing Educator of the Year and BusinessWeek’s European Case of the Year award. J.C. is also a respected executive educator whose programs are among the most highly rated in INSEAD’s excellent portfolio.

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Read an Excerpt


Delivering profitable growth year after year is the number-one, non-negotiable imperative facing today's business leaders. Many firms struggle to meet it, others achieve it in fits and starts, but only a select few consistently exceed it—sometimes extravagantly. How do these world-beaters do it?

The answer lies in the momentum effect.1

The momentum effect is a tremendously potent phenomenon by which, under specific conditions, exceptional organic growth is created—growth that feeds on itself. Momentum accumulates energy from its own success and provides ever-increasing acceleration for firms smart enough to build and harness it. These firms go from success to success, buoyed by a self-sustaining growth which sweeps all before them with disconcerting ease.

Momentum allows you to deliver exceptional growth without the stupendous efforts most firms are forced to make every day. It is this self-fueling characteristic of the growth produced by the momentum effect that leads us to call it momentum growth and to use the word exceptional. Momentum growth is exceptional for two reasons. First, because it is characterized by an exceptional rate of growth—exceptional, that is, compared to normal expectations based on history, market trends, or competition. Second, it offers an exceptional quality of growth, one that both generates higher profits and consumes fewer resources.

This book reveals evidence for the momentum effect, demonstrates how it works, and then offers you a pathway to harnessing its power.

The first inkling that a force such as momentum might explain some firms' exceptional growth occurred during my business studies at Stanford University. There, in the heart of Silicon Valley, I became fascinated by the way some businesses suddenly took off, experiencing almost unimaginable growth, whereas others, with what appeared to be technologically superior offerings, sank without a trace. Since then, I have sought out the engines of growth that help companies to create superior value, aided in this endeavor by different teams over time. We began by investigating marketing excellence. We examined customer focus. We scrutinized innovation. Each of these is a useful tool with an undeniable impact on growth, but painful experience over the years has taught us that marketing excellence by itself does not create sustained growth any more than does customer focus or innovation in isolation. We discovered that momentum growth requires a delicate combination of a number of specific elements, working cooperatively and simultaneously. This combination can occur by chance or by design. But even with the best-laid plans, it can work its full magic only if it is executed within a special culture and under a certain type of leadership.2

The momentum that builds as a result is what drove the extraordinary performance of Microsoft, Wal-Mart, and Dell, momentum that then deserted them, and momentum they are struggling to recover. The same near-irresistible energy is powering Apple, Toyota, Virgin, First Direct, and Nintendo today. But if those companies fail to maintain it intelligently, they too could wake to find the momentum behind their growth deserting them. That's the tricky thing about momentum: It is transitory. Without constant care, its power will prove fleeting.

Momentum is dynamic. In business, success can vanish in a flash unless it is constantly renewed. Several of the firms we studied lost their momentum because their leaders failed to understand or nurture the drivers of this force. Many of the stories we tell are of firms that are no longer excellent. And, almost certainly, some of the companies whose praises we sing will lose their momentum all too soon. But all these firms have built momentum and ridden it for all it was worth, some of them for decades. The ability not only to build momentum but, more importantly, to retain your grip on it is one of this book's key takeaways.

After sketching out the first rough outlines of the momentum effect, we embarked on a systematic investigation to expand and refine our comprehension of how it worked. We confirmed its existence as a long-term phenomenon through an empirical study of the world's largest firms, examining their growth in revenues, profits, and shareholder value over 20 years. We conducted in-depth studies of a vast number of small and large firms that enjoyed periods of exceptional growth over the past 50 years. We have generally considered that if a company has sustained this growth for at least ten years, the forces behind that growth were worth investigating—even if that growth has subsequently slumped. We often learned as much from the slump as we did from studying the initial growth. We have made exceptions to this ten-year rule only for recent ventures such as Skype, Nintendo's Wii, and Facebook. We used computerized simulations to replicate the phenomenon and to test different drivers of momentum. We advised client companies on specific aspects of momentum strategy, and tested their implementation.

What we learned was so wide-ranging that it would not sit comfortably within a single book, and we must leave many of our findings to subsequent publications. In these pages, we focus on a single purpose: to present a systematic approach for the design and execution of momentum strategy. This involves an eight-step process creating the specific conditions required to set the momentum effect in motion and to maintain it. This process integrates in a single framework a number of contributions that have emerged in the past decade, in academia and in business, mainly in the areas of customer focus, innovation, and marketing excellence.

Taken individually, each element of momentum strategy is very simple. It is part creativity, part business acumen, part psychology, and part simple common sense. You have to have smarts, not a Ph.D. Many entrepreneurs who created momentum for their firms and held it over several decades never completed university studies, either because of necessity or because they were impatient to go into business—Thomas Edison, Henry Ford, Steve Jobs, Luciano Benetton, Richard Branson, Michael Dell, and Bill Gates, to name a few.

But if the concepts are simple, successfully implementing a momentum strategy is challenging. "In strategy," wrote Clausewitz, "Everything is very simple, but not on that account very easy." This is keenly pertinent to momentum strategy, where the challenge is to first build and then maintain the balance that creates momentum and sustains it over time. For this, we offer a framework that assembles the pieces of the momentum-strategy puzzle into a coherent whole.

This book is divided into four parts. The first, Discovering Momentum, provides the evidence for the momentum effect and explains the phenomenon. It then presents the concepts of momentum strategy and demonstrates its role in value creation before describing a framework for momentum. Each of the eight steps of this momentum process is then examined over the two central parts of the book: Designing Momentum and Executing Momentum. The final part, Total Momentum, closes the loop. It concentrates on the creation of internal momentum and on the leadership competences required to successfully implement momentum strategy and create exceptional growth.

Like sports, the business environment of today's globalized, hypercompetitive world will increasingly become divided into leagues. The top league will consist of momentum-powered businesses enjoying exceptional growth. All the others will be trying to play catch-up. Given the choice, wouldn't you prefer to spend your future in the excitement and accomplishments of the Momentum League? Our most sincere wish is that this book helps you to create and experience to the fullest the stimulation and rewards of momentum.

© Copyright Pearson Education. All rights reserved.

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Table of Contents

Preface     xxi
Discovering Momentum     1
The Power of Momentum     3
Where's the Impetus?     3
What's Holding Us Back?     4
Pushers, Plodders, and Pioneers     5
Momentum-Powered Firms     9
The Power of Momentum in Action     11
Wal-Mart     11
Toyota     12
Join the Momentum League     14
The Source of Momentum     15
The Day Gary Kildall Went Flying     15
The Source of Microsoft's Momentum     16
How Value Is Created     17
Where Is the Unlimited Potential?     19
Drivers of Momentum Strategy     21
Exploring the Customer's Space     21
Crafting "Power" Offers     22
Mobilizing for Growth     23
Momentum Strategy at Work: The iPod     24
How Momentum Growth Opens a New Efficiency Frontier     25
Moving from Compensating to Momentum Strategy     26
Less Is More, More for Less     27
Unlock Your Unlimited Potential     28
The Road to Momentum     29
Vasella's Eureka Moment     29
The Momentum-Powered Firm in Action     30
The Results Momentum Can Deliver     31
The Twin Engines of Momentum     32
Momentum Design     34
Momentum Execution     36
Momentum Design at Skype     38
Momentum Execution at Skype     41
Making Momentum Systematic     44
Designing Momentum     47
Compelling Insights     49
IBM Is Listening Again     49
The Value-Origination Blind Spot     50
Virgin Atlantic     51
Customer Insights     52
3M: Post-it Notes     53
Alcoa Packaging: Fridge Pack     53
Dassault: The Falcon 7X Aircraft     54
The Systematic Discovery of Compelling Insights     54
The Knowing-Doing Discovery Path     57
The Listening Discovery Path     58
The Learning Discovery Path     58
The White Discovery Path     59
The Exploration Process     60
Guiding Exploration     60
Enabling Exploration     63
Explore the World for Insights     65
Compelling Value     69
What Women Want     69
What Does a Customer Value? That Depends     70
Customer Myopia     72
The Customer Value Map     73
Delighting Customers     74
Abusing Customers     76
What's It Worth? How Customers See Value     77
The Customer Value Wedge     78
Financial Customer Value     80
Functional Customer Value     81
Intangible Customer Value     82
Emotional Customer Value     82
Let the Customer See Better Value     84
The Golden Pathway to Increased Customer Value     85
Go Deep, Be Compelling     87
Compelling Equity     89
The Man Who Taught an Old Dog New Tricks     89
The Concept of Compelling Equity     90
Transaction Myopia     92
Lifetime Value: The First Step in Correcting Transaction Myopia     94
The Customer Equity Wedge     96
Financial Customer Equity     97
Functional Customer Equity     98
Intangible Customer Equity     99
Emotional Customer Equity     100
The Customer Equity Map     102
Optimizing Customer Equity     104
The Three Paths of Customer-Equity Optimization     104
Zero-in on Customers Who Drive Momentum      106
Power Offer Design     109
A Bank That Doesn't Like Banking     109
What Is a Power Offer?     110
Exploring for Customer Traction     112
From Exploration to Design of a Power Offer     114
The Compelling Value Path to the Power Offer     115
The Compelling Equity Path to the Power Offer     118
The Pillars of a Power Offer     120
Compelling Proposition     123
Compelling Target     124
Power Crafting     125
The Virtuous Circle of Power Offer Design     127
Design for Traction     129
Executing Momentum     131
Power Offer Execution     133
A Tape Recorder That Didn't Record     133
The Execution of the Power Offer     134
From Product Focus to Value Focus     135
Momentum as a New Business Model     135
The Dynamic Evolution of Power Offers     137
The Business Value of Momentum     140
The Chain Reaction of the Power Offer     143
The Virtuous Circle of Momentum     143
Breaking the Vicious Circles     146
Building and Sustaining Momentum     147
Understand the Emotional Drivers of Momentum     147
Implement a Systematic Action Roadmap to Momentum     148
Turn Traction into Momentum     150
Vibrant Satisfaction     153
Moments of Truth     153
Why Vibrant?     154
The Emotions Beneath Satisfaction     155
"Dissatisfaction Inside"     155
Why Intensity Matters     156
Champions and Desperados     158
Satisfaction Metrics     159
Top Box Ambition     160
The Impact of Vibrant Satisfaction     162
Aiming for Vibrant Satisfaction     163
Strategies for Vibrant Satisfaction     164
Mobilize for Vibrant Satisfaction     165
Detect Sources of Dissatisfaction     166
Convert Unsatisfied Customers     168
Nothing Less Than Vibrant     172
Vibrant Retention     175
For Want of a Key     175
Loyals and Runaways     176
The Emotions Beneath Retention     177
"Freedom Inside"     177
"Temptation Outside"     178
Retention Metrics     179
The Business Impact of Retention     180
Vibrant Retention     182
Passive Retention     184
Forced Retention     185
Vibrant Retention     187
Strategies for Vibrant Retention     188
Mobilize for Vibrant Retention     188
Detect Sources of Defection     189
Convert Defecting Customers     190
Nothing Less Than Vibrant     192
Vibrant Engagement     195
Harry Potter and the Exceptionally Engaged Readers     195
Advocates and Detractors     196
Why "Vibrant" Engagement?     197
The Human Nature of Engagement     197
"Belonging Inside"     197
"Broadcasting Outside"     199
Ambitious Engagement Metrics     200
The Business Value of Engagement     201
Boosted Compelling Value     201
Boosted Compelling Equity     202
Boosted Customer Acquisition     203
The Richness of Vibrant Engagement     204
Paid-For Value and Ambient Value     205
The Customer Engagement Portfolio     206
Strategies for Vibrant Engagement     208
Mobilize for Vibrant Engagement     208
Detecting Sources of Engagement     209
Converting for Vibrant Engagement      210
Competing in the Momentum-Powered League     212
Nothing Less Than Vibrant     214
Total Momentum     217
Internal Momentum     219
Give Me a Squiggly!     219
Mobilizing the Energy Within     220
Building Internal Momentum     221
Compelling Employee Insights     221
Compelling Employee Value     223
Compelling Employee Equity     224
Employee Power Offers     224
Vibrant Employee Satisfaction     225
Vibrant Employee Retention     226
Vibrant Employee Engagement     227
The Momentum Culture     228
The Customer Spirit: "The Real Battlefield Is Outside"     230
The Competitive Spirit: "Outsmarting Your Opponent"     231
Internal Momentum in Crises     231
Wal-Mart's German Fiasco     232
Johnson & Johnson and the Tylenol Crisis     232
The Best of Human Nature     235
Harness Your People Power     236
Momentum Leadership     239
Can You Ski the Face?     239
Generating and Directing Momentum     240
The Momentum-Leadership Ladder     241
Momentum Leadership [star] [star] [star]     243
Momentum Leadership [star] [star] [star] [star]     245
Momentum Leadership [star] [star] [star] [star] [star]     248
Tips for Aspiring Momentum Leaders     252
Commit to Value Origination     253
Practice Momentum Concepts Continuously with Your Contacts     254
Have Respect for People     255
Spend Quality Time with Customers, Employees, and Stakeholders     256
Be Momentum Consistent     257
It Starts with You     258
Epilogue     261
Seizing the Unlimited Potential     262
The Momentum Journey     262
Our Momentum Future     264
Bibliography     267
Endnotes     281
Index     313

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  • Posted January 11, 2010

    more from this reviewer

    Treatise on establishing superior business growth and profits

    Apple's customers love its products. They line up overnight to be the first to buy its newest offerings. They form user groups, becoming Apple "tribe" members. With such loyal customers, Apple has attained self-sustaining business momentum. How did it achieve this rank? Do its managers spend their time slashing costs? No, Apple's leaders focus on developing products that people feel they simply must have. In this carefully conceived, comprehensive book, business professor and consultant J.C. Larreche examines the way firms that have such momentum gain it and sustain it. The book is dense and it uses a fair dose of jargon to convey the power of momentum. Yet, Larreche's lesson that product quality and customer satisfaction (or, better, adoration) are the roots of momentum comes through clearly. It might cross your mind that if you could create products that engender as much devotion as the iPod, well, you already would have done it. This book sets out to show you how. getAbstract recommends this treatise on innovative, customer-driven products and services to executives who want to pump up their products and their sales.

    To learn more about this book, check out the following Web page:

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  • Anonymous

    Posted April 21, 2008

    Momentum: a smarter way to deliver growth!

    The Momentum Effect brings a strategic perspective and lays out practical frameworks on how to bridge innovation, customer focus and marketing excellence to drive growth. It is peppered with vivid examples that challenge company executives to work differently to harness their business¿ growth potential. This book draws on 20 years of solid research. It provides thought provoking insights about the success of firms across many sectors and the leaders that have turned them into top performers for several decades. The research brings to light unexpected results, in particular the fact that firms that spend more on marketing tend to do less well over time. The explanation: these firms use ¿compensation marketing¿ and promotions to make up for mediocre offerings, while the best performers practice ¿origination marketing¿ focused on developing innovative, ¿power offerings¿ rooted in customer research and insights. The stories are inspiring. They make a compelling case for the power of combining customer value innovation together with a relentless drive to engage company employees to generate vibrant customer satisfaction, leading to customer retention, superior profits, customer engagement and the next cycle of customer insights for the company to build on, eventually creating a virtuous circle and the momentum engine. The author combines his firsthand interaction with many successful leaders together with in-depth analyses and simulation-based modeling to create a powerful, yet simple framework, which guides the reader through the key steps that create momentum for growth. In the end, the book makes a convincing argument for a new business model, which shows how customer and internal momentum reinforce each other to deliver highly efficient and profitable growth. Best of all, JC Larreche demonstrates how the road to momentum can bring more excitement into corporate life, while successful execution 'harnessing The Momentum Effect' brings immense rewards, starting with thousands of engaged customers who become your firm¿s most credible advocates, and the source of continued momentum!

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