The Momentum Effect: How to Ignite Exceptional Growth
  • The Momentum Effect: How to Ignite Exceptional Growth
  • The Momentum Effect: How to Ignite Exceptional Growth

The Momentum Effect: How to Ignite Exceptional Growth

by J. C. Larreche
     
 

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

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Overview

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:
04/11/2008
Pages:
324
Product dimensions:
6.12(w) x 9.30(h) x 1.13(d)

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Read an Excerpt

PrefacePreface

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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