How to Grow Without Betting Big
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Many leaders and companies shy away from a high-risk strategy built around big gambles. But they still want to grow. According to BCG Institute research, companies that succeed with lower-risk growth have strategies that feature four elements: the commercialization of existing capabilities, small acquisitions, smart partnerships, and diversified bets. Learn from real-world successes.
Some of the most spectacular stories of corporate growth revolve around big bets — long-term investments, bold pivots, and major acquisitions. Think of ASML, which pursued next-generation semiconductor manufacturing technologies for more than 30 years; Adobe, which abandoned perpetual licenses in favor of cloud subscriptions; or Disney, which acquired Pixar, Marvel, and Lucasfilm in quick succession.
The companies and leaders that pull off such moves are celebrated as heroes.
But not every company is comfortable making big bets — particularly in volatile times. Our recent research showed that when faced with high-uncertainty events, 90% of companies pulled back rather than doubling down. So, what about a growth strategy not for the heroes but for the rest of us? How can businesses reignite or sustain growth without betting big? It’s a particularly pressing question at a time when economic tailwinds that aid corporate growth are slowing.
To find answers, we evaluated more than 1,200 companies operating in industries structurally challenged on growth, taking a close look at players that grew without relying on high-risk moves. We found that de-risking growth does not rely on making smaller bets, or on making bold moves less frequently. Rather, it requires a different approach at every stage of the growth cycle — from identifying opportunities, to executing on them, to managing risk across a portfolio of initiatives.
Learning From Low-Risk Growth Strategies
To study growth in the absence of economic tailwinds, we focused on industries in which aggregate revenues grew less than global GDP over the past 10 years. As expected, we found that in these challenged sectors, achieving high growth rates (more than 8% annually over our period of investigation) is hard: Out of the more than 1,200 companies we evaluated, fewer than 120 achieved that level of growth. (See “Significant Growth Without Big Bets.”)
Around half of those companies achieved their extraordinary growth by making big bets — major pivots in their business models or industry footprints, or acquisitions exceeding 20% of their market cap. They were rewarded with a median annual total shareholder return (TSR) of 5.5% over the 10-year period we studied, with the top quintile among them even generating a remarkable 13% annual TSR.
