Perspectives 2
December 23, 2016
2Q 2016 Middle Market Indicator
The National Center for The Middle Market

LEVERS OF GROWTH AND PERFORMANCE

When a company outperforms its industry or the economy, its leaders must be doing something right. Using factor and regression analyses, we have ranked activities that appear to have the greatest leverage on top-line growth. Foremost is expanding into new markets (especially domestic), which contributes 43% to middle market company growth. Innovation comes second, contributing 29%. Talent investments are third, with an 11% contribution. These are not mutually exclusive; CEOs know and our studies document that lack of talent is a major obstacle to global expansion, for example.

Growth is an important element of overall performance, but the full value of an enterprise also depends on its competitive position, efficiency, profitability, risk management, and other factors. Accordingly, the gearbox that drives overall performance is different. For example, salesforce effectiveness and retaining profitable customers rank high as levers of performance, whereas market expansion and finding new customers matter more for revenue. There is a strong link between planning and both growth and performance, but for overall performance the emphasis is on strategy and long-term plans.

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