Growth: It’s Vanishing

“

Where are the

big ideas?”

The Problem:

The traditional tailwinds driving sales and profit growth have faded,

and many companies are finding they can’t grow without them.

​

The Solution:

Leaders need to shift their company cultures to encourage

a greater tolerance for risk.

Imagine that your job’s most important metric suddenly fell off a cliff. For decades, this metric had been the one thing you could point to as evidence of your success. And now, like some horror movie, it’s starting to slip away. 

​

Welcome to the world most CEOs inhabit. Outside of a few technology and healthcare niches, corporate growth charts are hardly impressive, which can make for some awkward questions come earnings season. For the five years ending in 2023, S&P 500 firms grew their revenues, 

on average, by 6.9 percent a year. In 2024 that number is more than one-third lower, at just 4 percent. It’s the lowest annual revenue growth of any year in the 21st century that did not have 

a recession. Experts say 2024 won’t be a one-off, either.

​

Academics will debate for decades why something so fundamental to business could dip so much. Certainly, many CEOs haven’t had particularly strong economic tailwinds to help them out. Twenty years ago, big established economies such as the United States, Germany, the United Kingdom, and Japan were growing, as a group, by 3.3 percent annually. As recently as 2018, those advanced economies grew 3.1 percent. In 2023, growth was just 1.8 percent, and 2024 is shaping up to finish close to that far lower number. And in places such as the UK, the economy isn’t expanding at all. Some CEOs, grasping for straws, have turned to mergers as a quick fix, but their expenses rarely pay off. “Stringing acquisitions together is boring and expensive,” says Korn Ferry’s Rossi. “Most destroy value.” 

“

There’s been 

a real hesitancy about making decisions that 

need to be made.”

Some solutions may be right in front of CEOs’ noses, such as expanding more into developing countries or searching for more solutions for the climate. But the biggest

key to future growth, many experts believe, will come—as it usually has—from innovation: breakthrough manufacturing processes that make products faster, better, or cheaper;

or new gadgets that save consumers time and money. Aside from AI, says Grant Duncan,

a Korn Ferry senior client partner and the UK and Ireland consumer practice lead, most companies are focusing on incremental, not ambitious, improvements. “Where are the 

big ideas?” he asks. 

​

Talk to almost any CEO and you’ll find they’re as mystified about this idea drought as they are about the decline in growth. Sometimes the most obvious step can help: Telemetry, for example, found in its research for Korn Ferry that high-performing large firms were the ones that had simply hired more chief growth officers than others—by a whopping 541 percent since 2014. Of the firms named to Korn Ferry’s World’s Most Admired Companies list, eight in 10 say that growth depends less on investment in technology and more on people—hiring the right ones, aligning them properly in the right teams, and offering a skills- and career-development program that’s not based on a check-the-box webinar. “I’m surprised how long it took companies post-COVID to really look at how best to adapt to grow,” says Korn Ferry’s Manson-Smith. “There’s been a real hesitancy about making decisions that need to be made.” 

​

It’s a complicated formula, to be sure, this business of creating a culture to foster innovation. And nobody can know with certainty what works. Still, when Humana, the giant healthcare provider, managed to double its revenues in five years, it was partly due to creating health goals not only for patients but employees simultaneously. One example: successfully improving the health of various communities the company serves by 20 percent, using the Center for Disease Control’s Healthy Days Measures. “You can’t have world-class customer engagement without world-class associate engagement,” says Tim Huval, the company’s chief administrative officer.

A Growth in Chief Growth Officers

Source: Telemetry

At companies with more than 2,000 employees

At companies with more than 5,000 employees

Now:

292

Now:

163

2014:

38

2014:

24

Change: 668%

Change: 579%

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which skills are needed to grow the business, then hire and develop people who have those skills.

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Plant the Seed and It Will…

Companies are aware that growth has gotten harder to come by. Indeed, the number of mid- and large-sized firms that have hired a chief growth officer has risen by nearly 700 percent over the last decade, according to research firm Telemetry. But a dedicated executive isn’t enough to get a company consistently growing.

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