SCROLL
TO LEARN MORE
The middle market consistently outperforms other economic segments. To understand what drives its growth, the Center and its partners completed a Bayesian network analysis using data points from 20,000 middle market companies. Taking out factors beyond the reach of management, such as macroeconomic conditions and industry effects, we uncovered seven management-controlled drivers of growth.
How Middle Market Companies OPERATE Within Their Supply Chains
The Perfect Link
7 Management Practices and Behaviors
Weigh Into the Middle Market Growth Model
Growth drivers have different weights in the growth model
and they connect with each other in various ways
(Rollover the circles to explore the Bayesian network analysis)
14.3%
developing new products,
services, and processes
INVESTING
& INNOVATING
12.3%
getting access to capital
and managing it well
FINANCIAL
MANAGEMENT
11.2%
achieving excellence
in operations
COST
EFFICIENCIES
13.7%
including a top team
ATTRACTING
& RETAINING
QUALITY STAFF
10.6%
investing in human capital to
make it more productive
STAFF
DEVELOPMENT
14.4%
creating a plan for growth
and executing on it
FORMAL GROWTH
STRATEGY
23.4%
seeking new customers
and geographies
MARKET
EXPANSION
INVESTING
& INNOVATING
FINANCIAL
MANAGEMENT
COST
EFFICIENCIES
ATTRACTING
& RETAINING
QUALITY STAFF
STAFF
DEVELOPMENT
FORMAL GROWTH STRATEGY
3
5
6
4
7
2
1
MARKET
EXPANSION
GROWTH
Formal growth strategy, investing
and innovating, and talent are closely connected to market expansion; for one kind of grower (Efficiency Experts) it is
the most important factor
Market expansion has the strongest relationship with growth, and all other factors work through it to produce growth
The Fastest-Growing Companies Deploy the Growth Factors
in one of three growth DNA types
By means of innovation, investment, or efficiency, middle market champions
have a growth DNA distinct from that of smaller and larger companies,
which enables them to consistently achieve impressive results.
INVESTORS
Experience the fastest year-over-year revenue growth and tend to be larger than other types of growers
Most likely to expand into new markets
or make an acquisition
Focus on scaling, putting capital to work across
the spectrum of growth-producing activities
11.5%
YEAR-OVER-YEAR
REVENUE GROWTH
increasing R&D
development
INNOVATORS
Innovate and invest in new products and services
and processes for delivering them
Receive more than 20% of revenue from newly introduced products or services
Younger and smaller than other types of growers
9.4%
YEAR-OVER-YEAR
REVENUE GROWTH
innovating products, services and processes
EFFICIENCY EXPERTS
Win by running tight ships and investing in people
A formal growth strategy is the most
critical growth factor
Cost efficiency is strongly correlated
to formal growth strategy
7.4%
YEAR-OVER-YEAR
REVENUE GROWTH
increasing R&D
development
Growers Experiencing Year-Over-Year Revenue Growth
of 30% or More Set Themselves Apart
64%
provide career-pathing
for employees
67%
maintain efficient internal
policies and procedures
71%
are adept at attracting
top managerial talent
65%
exploit new opportunities
in fast-growing markets
67%
maintain first-class
marketing capabilities
73%
have a long-term
growth strategy
73%
keep up with the latest
management tetchiness
68%
have a sustained innovation
and investment strategy
73%
excel at entering
new geographies
By understanding growth factors and growth DNA type, executives can make smarter choices that benefit companies, employees, and communities.