The Alchemy Of Growth: Practical Insights For Building The Enduring Enterprise [Hardcover]

Mehrdad Baghai (Author), Steve Coley (Author), David White (Author)

Book Description

Publication Date: April 6, 1999

Growth unleashes benefits beyond the economic. It revitalizes organizations and invigorates the people in them, creating energy, a sense of purpose, and the glow of being on a winning team. Like the alchemy of old, it seeks to transform the everyday into the exalted by means that seem little short of magical. Yet growth is often elusive, achieved at unacceptable costs, or managed in fits and starts. Based on over three years of research and application at high-performing companies around the world, The Alchemy of Growth is a comprehensive, practical approach to initiating, achieving, and sustaining profitable growth—today and tomorrow. As the book shows, the secret is to manage business opportunities across three time horizons at once: extending and defending core businesses, building new businesses, and seeding options for the future. The Alchemy of Growth offers managers at all levels the tools and concepts for investing in the right initiatives, capabilities, and talent to propel their companies into the future.

Editorial Reviews

Amazon.com Review

Why do some companies come and go while others endure? According to McKinsey & Company, Inc. consultants Mehrdad Baghai, Stephen Coley, and David White, the secret to a lasting enterprise is sustained growth. In The Alchemy of Growth, the authors offer a practical guide for jumpstarting expansion and keeping it going. "Growth is a noble pursuit. It creates new jobs for the community and wealth for shareholders. It can turn ordinary companies into stimulating environments where employees find a sense of purpose in their work," they write. "Growth's transformative power is akin to the alchemy of old."

The authors describe the approaches that have succeeded in helping their corporate clients around the world to step up the pace. For instance, companies must simultaneously focus on "three horizons" critical to growth. The first is the current bread-and-butter of the firm; the second, the fast-developing entrepreneurial ventures; and the third, the ideas that will germinate into tomorrow's profits. The best part of the book: the real-life examples of firms that have transformed themselves from laggards to supercharged growth companies. Take Disney, for example. After founder Walt Disney's death in 1966, the company stagnated, with its theme park and film business slipping. But after Michael Eisner took over in 1984, Disney boosted its average annual returns to 29 percent, on the strength of growth in such new avenues as Disney stores, ESPN, and resort development. The Alchemy of Growth is an instructive handbook for managers interested in spurring their companies to new heights. --Dan Ring

From Library Journal

This slender volume is the latest in a growing number of books from accounting, management, or consulting giants. Here, the topic is that most elusive of business concepts, growth. Coauthors Baghai, Stephen Coley, and David White are partners at the renowned consulting firm of McKinsey & Company, specializing in growth strategies. They feel that the growth creation process has three stages: maximizing current business, building emerging issues, and developing viable options. This framework is used to examine successes and failures while exploring the interrelated issues of inertia, momentum, business history, opportunity, leadership, and sustained growth. The last third of the volume consists of two-page summaries of the 30 companies used as successful examples. The concepts are clear, logical, and well documented with footnotes, but this type of business book will date quickly even if the underlying theoretical framework is sound. Public and undergraduate libraries will find this an acceptable though optional purchase.APatrick J. Brunet, Western Wisconsin Technical Coll. Lib., LaCrosse
Copyright 1999 Reed Business Information, Inc.

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Product Details

• Hardcover: 272 pages
• Publisher: Basic Books (April 6, 1999)
• Language: English
• ISBN-10: 0738201006
• ISBN-13: 978-0752813615
• Product Dimensions: 9.2 x 6.4 x 1.1 inches
• Shipping Weight: 1.6 pounds
• Average Customer Review: 4.5 out of 5 stars  See all reviews (14 customer reviews)
• Amazon Best Sellers Rank: #734,826 in Books (See Top 100 in Books)

More About the Author

Mehrdad is Managing Director of Alchemy Growth Partners, a boutique advisory and venture firm based in Sydney. Mehrdad advises large companies on their growth strategies and business building initiatives. He is co-author of the international bestsellers, The Alchemy of Growth, The Granularity of Growth as well as the newly released book As One. Previously, he was a partner in the Sydney and Toronto offices of McKinsey and Company and co-leader of the Firm's worldwide Growth Practice.

He is the founder of the High Resolves Initiative, a community service project around global citizenship, which has reached over 10,000 high school students. Mehrdad is a Henry Crown Fellow at the Aspen Institute. Mehrdad received a B.S.E. with highest honours in electrical engineering and computer science from Princeton University, where he also completed a joint degree on public policy at the Woodrow Wilson School. He continued his education in public policy at Harvard where he completed an M.P.P. as a Kennedy Fellow at the Kennedy School of Government and a J.D. with high honours at Harvard Law School.

Customer Reviews

Most Helpful Customer Reviews

23 of 24 people found the following review helpful:

5.0 out of 5 stars A strategic stairway to business success, June 8, 2000

By 

Bill Godfrey (Mt Stuart, TAS Australia) - See all my reviews
(REAL NAME)   

This review is from: The Alchemy Of Growth: Practical Insights For Building The Enduring Enterprise (Hardcover)

A perspective on corporate growth and change which works through the need to maintain a simultaneous focus on three 'horizons' - today's business, emerging businesses and longer term options and the implications for strategy, management and structures.

As you would expect of a book out of the McKinsey stable, this is on an issue of importance to business, is well researched and analysed and very readable and well presented. As you would also expect, it is focused on large corporates, and on strategies for their business success, as measured by exceptional growth and returns to stockholders.

It provides one important perspective on the issue of corporate growth and development, to be compared with other perspectives.

There are obvious comparisons with Collins & Porras: 'Built to Last' both in the concern with continuing exceptional performance over an extended period and in the care taken to explain the research base from which the findings are derived. However, whereas Collins & Porras are concerned primarily with values and culture, Baghai et al are primarily interested in strategies for the selection, development and management of a portfolio of businesses and the implications of those strategies for structuring, staffing and operations.

The fundamental thesis is simple and can be stated in a few propositions:

The companies that have been successful in maintaining high rates of growth with superior profitability are those that have learnt to manage well to three different time horizons at the same time - today's business, the next generation of emerging businesses, and the longer term options out of which the next generation of businesses will arise.

In order to develop longer term options into 'core profit engines', a series of measured steps (concerned with finding ways of profitably building core capabilities and markets) are required, which the authors call 'stairways'. In the nature of things, not all stairways will lead to future core businesses, so a variety of initiatives need to be carried forward together. Management of the 'stairways' should receive significant senior management attention.

The skills and temperaments required to manage current business, to develop new business and to search out viable future options are widely different one from the other. The key to maximising the profitability of today's business is excellence of execution. Emerging businesses require business builders - the typical entrepreneurial temperament, while the identification of future options requires lateral thinkers and visionaries.

In consequence, the style of organisation and internal culture most appropriate to each of these foci are also different. Large corporates tend to find difficulty in encompassing these very different cultures. The authors discuss in some depth the resulting issues of internal culture, recruitment, structuring and transition, and their strategic management.

The strength of the book is that the authors identify a key issue in business success - the development and maintenance of a vigorous portfolio of businesses over the longer term - and work through the implications with clarity and thoroughness.

The cost of that approach is that other equally significant issues are assumed or left in the background. It is necessary to balance the valuable perspective offered with others that are also important. It is also necessary to be aware of the underpinning tacit assumptions - for example, the underlying metaphor of organisation adopted by the authors appears to me to be much nearer that of the organisation as a (money) machine, than that of the organisation as an organism. There is a marked contrast with the emphasis in, for example de Geus: 'The Living Company'. This is not to say that either is wrong, only that neither is complete.

5 of 5 people found the following review helpful:

4.0 out of 5 stars Very useful models and abstractions, June 5, 2000

By 

frumiousb "frumiousb" (Amsterdam, the Netherlands) - See all my reviews
(VINE VOICE)    (TOP 500 REVIEWER)   

This review is from: The Alchemy Of Growth: Practical Insights For Building The Enduring Enterprise (Hardcover)

It seems like a no-brainer that companies need to grow in order to survive or compete, and this book isn't interesting because it tells us what we already know. What's interesting about this book is that the authors do a wonderful job of taking substantial research, abstracting the trends, and rendering their findings into very clear and usable models and messages that can help most managers who are thinking about growth. It was particularly interesting for me, as I work as an ebusiness consultant for a large IT integrator and many of my customers are trying to start new staircases (as described in the book) via Internet channels and I can immediately see the applicability of Alchemy to what they're trying to do.

The book is a quick read (almost comically quick, given the price) and mercifully low on buzz words. Right now, I don't see the appendix as being particularly useful, but I may find it more so later. Annotating the bibliography would have added a lot of value.

5 of 5 people found the following review helpful:

5.0 out of 5 stars Useful Insights about Growth Options, June 13, 1999

By A Customer

This review is from: The Alchemy Of Growth: Practical Insights For Building The Enduring Enterprise (Hardcover)

The authors have focused on one type of real options - growth options - and written a useful book on the topic. They take a high-level strategy view of the topic and do not cover the actual pricing of growth options. However, such options represent the majority of the value of most technology and startup companies. As a result, focusing on growth options can provide useful insights for managers and break through some of the short-sighted management fads (such as Stern Stewart & Company's Economic Value Added (EVA) metric) which focus on short-term profits at the expense of long-term value creation.