most frequent request would surely be for a reliable way to create new growth businesses. Business practitioners' overwhelming interest in this subject, which we as academics share, prompted us to undertake a major study ofsuccessful growth moves initiated by established companies in several industries. We looked at a wide range of strategic approaches
F COMPANY LEADERS WERE granted a single wish, their
MarketBusting: Strategies for Exceptional Business Growth
to growth-everythingftom low-risk, incremental changes to high-risk, disruptive ones. In tbe course of our threeyear study, we becameintrigued by an approach that lay somewhere between tbose two extremes. At a high level, this strategy is about redefining profit drivers. At a practical level, it involves making several deceptively simple moves: Some companies reconfigured their unit ofbusiness-what they bill customers for-to more closely match the customers' needs. Some companies focused on different key metrics than theircompetitors did, and, in doing so, created a better business design. Still other companies helped customers change their own unit of business or key metrics. Once we started to look at new growtb through this lens, we found success stories in industries that bad been written off as hopelessly commoditized or strategically unattractive. In a few cases, the companies we studied succeeded so well at redefiningtbeir profit drivers that they bad transformed their industries.
Building a Better Model
It's hard to imagine two businesses more mature than ready-mix concrete and reinsurance. Both industries have been around for more than loo years, and competition in both has devolved: The companies offer standardized products and play by well-established mles. Yet in both industries, we identifiedcompanies that were enjoying sustained and impressive grovrth because they had redefined their profit drivers or changed their unit of business and key metrics. Let's start witb concrete. The problem with ready-mix concrete is that it's highly perishable; it begins to set when a truck is loaded, and the producer has only limited time to get it to its destination. In Mexico-as in many other rapidlyurbanizing countries - traffic, weather, and unpredictable constmction labor make it incredibly hard to plan deliveries accurately. So a construction contractor might have concrete ready for delivery when the site isn't ready or, worse, expensive work crews at a standstill because the concrete hasn't arrived. Lorenzo Zambrano, who became CEO ofthe Mexican company Cemex in 1985, decided that there hadto be a better way to run this business. Cemex, like all traditional cement companies, sold concrete by the cubic yard. But Zambrano's customers didn't particularly value cubic yards of concrete. They rightly considered concrete a commodity product. What they did value (and what Zambrano had the good sense to start selling) were deliveriesin other words, the right amoimt of concrete deliveredjust when it was needed. To figure out how to accomplish tbis goal, Cemex staffers studied how FedEx, pizza delivery companies, and ambulance squads worked. Eventually, they developed digital systems tbat allowed Cemex to adjust, in real time, where trucks were bound. They leamed to optimize delivery pattems across a whole region; customers who unexpectedly needed concrete could be served, often byshipments that had unexpectedly been postponed by other customers. Cemex can now deliver concrete within hours-sometimes even minutes. It can accept unlimited change orders. It can belp customers anticipate demand and cashflow requirements. Cemex, once a regional company operating in Mexico, Is now the third-largest ready-mix concrete business in the world, with plans to capture the number two...