2010 Perspective On Leveraged Growth
Source: Deloitte LLP
As the economy improves, we expect that most companies will gravitate toward traditional growth strategies: organic expansion and acquisition. Yet these growth strategies require up-front investments in additional assets, with an uncertain payoff. So the pursuit of growth almost always narrows margins, for a time or, in the worst case, forever. But another kind of strategy - leveraged growth - doesn't require companies to trade short-term profitability for growth. Instead of owning assets, a company leverages the assets of many other businesses offering complementary capabilities, capturing value for itself as a catalyst for the mobilization of valuable resources. This approach to growth straddles a middle ground between acquisitions and organic growth. While providing financial leverage, these growth strategies provide something even more powerful - capability leverage.