1. Growing Better Business The Challenge of Sustainable Business Growth

2. Growth – The great statistical anomaly We live in a growth addicted world Purveyors : Analysts, journalists, boards consultants and academics No such thing as mature businesses only mature mindsets. Innovation and blue sky (disruptive ) strategies are the key to sustainable growth Significant amounts of time, money and energy are invested in initiatives aimed at growing businesses Study after study reiterates that never ending growth is a delusion, a statistical anomaly that very few companies achieve Significant amounts of shareholder value is destroyed in the legitimate pursuit of revenue and earnings growth We need different growth frameworks, thinking tools analytical techniques and mindsets The Pursuit of Growth

3. The Presentation at a Glance What do the stats tell us about growth Potential interpretations Growth and the business lifecycle Approaches to business growth Thinking Tools: Selecting opportunities that fit Strategic Growth Assessment

4. What do the Stats Tell Us Earnings growth rates are exceeding revenue growth rates (mid 90+) Less than 20% of new corporate ventures generate returns > WACC of the parent 1 in 17 companies world wide are able to sustainably grow both Rev + Earnings in real terms for 10 consecutive years Less than 1% companies world wide are able to sustainably grow both Rev + Earnings in real terms for > 10 consecutive years “ I am prepared to wager a very significant sum that fewer than 5% of profitable companies in 2000 will attain 15% annual growth in EPS over the next 20 years” Warren Buffet 3700 US/Non US co’s – Rev > $500m 3.3% profitably grow top and bottom line for 7 consecutive years 21 of 3700 companies could achieve this over 20 years Corporate Strategy Board

5. What do the Stats Tell Us The Mckinsey Quarterly: April 2007 – Devan, Klusas, Ruefli Performance CategoryNumber of Companies (Highest Performers 12.8%) Superior Performance By Revenue Growth Superior Performance By Profitability Superior Performance by both Revenue and Profitability 138 30 99 9 Sample – 1070 companies, across 17 industries, revenue > $5b, 1994 – 2004 Profit Measurement (Industry Specific ) EBIT, ROCE, ROE Strongly preferred organic growth with acquisitions never being transformative Higher than average market – to – book value

6. Core Business New Channels Cust ProductMarket Geo Area Extensions New Products Complimentary New Customers New Segments Micro Segmentation New Markets New Profit Pools New Segments Direct On-Line Indirect National International Value Chain Backward Forward Adjacencies Diversification Sell Capabilities Organically Strategic Alliance Joint Venture Acquisition Minority Stake Growth Options New Ventures

7. Why is Growth So Tough “Position yourself correctly and manage the operational fundamentals and growth will occur” Markets Profit Pools Business Model Offerings Competencies Capabilities How you competeWhat you use to compete Where you compete Understanding all the options is complex Making good choices, consistently Expected at all costs Contextual and Lifecycle Specific Imperfect Information

8. Competitive Advantage Companies are unique collections of resources capabilities and distinctive competencies Exploit internal capabilities relative to external opportunities Distinctive Capabilities Resources + Capabilities Isolating Mechanisms Diffusion Protection Competitiveness Sustainability Rare skills that your company has that are valued and paid for by clients Durability Transparency (Identifiable) Transferability Replicability (Complexity) Non substitutability

9. Focus - Develop the Core Are they valued by customers Are they difficult to acquire Are they difficult to imitate Role in Value Creation Degree of Differentiation H L HL Non Essential Inner Core Non Core Insufficient clarity of what the core capabilities need to be/are Focus Sustainable competitive advantage Underpinned by causal ambiguity (Tacit skills - complexity - specificity)