The Idea in Brief
If you’re finding it harder than ever to grow revenue, you’re not alone. Just 10% of companies enjoyed eight or more years of double-digit growth between 1990 and 2000.
Why? Revenue-boosting tactics—international expansion, acquisitions, aggressive price increases—are running out of steam. And reliance on products alone is backfiring, as markets become saturated. (How many appliances and credit cards do customers really need?)
But you’re sitting on the answer to this growth crisis: your company’s hidden assets, those intangible capabilities and advantages you’ve built in the normal course of doing business. These include:
- customer relationships—your reputation for expertise, your high level of customer interaction
- strategic “real estate”—your strong market position, your place in the value chain
- networks—your installed product base, user communities, links with suppliers
- information—your proprietary technical know-how, software systems valuable outside your company
By leveraging hidden assets, you make your customers’ lives better—more convenient, less expensive—without bombarding them with redundant offerings.
Sears, for example, leveraged its reputation for expertise to build a strong position in the home-renovation market. Sears Great Indoors provides a full spectrum of remodeling services—from design and financing to construction and installation. It streamlines customers’ shopping time and project planning and improves the quality of the finished renovation.
You’ve spent years growing by creating products and services. Now recharge—and sustain—growth by using the hidden assets you’ve accumulated in the process.
The Idea in Practice
The Benefits of Hidden Assets
Your hidden assets offer many advantages. They generate more growth than product extensions and less risk than new products for new markets. They reinforce—rather than cannibalize—your core product business. And rivals can’t easily replicate them.
A Universe of Hidden Assets
Your diverse hidden assets include:
Customer relationships. Your position of authority with customers and insights into their business issues enable you to deliver new, more sophisticated offerings than your competitors do—at lower cost and premium prices. Example:
John Deere capitalized on its reputation with landscapers by offering them one-stop shopping. It purchased two nursery- and irrigation-products chains, renamed them John Deere Landscapes, and added showrooms displaying its latest machines. Its credit program lets landscapers offer financing to their homeowner customers. The company has moved beyond the mature $20 billion landscaping equipment market into the fast-growing $100 billion landscaping market.
Strategic “real estate”. Your strong market position lets you enter new markets quickly and cheaply. Example:
Drug distributor Cardinal Health used its position in the pharmaceutical value chain to better meet its customers’ and suppliers’ needs. For hospital pharmacies, it developed automated technology for ordering and dispensing medications—reducing loss and theft, improving accuracy, and maximizing data capture. For drug makers, it created customized packaging. Now Cardinal Health is a major player in pharmacy management, IT, and drug packaging. Its revenues and operating profit have grown at double-digit rates.
Networks. Your third-party relationships with suppliers and installed product bases provide opportunities to offer lucrative services. Example:
General Motors leveraged its installed base of 80 million vehicle owners by launching OnStar—in-vehicle services for drivers that include access to route-planning information, traffic updates, and concierge services. More than 2 million drivers subscribe to OnStar, generating recurring revenue streams and funneling detailed information about their needs directly to GM.
Information. The software systems you’ve developed to capture and manipulate information about your business can lead to additional growth-generating businesses. For example, Cardinal Health created a business to package and sell real-time information about wholesale and retail drug sales to pharmaceutical marketers.
Deep down, executives know that achieving strong and sustained top-line growth is getting tougher. They may be able to temporarily boost earnings by slashing costs. They may be able to inflate their companies’ share prices with the promise of future profits. But steady sales gains remain elusive. Even during the boom years of the past decade, consistently strong revenue growth—the foundation of steady earnings and share price growth—was the exception: From 1990 to 2000, just 10% of publicly traded companies enjoyed eight or more years of double-digit growth in their top line.
