Growth is no longer a given, and in today’s economic climate, companies must rethink how they unlock it. With higher capital costs, reduced global tailwinds, and increasing investor pressure, the path forward requires a willingness to transform under pressure. Leo Cummings, an associate at Hunt Scanlon Ventures, examines why growth transformations are so hard to get right, and what separates the winners from the rest.
Business leaders can no longer rely on tailwinds. With the end of free capital, slowing demographics, and ongoing geopolitical shocks, growth has become harder and more expensive to achieve.
According to Boston Consulting Group’s new report, The Transformation Paradox: How to Grow When the Growing Gets Tough, the odds are stacked against most efforts. Of 1,700 transformations analyzed over 20 years, only 33% delivered value-accretive growth, defined as achieving both growth acceleration and total shareholder return (TSR) outperformance.
Yet transformation during periods of low growth appears to be not only viable, but often more successful. BCG found that growth transformations launched during crises like the Eurozone crisis (39%) or COVID-19 (43%) had higher success rates than those launched in higher-growth years.
It’s a contradiction BCG embraces: “Transforming for growth may seem like an audacious undertaking today—but we’ve found that the success rate for such transformations is actually higher in times of low growth than in other years.”
“Transforming for growth may seem like an audacious undertaking today—but the success rate for such transformations is actually higher in times of low growth than in other years.”
Why Most Transformations Fail
The BCG report makes it obvious; only one-third of companies manage to both accelerate growth and outperform their peers on TSR. The rest either fall short on shareholder returns, fail to scale, or both.
BCG’s definition of success is rigorous. A company must both accelerate sales growth relative to industry peers and deliver TSR outperformance within three to five years of beginning its transformation.
BCG studies show that most firms don’t meet both marks. 25% actually slow down and underperform, while another 21% gain growth without delivering value. The result: transformation becomes a cost, not a catalyst.
What Drives Success
So what tips the odds? BCG identified 10 specific success factors across two categories: building capabilities and executing the change.
Among the most impactful, appointing a chief transformation officer (+22%), crafting a compelling narrative (+10%), and building transformation experience (+11%). On the capability side, investing in innovation (+6%) and looking beyond the firm’s boundaries (+5%) also stand out.
BCG is clear on one thing: “Transformations that employ multiple success factors can substantially increase their rates of transformation success.” Yet fewer than 20% of companies apply more than two.
“Transformations that employ multiple success factors…can substantially increase their rates of transformation success.”
Paradoxes at the Core
Successful transformations embrace contradictions. BCG outlines three “transformation paradoxes” that define how growth happens under pressure.
The first: Creativity vs. Discipline. Fostering innovation while maintaining execution rigor. As BCG puts it, “Fostering creativity is crucial, but growth transformations also require disciplined execution.”
The second: Vision vs. Foundation. Balancing a long-term future focus with near-term operating model discipline. “Successful and profitable growth is not only a mindset—it’s also about creating an efficient operating model to support it and to fund the journey,” noted BCG.
The third: Experience vs. Adaptability. Prior success doesn’t guarantee future results. Only 20% of firms avoid the “success trap,” repeating what worked instead of adapting to new realities.
“Successful and profitable growth is not only a mindset—it’s also about creating an efficient operating model to support it and to fund the journey.”
Why Now Is the Moment
Despite headwinds, now may be the best time to act. Companies that transformed during downturns, including Delta, Amazon, and Starbucks, emerged more resilient, more scalable, and more competitive.
“Outperformance during recessionary times contributes significantly to overall long-term outperformance,” BCG found. “Over a 10-year horizon, nearly three-quarters of TSR is driven by sales growth. Put differently: growth will get you ahead competitively in times of crisis.”
For firms willing to face this paradox, invest in capabilities, and lead with clarity, transformation isn’t just survivable, it’s a growth engine.
Article By
Leo Cummings
Leo Cummings is Editor-in-Chief of ExitUp, the investment blog from Hunt Scanlon Ventures designed for professionals across the human capital M&A sector. Leo serves as an Associate for Hunt Scanlon Ventures, providing robust industry research to support the firm’s investment group.
