RELEARNING HOW TO GROW
Six years into the economic expansion, Corporate America is still turning out an excellent performance. The old scourges of an aging business cycle--inventory accumulation, wage inflation, and balance-sheet weakness--are nowhere to be seen. Profits are healthy. Revenues are up. And most shareholders are happy. The globalization of markets and the Information Revolution can take plenty of credit for the healthy economy. But corporations, and the people who run them, should take a bow as well. They chose growth as a dominating strategy of this expansion. After years of playing defense by downsizing and restructuring, corporations have turned to offense to expand in the global arena.
Companies are choosing a variety of tactics to grow. For many, innovation and product development are the paths to top-line revenue and earnings growth. Other companies are shifting to extreme decentralization to generate entrepreneurialism in their ranks. Others still are spending heavily on research and development.
Many CEOs are bulking up their companies through acquisitions. Instead of the financially driven mergers of the '80s, these deals focus on expanding core competencies and businesses, boosting market share to No.1 or 2, and extending brand-name sales around the world. They make business sense.
To match this new reality, BUSINESS WEEK is launching a new ranking listing corporations by their performance. Using eight measures, the magazine grades the entire Standard & Poor's 500-stock index universe and chooses the top 50 Best Performers (page 79).
The companies that made it into the winners' circle are truly exceptional. They accomplish superior results in one of the strongest periods ever for corporate earnings. There is much to learn from their strategies and their managements.