As India anticipates a century of independence in 2047, it is committing to sustainable and inclusive growth in its goal of becoming a developed economy. This ambition is likely to see 600 million jobs created, income rising sixfold to over $12,000 per capita and GDP growing to $19 trillion.1 In realizing this goal, the private sector is an indispensable partner.
We set out to understand how Indian enterprises can achieve the extraordinary growth necessary for them to propel India towards its centennial aspirations. We analyzed the performance of 837 Indian publicly traded companies between 2012 and 2022.2 The results of the research were clear. Most companies performed in line with national economic growth, over the period.3 However, what’s impressive is that one in every five companies (top quintile) were able to double their revenue every five years and quadruple it in ten, achieving revenue growth of 15 percent or more, compounded annually. This extraordinary growth rate is more than two and a half times4 the GDP growth rate during the same period, and it has the potential to act as a GDP growth catalyst (Exhibit 1).
Our research clearly indicated that extraordinary growth rates such as these are achievable for Indian enterprises, but persistent myths abound that deter companies from pursuing such growth. This article debunks those myths and proposes enablers for companies aspiring to such growth.
The top quintile companies also delivered nearly double the total shareholder returns (30 percent) over five years compared to the Nifty 50 benchmark index of 14 percent total shareholder returns.5 We deem this as extraordinary growth, and companies achieving this as “growth champions.” Higher returns are important because when compounded over a ten-year period, this increase could create ten times more wealth for shareholders compared to the benchmark index.
Our analysis identifies common misconceptions surrounding growth champions, providing a roadmap for others to follow. A more nuanced understanding of sustained high growth could help to recognize champions, identify best practices, and provide both a benchmark to measure progress and a roadmap for others to follow.
Myths about growth can prevent companies from aiming high
While most companies aspire to growth, misperceptions of leaders can keep them from setting high growth targets. Leaders may believe growth depends on size, on being in the right industry, that growth comes at the expense of profit, or that a low-growth company cannot dramatically turn around performance. Lessons learned from the companies in our sample shed light on these four common myths around growth outperformance:
Myth 1: Size matters. Only large companies can outperform in uncertain times
Indian companies have had to overcome considerable uncertainty over the past few years, such as the impact of COVID-19, supply chain disruptions, and severe weather events—and it’s likely that uncertainty will continue. In this environment, business leaders could well believe that success is the domain of large, established companies. However, our study revealed that 36 percent of smaller companies, with revenue less than INR 1,500 crore (approximately $180 million) in 2022, were classed as growth champions.6 Only 10 percent of mid-sized firms (revenue between INR 1,500—4,000 crore) and 11 percent of large firms (revenue greater than INR 4,000 crore) showed similar growth (Exhibit 2). While it is true that some of this high growth can be attributed to the low base effect, the difference in average growth rate between these categories is too significant to overlook.
Myth 2: Companies must either choose growth or profits, not both
Many firms may consider growth and profitability as trade-offs. After all, growth plans frequently incur sizeable costs as companies expand capacities, enter new markets, introduce new product lines, or invest in brands. But our research confirms that revenue growth and profit growth have a high correlation coefficient of 0.95, which shows a strong relationship between the two variables (Exhibit 3). Companies with extraordinary growth in revenue also saw gross profit increasing in parallel, with an average of 20 percent profit growth compounded annually, compared to less than 9 percent profit growth for peers over the same period.
Growth provides scale benefits, but that only explains part of this correlation. Growth champions reduce costs and pursue value engineering to open new markets and create surplus profits for investing in future growth.7 This may include investing in distribution networks that increase their access to customers, investing in their brand and marketing, or tightly managing their pricing strategy.
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Myth 3: Extraordinary growth is only possible in high-growth industries with tailwinds
Higher revenue is easier to unlock when companies are fortunate enough to be in high-growth industries. Financial services, IT, and healthcare companies in our sample have all grown revenue at double-digit rates over the past decade (Exhibit 4). But it’s also true that while tailwinds matter, extraordinary growth is possible in almost every industry. Hence, a company in an industry facing headwinds should not be limited by the belief that growth is beyond reach.
In almost all sectors, the top quintile of our sample has grown revenue by more than 15 percent over the past decade, indicating consistent outperformance. The only exception was the energy sector.
Myth 4: Once a low-growth company, always a low-growth company
Companies that trail their peers can turn around performance. In fact, companies can stage a significant recovery within a ten-year horizon. When we analyzed the performance of sample firms between the first and second half of the past decade, we found that one in two trailing companies were able to leapfrog from the bottom two quartiles into the top.
Performance turnaround is much more prevalent in high-growth sectors. Almost 50 percent of companies who ended the decade in the top quintile for the financial and real estate industries were not in this position in the first half of the past decade (Exhibit 5). This figure was much lower in slow-growing industries, where less than half of the companies had overturned performance to gain a top-quintile position.
Extraordinary growth, while challenging, has been achieved by companies across industries, regardless of size and even their performance relative to their peers. Understanding how these companies have outperformed is interesting—but will be truly valuable only if other companies follow suit. What, then, can we offer as a roadmap?
Extraordinary growth demands bold choices
Fast-growing companies typically make the explicit choice to grow, and follow that up with bold, deliberate actions. The core elements are an ambitious mindset, the right internal enablers, and clear pathways for action founded on growing revenue.
Previous McKinsey research identified a consistent growth framework for companies with success indicators. Analyzing the growth patterns within the sample allowed us to recognize seven levers for high growth that may apply to Indian companies. Organizations can pull these levers to accelerate their core, through digital technology and data, agile resource reallocation, and investing in leadership capabilities. Additionally, four more levers encourage companies to diversify beyond core business, including the pursuit of adjacent opportunities, the creation of new breakout businesses, global ambitions, and a strategic approach to acquisitions. Research has found that high-growth companies execute along not just one, but several, distinct growth levers (Exhibit 6).
Accelerating the core
While pursuing sustained growth, outperforming companies also recognize the need to fortify their core operations. Here, companies have three paths for higher growth, including the adoption of digital technologies and data, agile resource allocation for the highest returns, and investing in leadership development.8 By investing in both systems and people, companies can enhance their overall potential.
Unleashing the full potential of digital and data
In financial services, IT, and healthcare, around 40 percent of companies studied were growth champions—and digital transformations were a common accelerator. Using data and advanced analytics can streamline processes and enhance capabilities across the board, including pricing, marketing, and decision making. An Indian multinational electrical equipment company deployed digital technologies in fulfilment, pricing, and marketing functions to deliver triple growth in e-commerce sales in a few months.
In another example, a leading commercial vehicle manufacturer seized the opportunity to build a breakout business by recognizing that overall lifetime spending on a commercial vehicle is ten times the cost of the vehicle itself. It launched a full stack solution for customers, which included driver skilling, vehicle health monitoring, and fuel monitoring. The driver skilling module alone accounted for between 7 and 10 percent of fuel savings for the customer.
Courageous growth: Six strategies for continuous growth outperformance
Reallocating resources with agility
Companies that expand by maintaining or increasing their exposure to fast-growing, profitable segments can outperform their peers. And organizations facing market headwinds may need to reallocate their resources aggressively. This reallocation could include segments, geographies, channels, or timing. Growth champions often assess opportunities with a microscopic view of neighborhoods at a pin-code or district-level, rather than a macro state-level lens.9
A decade ago, newer channels such as e-commerce and social media commerce had limited penetration in India.10 With the Indian e-commerce market estimated at over $55 billion in gross merchandise value in 2021, it is forecast to reach $350 billion by 2030, growing at a 23 percent rate compounded annually.11 Large companies would therefore need to think differently in terms of resource allocation as they build their presence and capabilities in these channels.
To expand its geographical footprint, a leading cement brand in India reassigned technical officers from other regions to prioritize newer markets, as well as markets where it wanted to improve its brand. This reallocation helped it to achieve its objectives quickly and effectively.
Investing in the next line of leaders
Empowering leadership throughout the organization can enhance operational efficiency as top executives are better able to focus on strategic initiatives, propelling the organization towards innovation and growth. Previous analysis has shown that investing in culture and leadership can contribute to overall organizational health and performance within six to 12 months.
An Indian construction conglomerate invested in a multiyear, next-generation leadership program for 45 leaders. The program focused on building leadership skills and business acumen through a combination of in-class modules and on-job trainings. Following this program, the company realized significant incremental revenue through over 200 breakthrough projects in one year.
The key lies in fostering a consistent strategic direction by leadership, with an emphasis on supportive and consultative leadership styles, and developing and deploying strong leaders at all levels. Organizations that do this may be more likely to improve overall health, establishing a robust foundation for continuous growth and success.
Looking beyond core business
Our research found growth champions frequently choose to grow competencies beyond their core business, transferring the skills, expertise, and market knowledge acquired in one sphere to new markets and geographies. There are four key growth drivers that high-growth companies typically pursue as they look beyond their core businesses, including the pursuit of adjacent opportunities, creating new breakout businesses, pursuing global expansion, and mergers and acquisitions.12 Diversifying beyond the core can be a valuable growth strategy for any company, regardless of industry. Fast-growing businesses can consolidate their position, with opportunities for slow cultivators too.
Pursuing adjacent opportunities
Firms can use their existing assets and capabilities to venture into adjacencies. For example, a longtime industrial switchgear producer used its technical expertise and distribution network to expand into an adjacent market segment—consumer durables such as kitchen appliances, fans, and water purifiers. By 2022, 20 percent of its revenues came from this work (from 15 percent in 2017), and it is now one of the largest incumbents in the sector.
Creating new breakout businesses
New breakout businesses offer a pathway to growth that involves both disruptive innovation and the establishment of newer categories. This dynamic approach requires a firm commitment to innovation, a deep understanding of customer needs, and the willingness to make big bets. It goes beyond simply creating unique products, to paying careful attention to customer centricity and operational capabilities, and a willingness to embrace change through the fail-fast model, where failures are quickly identified and learned from.
One of India’s largest healthcare organizations followed this route to growth. Starting with a single hospital, the company strategically expanded into pharmacy, insurance, and retail healthcare while continuing to grow its hospitals offering. It now has over 10,000 beds, alongside thousands of pharmacies across India. Its retail healthcare offering includes several different revenue categories from diagnostics labs, dialysis centers, and dental clinics to specialized care centers for maternity and neonatal, day surgery, and diabetes, among others.
Building new export markets worldwide
Companies that demonstrate strong growth locally could find similar success internationally if they have a clear competitive advantage. India’s exports were forecast to reach $770 billion in 2023 with a target of $2 trillion by 2030.13 Commodities, healthcare, and IT service sectors, in particular, have seen exports soar.14 Growth champions in these sectors have benefited from lower production costs and higher availability of skilled labor.15 One of the largest diversified Indian conglomerates has tripled exports as a share of total sales, from 4 percent in 2012 to 13 percent in 2023.
Strategic mergers and acquisitions
Mergers and acquisitions (M&A) are powerful tools for growth, and 30 percent of growth champions in our sample have undertaken substantial M&A activity. Strategic acquirers build organizational capabilities and best practices across all stages of the M&A process to successfully integrate the two businesses. A leading chemical company has made more than 40 successful acquisitions in the last 25 years. By acquiring businesses that already have a significant presence, it has increased market share from approximately 15 percent to 25 percent, growing revenue by 20 percent compounded annually over the last ten years.
Strategic acquirers often execute acquisitions systematically which enables them to better navigate industry headwinds, possibly because of their agile organizational culture. They also outperform peers that focused on organic growth, delivering total shareholder returns that were almost four percent higher.
As India aspires towards its centennial ambition of becoming a $19 trillion economy by 2047, companies across all sectors can build their own recipe for growth outperformance. The seven growth levers we described could help create superior value for shareholders and drive broader economic prosperity for the nation. Ultimately, it is up to company leaders to decide whether they wish to pursue extraordinary growth. If they do, these levers may provide the direction they seek.
