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That isnt surprising. The history of most successfulWestern businesses has been to move in a straight line,from insurgent to incumbent. And often, thats where

the growth story ends (se Figur 1). Having misplacedtheir innate bias for simplicity, they now pile on com-plexity in an increasingly futile effort to reignite growth.

For leaders of these large incumbent companies, the realdilemma is how to revive their original Founders Men-tality before the burdens of size and complexity dragthem down. Leaders of insurgents, meanwhile, aresearching for a different road to growthone thatrejects the so-called best practices of the incumbents,yet still delivers global scale.

It is possible. Companies stepping onto the global stage

can resist the natural forces pushing them off course.Multinational corporations that have succumbed tothose forces can regain their wayon their own or throughcreative partnerships with insurgents. Its not easy, butas we show in our book Repeatability, the tools they needalready exist inside their own companies. For CEOs,the question is: Which path to a Great Repeatable Modelis my company on?

The paths to Great Repeatable Models

How insurgent companies capture the benefits of scale and

scope without losing their Founders Mentality

SM

Most fast-growing companies aim to do more thansimply increase revenue year after year; they aspire toglobal leadership in their industries. That kind of successrequires sustainable growth: As the companys revenuesand customers grow, so must its capabilities.

These companies often start as insurgents, led by ambi-tious entrepreneurial founders who break the rules.They are fast, agile and adaptable. They thrive on aunique understanding of their customers and theirlocal markets. They hate complexity and work tirelessly

to keep their organizations and offerings simple.

But they also know that to win in the long term they needthe cost advantages and broader scope of global incum-bents. And, in too many cases, they eventually accept a trou-bling trade-off: In achieving scale, they lose what we call theFounders Mentalitythe very core strengths and valuesthat helped these insurgents succeed against the odds.

BAIN STRATEGY BRIEF

Figur 1: Too often, a Founders Mentality is lost in the quest for scale, causing complexity and then aslow drift toward bureaucracy

Incumbents Great Repeatable Models

Struggling bureaucracies Insurgents

Source: Bain & Company

High

Low

Low HighNet benefits of Founders MentalitySMLeaders and the front line share a bold mission, a focus on the needs

of their core customers and a commitment to develop the routines,behaviors and talent that transform industries

Net benefits of scaleMarket leadership, assets

and scope to out-invest thecompetition, better serve

customers and attractthe best talent

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This immediately becomes apparent when the companyconsiders expanding abroad. Decades of research dem-onstrate that international expansion should build ona strong core business and that a companys first forayabroad should export the core of its core. Yet compa-nies afflicted with the Midas touch find themselves

wondering, What is our core?

The antidote to the Midas touchand to the other west-ward windsis to understand and rely on the RepeatableModels that led to success in that core. Basing expansionon repeatable models ensures that growth strengthens,rather than weakens, the Founders Mentality that led toearly success. In turn, that serves as a natural defenseagainst complexity on the path to scale and scope.

By James Allen, Dunigan OKeeffe and Chris Zook

Bains Developing Market 100 (DM100) initiativea close partnership with leading developing marketcompaniesand our research on Repeatable Modelsprovide insights into how companies can maintain aFounders Mentality as they grow.

To do so, companies must avoid the forces that pushthem west on our grid toward the incumbent quadrant,toward that troublesome trade-off. We call these forces

the westward winds (se Figur 2).

Lets examine one of these winds: the Midas touch. Manycompanies grow rapidly during their early years, partic-ularly in emerging markets. Yet this growth often resultsin part from proprietary access to talent, capital andgovernment relationships. Success only increases theseadvantages and, for a while, almost everything the com-pany touches seems to turn to gold.

But behind this seemingly virtuous circle of growth,complexity mounts. Multiple businesses cause thecompany to lose sight of its core.

Figur 2: How to resist the westward winds that push insurgents off course

Source: Bain & Company

Founders great track record and proprietary access totalent and capital leads to over-expansion, diffused focusand a complex portfolio

Rediscover the core: Sharpen focus on key sourcesof differentiation and pursue one-step adjacencyexpansion only when core is at full potential

The Midas touch

Founders attempt to institutionalize core capabilities tosupport Tier-II talent backfires, resulting in bureaucracyand Tier-I talent exodus

Create bigger jobs for existing talent and givethem leverage through non-negotiables andscalable routines

Death by1,000 averages

Growing demand from organization/family for founderto delegate decision rights results in governance debates

Confusion over family member roles in decision makingleads to clashes with corporate talent

Create proprietary talent plans to ensure nextgeneration of leaders maintain Founders Mentality

Build an operating model and governance that dis-tinguishes between founder/family and corporate roles

The fog ofgovernance

Westward winds Description Actions to counter

Rise of the average customer: generic view acrosssegments and undifferentiated customer experience

Rise of the planner with no frontline experience,resulting in spreading limited resources across toomany priorities

Rise of the incumbent mindset, resulting in too much timespent on defending positions vs. transforming industries

Bring back the Voice of Customer: focus onmost profitable advocates and delight them

Bring back the Voice of Front Line: redeployPower of Ten to give the front line whatever ittakes to overwhelm competitors in must-win battles

Bring back the insurgent mindset: external orientation,willingness to break the rules of the game and fastexperimentation with effective feedback loops

Revenuegrows fasterthan talent

Great Repeatable Models and Repeatable Models are registered trademarks of Bain & Company, Inc.

Founders MentalitySM is a trademark of Bain & Company, Inc.

To learn more about the DM100 initiative and howwinning companies combat the westward winds,go to www.foundersmentality.com