From Strategy to Growth Strategy: When Growth Makes Strategic Sense

tl;dr

• A growth strategy is the targeted allocation of resources toward expansion — not a goal in itself, but a strategic instrument that only makes sense when the core strategy demands it.
• Without a clear strategy, growth becomes a risk: it adds complexity, dilutes focus, and accelerates resource consumption without strengthening competitive advantage.
• Strategic growth starts with the leverage point question — where does expansion create the greatest impact for the overall system?

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Growth as a Strategic Decision

Growth is not a goal in itself — it is a strategic instrument. A growth strategy is the deliberate plan for how a company systematically expands its market share, revenue, or sphere of influence. But not every company should grow. And not every company that wants to grow is ready for it.

Strategy defines the overarching framework: Where does a company compete? How does it win? What resources does it deploy? Growth is one possible strategic direction within this framework — but only one of several. The alternative is not “stagnation” but can be consolidation, specialization, or deepening.

Viguerie, Smit, and Baghai showed in “The Granularity of Growth” (McKinsey, 2008): portfolio momentum — choosing the right growth fields — accounts for 30 percent of revenue growth at large companies. Not the intensity of growth matters, but the granularity: Where exactly is investment directed?

A Growth Strategy Is Not a Standalone Strategy

A growth strategy is not a standalone discipline. It is a derivative of the overall strategy — the strategic goals, the market position, the available resources. Without a strategic foundation, growth becomes flying blind: expansion in all directions simultaneously, diversification without focus, revenue growth at the expense of profitability.

The connection between strategy and growth runs through three questions: First, is the core strategy clear and validated? Second, does the market show structural growth potential? Third, can the organization handle the additional complexity?

When Growth Makes Sense

Strategic growth is expansion along the greatest leverage point — not in all directions simultaneously. Growth makes sense when it strengthens the strategic position and the market supports the expansion.

The core strategy works. Before a company grows, it must have proven that its current strategy works. Product-market fit, returning customers, positive unit economics — these are prerequisites, not results of growth. A company with an unclear business strategy only magnifies the lack of clarity through growth.

The market offers structural potential. Growing into a shrinking market is a waste of resources. Strategic planning must show that the target market — whether existing or new — offers enough room for the planned expansion.

The organization can handle the complexity. Every expansion adds complexity: new processes, new employees, new customer segments. Verne Harnish formulates in “Scaling Up” (2014): the central growth problem is not revenue but the organization’s ability to manage the right leadership, strategy, execution, and cash position simultaneously.

When Growth Does Not Make Sense

Growth is not a universal remedy. There are at least three situations where growth is strategically counterproductive.

The core strategy is unclear. If a company does not know why its current customers buy, expansion is a risk. Growth multiplies existing problems — it does not solve them. The right decision here: sharpen the strategy first, then grow.

The market position is eroding. When the existing position is under pressure — through disruption, price decay, or commoditization — growth into new fields is often a flight reflex, not a strategic move. The more productive answer: stabilize the core or consciously transform.

Growth only adds complexity. Some companies grow without the growth increasing competitiveness. More revenue but not more profit. More employees but not more value creation. This is growth as an end in itself — the opposite of a growth strategy.

The Leverage Point: Where Growth Creates the Greatest Impact

The decisive question of growth strategy is not “How much growth?” but “Where does growth create the greatest impact for the overall system?”

The Ansoff Matrix structures four growth directions — market penetration, market development, product development, and diversification. But the matrix shows only the options, not the priority. Growth at the leverage point means systematically identifying the option that achieves the greatest strategic impact with the least resource investment.

An example: A mid-sized B2B software provider (60 employees, EUR 8M revenue) for logistics ERP faces the growth question. The Ansoff Matrix shows four options. Leverage point analysis reveals: the biggest bottleneck for existing customers is no longer software but the integration of their supply chain data. Market penetration (existing customers, expanded offering) along this bottleneck generates more impact than market development into a new industry — because the existing trust advantage and industry expertise amplify the leverage.

Organic or Inorganic?

The second directional decision: grow organically (through own efforts — new customers, new products, new markets) or inorganically (through acquisitions and mergers)? Both paths have strategic implications. Organic growth is more controlled and lower-risk but slower. Inorganic growth is faster but integration-intensive and capital-heavy. The choice depends on market speed, available resources, and integration capacity.

Tools for Growth Strategy

Four tools structure the growth decision — each with a different focus.

The Ansoff Matrix structures the four fundamental growth directions: existing vs. new products, existing vs. new markets. It is the starting point for every growth decision — a structuring tool, not a decision-making tool.

Blue Ocean Strategy asks: Is there a market that does not yet exist? Growth through value innovation — not through competitive displacement. Kim and Mauborgne showed: 14 percent of business launches with a Blue Ocean approach generated 61 percent of total profits (HBR, 2004).

Discovery Driven Planning by Rita McGrath is the tool for growth under uncertainty. Instead of creating a detailed growth plan, assumptions are made explicit and validated step by step. Particularly suited for diversification and new market entries where forecasts are unreliable.

Scaling is the mechanism that operationally implements growth: the ability to increase output disproportionately relative to resource investment. Scaling is not the same as growth — it is the how, not the whether.

Distinction: What a Growth Strategy Is Not

A growth strategy is not the same as revenue growth

A growth strategy is the targeted allocation of resources toward expansion that strengthens the strategic position, whereas revenue growth is a metric that can also result from price increases, one-time effects, or unprofitable volume.

A growth strategy is not the same as scaling

A growth strategy is the targeted allocation of resources toward expansion that strengthens the strategic position, whereas scaling describes the operational ability to increase output without proportional cost growth. Scaling is a tool of growth strategy — not its synonym.

A growth strategy is not the same as diversification

A growth strategy is the targeted allocation of resources toward expansion that strengthens the strategic position, whereas diversification is only one of four growth directions in the Ansoff Matrix — and the riskiest. A growth strategy encompasses all four directions.

Conclusion

Growth is not a goal in itself — it is a strategic instrument that only generates impact when built on a clear strategy. A growth strategy does not answer the question “Should we grow?” but rather “Where does growth create the greatest impact for our overall system?” The Ansoff Matrix structures the directions, Blue Ocean Strategy opens new markets, Discovery Driven Planning validates under uncertainty — and scaling provides the operational mechanism.

The next step? Check whether your growth initiative sits at the greatest leverage point of your strategy — or whether you are expanding in all directions simultaneously.

Further reading:

• Ansoff Matrix: 4 Growth Directions
• Disruption: Definition, Types & Practice
• Scaling: Definition, Types & Scale Effects
• Blue Ocean Strategy: ERRC Grid & Examples

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Sources

• Ansoff, H. Igor: Strategies for Diversification. Harvard Business Review, 1957.
• Harnish, Verne: Scaling Up: How a Few Companies Make It…and Why the Rest Don’t. Gazelles, 2014.
• Kim, W. Chan; Mauborgne, Renee: Blue Ocean Strategy. Harvard Business Review Press, 2005.
• McGrath, Rita Gunther; MacMillan, Ian C.: Discovery-Driven Growth. Harvard Business Review Press, 2009.
• Viguerie, Patrick; Smit, Sven; Baghai, Mehrdad: The Granularity of Growth. Wiley, 2008.