Special Report October 30, 2009, 3:04PM EST

Redefining Growth

How are you and your company aspiring to achieve exceptional growth despite the challenging times ahead?

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Microsoft (MSFT), Google (GOOG), Panera Bread (PNRA), Staples (SPLS), Juniper Networks, Nike , and Endo Pharmaceuticals are just a few of America's exceptional growth companies that have managed to turn big ideas into billion-dollar revenue businesses. This elite set of companies is the heart of America's innovation and growth. They even grow through challenging economic cycles, and they represent the class of growth companies that will be the leaders for the next growth cycle. They are the companies to work for, invest in and learn from.

Whether you work for a private or public company, a unit of a large one, in government, education, or the nonprofit sector, you can take away insights from the success pattern of America's highest-growth companies and apply actions to help produce exceptional growth for your company.

The economy is moving out of a recession (fairly labeled "The Great Recession") into a new phase characterized by high unemployment with growth. Going forward, the conditions favorable to business growth will be redefined, especially if the economy is characterized by high unemployment, high debt, tight credit, increased higher regulation, and low consumer spending. Correctly projecting the shape of the recovery to come is anyone's guess: Is it a L, U, V or W recovery pattern?

Google Vs. Twitter

For at least the duration of this lengthy recovery period (and possibly longer), the numbers are pointing to an extreme financial scenario for business growth: a higher upside for those businesses that achieve growth and a greater failure rate for those that struggle.

Those of us in business naturally define business growth through different lenses, often based on our business growth or failure experiences. For example, companies with a disruptive innovation have a disruptive growth opportunity. Investors define stocks with high price/earnings or price/book ratios as members of growth funds or indices.

By contrast, I define a growth company as having a simple, single characteristic: achieving compounding customer demand as measured by revenue growth. This allows companies to increase revenue every year; the No. 1 objective of just about all for-profit management teams—and the most difficult to achieve. This is the measure, however, that ultimately defines a growth company. Contrast Google and Twitter. The former has achieved stellar revenue growth; the latter is experiencing exponential growth in subscribers and valuation but it has yet to achieve exponential revenue growth.

Good News for Select Companies

Revenue growth gives the management team the option of generating profit and returns for investors and employees. It is not sustainable to do the reverse—i.e., overinvest, or cut costs to generate profit and then look for revenue growth—yet all-too-many management teams travel this dead-end road to short term success.

Even though today's economic challenges may seem like an unfavorable headwind, consistent and compounding revenue growth can be achieved by companies of all sizes: $1 million, $10 million, $50 million, $200 million, $500 million, and even $1 billion and beyond. Growth rates may temporarily slow as a result of declining or rapidly changing market conditions, but revenues of high-growth companies still average compounding revenue-growth rates across multiple years.

Despite the turbulent recession and slow recovery currently being experienced by American businesses, there is good news—a select set of exceptional revenue growth companies are leading the way!