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Some of the most spectacular stories of corporate growth revolve around big bets — long-term investments, bold pivots, and major acquisitions. Think of ASML, which pursued next-generation semiconductor manufacturing technologies for more than 30 years; Adobe, which abandoned perpetual licenses in favor of cloud subscriptions; or Disney, which acquired Pixar, Marvel, and Lucasfilm in quick succession.
The companies and leaders that pull off such moves are celebrated as heroes.
But not every company is comfortable making big bets — particularly in volatile times. Our recent research showed that when faced with high-uncertainty events, 90% of companies pulled back rather than doubling down. So, what about a growth strategy not for the heroes but for the rest of us? How can businesses reignite or sustain growth without betting big? It’s a particularly pressing question at a time when economic tailwinds that aid corporate growth are slowing.
To find answers, we evaluated more than 1,200 companies operating in industries structurally challenged on growth, taking a close look at players that grew without relying on high-risk moves. We found that de-risking growth does not rely on making smaller bets, or on making bold moves less frequently. Rather, it requires a different approach at every stage of the growth cycle — from identifying opportunities, to executing on them, to managing risk across a portfolio of initiatives.
Learning From Low-Risk Growth Strategies
To study growth in the absence of economic tailwinds, we focused on industries in which aggregate revenues grew less than global GDP over the past 10 years. As expected, we found that in these challenged sectors, achieving high growth rates (more than 8% annually over our period of investigation) is hard: Out of the more than 1,200 companies we evaluated, fewer than 120 achieved that level of growth. (See “Significant Growth Without Big Bets.”)
Around half of those companies achieved their extraordinary growth by making big bets — major pivots in their business models or industry footprints, or acquisitions exceeding 20% of their market cap. They were rewarded with a median annual total shareholder return (TSR) of 5.5% over the 10-year period we studied, with the top quintile among them even generating a remarkable 13% annual TSR.
However, there was another, similarly sized group of companies that achieved comparable revenue growth rates without making such major moves. These low-risk growers recorded a median annual TSR of 4.2% — clearly outperforming the other 90% of the companies operating in these low-growth sectors, which achieved a median annual TSR of -1.2%. With a top-quintile TSR of 8%, the low-risk growers did not achieve nearly the same upside potential as their higher-risk peers. However, they also limited their downside risk, with only 17% recording negative TSR over the course of the decade — compared with 30% of the big bettors.
Overall, our empirical analysis shows that even in the absence of economic tailwinds, companies can achieve significant growth without taking major risks.
Low-Risk Growth: Four Key Elements
So, what did these successful companies do differently? Across them, we observed four recurring patterns that we think of as components of an operating system for lower-risk growth.
1. Commercializing internal capabilities
When chasing growth, organizations often start from a market perspective — looking for higher-growth sectors that they are not currently serving, and developing products or services tailored to them. However, 33% of the lower-risk growers in our sample instead focused on monetizing internally used assets or capabilities in new ways by offering them as products or services to external clients.
Stride, an education technology company, is one player in our sample that pursued such a strategy. It began as an operator of virtual public schools, using a platform and curricula it had developed. Over time, the company recognized that the learning management system it had built for virtual K-12 schools had value beyond that use. Stride began licensing its technology to school districts, government agencies, the military, and private companies — offering education software as a service for institutions looking to run their own learning programs. This has driven significant growth for Stride.
Under that approach, existing assets that have already been built and internally battle-tested are turned into engines for new growth — with less upfront capital and time investments required compared with greenfield innovation.
Applying that approach, a consumer packaged goods company with strong marketing capabilities might begin selling marketing services; a retailer with advanced last-mile optimization capabilities might offer route planning and carrier selection as a service to e-commerce brands; or a wholesaler with advanced demand-forecasting capabilities might repackage its models into an analytics subscription for manufacturers.
To get this approach right, companies first need to choose the right capability to sell. For one thing, it needs to be valuable — which means that it must be demonstrably superior to existing offerings or capabilities built by others. Often, these are support or back-office functions that others may underinvest in. Yet, this capability should not be a company’s only or most crucial source of differentiation — otherwise, providing it to peers would risk commoditizing competitive advantage.
Walmart’s GoLocal offers a compelling illustration. Having built a vast last-mile delivery network to serve its own customers, Walmart launched GoLocal in 2021 to offer delivery as a service to other retailers. The move works precisely because last-mile logistics, while valuable, is not what sets Walmart apart: The company’s competitive edge rests on pricing, assortment, and the density of its physical footprint.
Once the right asset or capability has been identified, it needs to be turned into a marketable offering. Companies must build a new sales and marketing engine around this product, targeting a distinct set of clients. Pursuing this strategy is particularly sensible for builder-operators — vertically integrated businesses that have developed proprietary systems, tools, or functions to run their own complex machines but remain standardizable enough to be useful to peers in their industry and beyond.
2. Acquiring growth catalysts
Another common strategy companies use when searching for growth is buying market share (by acquiring direct competitors) or buying growth (by acquiring existing businesses in higher-growth industries). But targets with sizable revenues or strong growth trajectories tend to be expensive and demand that buyers pay a high acquisition premium — making acquisitions costly and risky. Moreover, the path to turning this new growth into value is not straightforward: Assuming that the deal is fairly priced, the acquirer will have to realize cost savings or enhance the target’s growth potential beyond what the market had expected.
In our sample, 16% of the lower-risk growers took a different approach to M&As, selecting targets not for the direct revenue uplift they would deliver but for the capabilities they would bring. These players acquired specific technologies, expertise, or access to channels that opened up new opportunities for the existing business.
Like a catalyst that is needed to trigger a chemical reaction, the acquired target adds the missing piece that allows the buyer to use existing assets or capabilities to create new revenue streams. For example, a traditional publishing house might acquire a digital marketing firm to expand its online offering; or a retailer might take over a loyalty-data platform with a strong algorithm to level up its consumer insights.
A case in point from our sample is China Literature, a major online reading platform hosting millions of web novels. It acquired a TV and film studio to turn its most popular intellectual property into dramas and movies. The move combined China Literature’s audience insights with new production capabilities, enabling it to deliver multiple hits that contributed to its 31% annual revenue growth during the past decade.
In our sample, lower-risk growers that applied that approach were able to unlock growth with significantly lower spending on deals: They acquired companies priced at an average of 2% of their own market cap — while higher-risk players, which often acquired growth outright, spent more than 20% of their market cap.
To succeed with this strategy, a company must identify capability gaps that are preventing it from entering new growth verticals. Starting out, it should formulate an explicit thesis: “There is an attractive revenue pool X that we could unlock via pathway Y if we added the missing capability Z.” These pathways should also be mapped before the acquisition to identify where catalysts plug in: products that can be upgraded, customers that can be cross-sold, or channels that can be activated. Then, appropriate targets need to be identified that could bring these capabilities.
These deals are rarely self-contained. Rather, they are treated as a starting point: All of the buyers in our sample increased their R&D investments post-acquisition, working to refine the acquired assets and turn them into marketable products. Often, this effort was led by the acquired company’s team, ensuring that expertise stayed onboard.
Companies pursuing this strategy usually already have a strong core to amplify. When the catalyst can be applied to a sizable base (such as customers, data, or distribution network), its impact is greater.
Moreover, these companies are usually disciplined integrators, possessing the managerial experience and bandwidth needed to embed the catalyst in existing processes and build on it.
3. Jumping on a partner’s bandwagon
As noted above, when a company tries to simply buy market share by acquiring a major player in its sector, the outcome is often mixed. Thus, in our sample, 19% of companies found a lower-risk alternative: They partnered with innovative, growing companies and brought their own legacy strengths, such as large distribution networks, existing customer relationships, or hard-to-replicate physical assets. Such assets can help a new partner overcome challenges in scaling up.
One such case from our sample is home security-monitoring company ADT, which partnered with Google to act as a sales, distribution, and professional-installation channel for Google’s Nest smart home devices. The partnership delivered deep product integration: Customers can link their Nest and ADT accounts and manage them through the ADT app. Since it first partnered with Google, ADT has reported record levels of recurring revenue and over 1 million Nest-related subscribers.
Getting this strategy right involves first bringing a truly scarce asset to the table: Assets like service networks, customer access, or regulatory licenses can be hard for disruptors to replicate. Moreover, the partners need to align incentives.
4. Building a growth portfolio with multiple options
When pursuing growth through higher-risk bets, companies often prioritize the most attractive option and go all in on it. Meanwhile, successful lower-risk growers in our sample pursued an optionality strategy, running a portfolio of bets in parallel. A notable 33% of our sample used this approach. On average, those players launched three new growth initiatives per year. By running many smaller-scale experiments, companies can limit the potential downside of each single option — and reduce the risk of one failed big bet negatively impacting the company’s future.
However, managing a portfolio of initiatives adds complexity for leaders. Companies in our sample used a variety of approaches to pull off this work successfully. Many set up dedicated organizational vehicles for growth. They could take the form of internal “new bets” teams or external structures, such as corporate venture capital arms, innovation hubs, or moonshot factories, with the goal of identifying and incubating new initiatives before spinning them out as full-scale business units.
To ensure that incentives are aligned and that the growth vehicle does not require heavy central oversight, many companies use performance-based contracts for the leaders of such efforts. When these growth units hit their performance marks, they receive strong support from the corporate center — for example, on finance, talent management, or technology. Finally, at the business level, clear “kill rules” must be established so that projects that do not show early signs of success are sunsetted (in order to limit downsides and complexity). On average, companies in our sample either scaled up or abandoned their bets within two years of launch.
Wireless infrastructure provider Sunwave Communications offers an example of this strategy in action. To grow internationally, Sunwave built a dedicated unit that entered North America, Latin America, Europe, and the Middle East through small test-and-learn pilots that scaled only when evidence of initial success emerged. Additionally, the company developed a suite of products tailored to emerging use cases, with a few (such as smart cities, transportation, and manufacturing) demonstrating significant success and contributing to the company’s impressive growth of 26% annually over the past decade.
Individually, each of these approaches reduces risk at a different stage of the growth cycle: in opportunity identification (by capitalizing on what you already have and/or limiting deal size), in execution (by sharing exposure with a partner), and in risk management (by diversifying across bets). By combining them, companies can form a powerful operating system for lower-risk growth.
This course of action requires a very different mindset than a high-risk strategy that revolves around big bets. While big bets in uncertain times can pay off, the reality is that many leaders shy away from this path. Our research reveals a complementary truth for them: Patient, disciplined growth — rooted in existing capabilities, small acquisitions, smart partnerships, and diversified bets — delivers returns well above those realized by peers stuck in the low-growth status quo. Growing in a challenging economic environment, it turns out, is not just for the high-risk gamblers.